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Is Retirement Even Possible?

Millions of people age 70+ are still on the job.

Frank Wilkinson, 89, is unlikely to savor even a decade in retirement. The former airline pilot lost his pension when his employer filed for bankruptcy decades ago. So, like others who require extra income, Wilkinson works at least 25 hours a week helping older adults in Clearwater, Fla., find jobs as part of a senior employment program administered through AARP Foundation.

“They’re really desperate to supplement their Social Security income,” Wilkinson says of the people he works with. “It’s rewarding to be able to help people worse off than I am.”

When today’s middle-aged workers face their retirement years, Rix says, rising drug and health care costs, which have consistently outpaced inflation, will eat away at retirement income. At the same time, Social Security benefits will likely cover a smaller portion of expenses. And workers’ retirement savings, including those in 401(k) plans, will remain vulnerable to market downturns.

Since the recession began in December 2007, retirees and near-retirees have watched their nest eggs fall by as much as 40 percent, though values are rising gradually as the stock market stabilizes and regains ground. Older workers nearing retirement are hardest hit, since they have less time to recover losses.

Then there’s the debt factor. It used to be that Americans largely paid off their mortgages and other debt as they entered retirement in order to make the most of their fixed incomes. But recent studies show that a majority of workers are retiring, or approaching retirement, with a pile of debt.

One study, called “Debt: The Detour on America’s Road to Retirement,” released in May by the Securian Financial Group in St. Paul, Minn., compared older Americans’ finances from the start of the recession to February 2009. In that period, the share of boomers who reported consumer debt of $25,000 or more rose from 28 percent to 38 percent, while those who owed at least $50,000 rose from 12 percent to 22 percent.

“Even if you’ve done all the right things,” like living within your means and socking away hefty savings, “you could still be in trouble,” says Harvey Sterns, director of the Institute for Lifespan Development and Gerontology at the University of Akron. “We’re in a reset period,” he says, “where people are going to think very differently about retirement from now on because of the sense of vulnerability.”

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