MARKETPLACE (Minnesota Public Radio), July 12, 2005, Tuesday

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MARKETPLACE

SHOW: Marketplace 6:30 AM EST SYND

July 12, 2005 Tuesday

HEADLINE: Growing number of Americans are postponing retirement

ANCHORS: DAVID BROWN

REPORTERS: HILARY WICAI

BODY:
DAVID BROWN, anchor:
They call this a settlement. You be the judge. A little company called Enron has agreed to pay $356 million to former employees who lost their retirement packages. But the Labor Department has a warning for those former employees: Enron doesn't really have that kind of money. There'll be payouts, but far less than full value. Many would-be retirees may need to stay working longer than originally planned. You know, for a variety of reasons, a growing number of Americans are postponing retirement. From the Work & Family Desk, MARKETPLACE's Hilary Wicai tells us it's a trend many employers are happy to see.
HILARY WICAI reporting:
She doesn't work full-time, but 72-year-old Josephine Godfrey hasn't quit nursing yet.
Ms. JOSEPHINE GODFREY: I've raised eight children by myself, and you don't save much money for retirement when you've raised eight children.
WICAI: So she works three or four days a week, and St. Mary's Hospital, run by SSM Healthcare in St. Louis, is delighted and a bit desperate to have her in its busy endoscopy department. Steve Barney, SSM's head of human resources, says the health-care company is dealing with a national nursing shortage in part by holding on to several hundred skilled employees like Godfrey. The company is doing it with a formal phased retirement program.
Mr. STEVE BARNEY (Human Resources, SSM Healthcare): Come the day that Jo quits, we're going to have to go out and find a very experienced young person to replace her, and there aren't too many of them to do that.
WICAI: Godfrey may want to work, but standing on her feet eight to 10 hours a day five days a week isn't realistic in her 70s. Phasing into retirement allows a cutback in hours, access to health care and the ability to draw on some pension income. That makes up for Godfrey's cutback in hours. SSM's Barney says it beats the alternative.
Mr. BARNEY: We saw anecdotal evidence of nurses and others who were taking retirement from us and going down the street and working for one of our competitors.
WICAI: The nursing shortage forced companies like SSM to retain highly skilled workers who would normally be retired. But nursing could show what's in store for other professions like science, engineering and high tech. Lack of savings and employers' need for skills may make phased retirement a new way of life for boomers. Mike Aitken is with the Society for Human Resource Management.
Mr. MIKE AITKEN (Society for Human Resource Management): There's no question that there will be a skills shortage to meet the demands of the 21st century.
WICAI: The Congressional Budget Office forecasts that labor force growth will slow by almost half over the next 10 years. Deborah Russell is with the AARP. Russell says the AARP, as an employer itself, must deal with its own wave of employees retiring. It needs workers, like 63-year-old Cindy Sharon, to stick around. But Sharon didn't have the energy anymore for her job's demanding travel schedule. At first, she considered early retirement, but quickly realized she'd need more income to make her twilight years a bit more golden.
Ms. CINDY SHARON (AARP): Why not work part-time, have some regular income, increase for my retirement benefit the years of service I've put in at AARP, and have some time to build a business so that when I fully retire, hopefully that's up and running.
WICAI: Americans are living longer and saving less. The AARP says its survey shows two in five workers 50 and older are interested in phased retirement, but there are still serious economic, legal and institutional roadblocks, like how to deal with pensions. SSM got an exemption from the federal government, because the nursing crisis was so dire. But most employers are waiting on changes in federal regulations that currently prevent employees from partially retiring and drawing down on pension benefits. Other laws also set limits on how retirement benefits are calculated, paid and taxed. Robert Hutchens studies retirement issues at Cornell. He says Washington is likely to do something about it. The government has its own reasons.
Mr. ROBERT HUTCHENS (Cornell University): We're having difficulty financing Social Security, and if boomers stay in the labor market, that's going to ameliorate that problem.
WICAI: The IRS and the Treasury Department have proposed allowing workers at least 59 1/2 years old to scale back their hours by 20 percent. They could still get a portion of their pension while staying at the same job. After a hearing this spring, the feds are in the process of finalizing the regulations. In Washington, I'm Hilary Wicai for MARKETPLACE.