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Retirement on Hold

Economic downturn forcers older workers to remain in workforce

They'd spent years crunching numbers, planning for their long-awaited retirement. Now the couple say they can't afford it.

Josie Pirozzoli, 60, and her husband, John Heisler, 54, of Winter Haven, Fla., had planned to pay off their mortgage first, dabble in real estate and cash in some of their 401(k) and IRA funds to travel, pursue hobbies and "just enjoy each other."

See also: Boomers report no savings at all.

But their income nose-dived along with the economy. Now they may have to sell the waterfront home they've settled into for their retirement years if they cannot find jobs soon."

We were working 24/7 and thought that, finally, we'd have time to travel and do things we never had time to do-antiquing, volunteering, watercolor painting," Pirozzoli says. "That's not part of the plan anymore.

"As tumbling property and stock values erode Americans' nest eggs, an increasing number of workers are delaying retirement or re-evaluating their dreams of the golden years that may, in fact, nevercome to pass.

An AARP survey in April found that nearly one in five people ages 55 to 64, and about one in four ages 45 to 54, planned to delay retirement because of the economic downturn. Nearly one in three people ages 45 to 54 blamed falling home values for the decision to postpone retirement; 18 percent of those ages 55 to 64 said the same.

Others were more troubled by their declining investments and fluctuating 401(k) accounts. One-third of workers ages 55 to 64 said they postponed plans to retire due to shrinking portfolios, as did 19 percent of those 45 to 54, according to the poll of 1,002 people.

Working longer is a trend that's likely to continue as employers cut back on retiree health care coverage and traditional pension plans go by the wayside. By 2014, the number of 65-plus workers in the labor pool is projected to grow by 74 percent, according to the Bureau of Labor. Last year, nearly 6 million workers were 65 or older.

Alicia Munnell,director of the Center for Retirement Research at Boston College, says the huge number of foreclosures and more workers borrowing from their 401(k) plans are "eroding the major assets people have as they enter retirement."

"It's very hard to make up a lot of that money if you're in your late 50s or early 60s," she says. The downturn in the stock and real estate markets is "accelerating what people will be forced to do anyway"-retire later.

Karen Smith has spent years researching retirement issues at the Urban Institute in Washington. She says low-income workers in particular benefit from staying in the workforce for an extra year.

"You give up a year of leisure, and you get a year of earnings and savings, and you increase your Social Security benefit," she says. "That adds up to a sizable return.

Next: Re-entering the workforce. >>

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