Many in U.S. forced into retirement

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American workers, who face growing financial pressure to stay in the work force, are far more likely to be forced into an early retirement than many expect, according to a recent study.

Four of 10 retired workers left their jobs sooner than they had planned, usually because of health problems or the loss of employment, says the report by McKinsey & Co., which was based on a national survey of 3,086 people.

The survey also found that 45 percent of people who are employed planned to keep working past age 65. But among the retirees polled, only 13 percent said they had done so.

The findings raise fresh concerns about Americans' ability to afford a comfortable retirement. With more companies abandoning or freezing their pensions, many people say they plan to work longer to build up their nest eggs.

The reality "is quite sobering," said David Hunt, a senior partner at McKinsey. "Our research clearly shows that many people - and more than a few public policy makers - who are betting on simply working longer to compensate for a lack of current savings are setting themselves up for a rude awakening and a significantly poorer standard of living in retirement than they had expected."

Ask Rolf Marsh. The computer programmer was age 60 when he got a surprise tap on the shoulder from IBM.

Marsh had planned to work five more years to qualify for higher pension payments, then retire to enjoy a new phase of life, including visits to friends in Britain and other travels with his wife.

"I guess I was blind to the handwriting on the wall," said Marsh, 63, who lives near Spokane, Wash. "I didn't think it was going to happen."

Marsh has been frustrated in his attempts to prolong his career. "I looked for work when I first got out - basically, there's very little up here in Spokane - and the jobs I applied for I didn't get. My feeling was it was because of age."

He estimates that his pension is less than half what it would have been had he remained longer in the job. To boost his income he signed up for Social Security earlier than planned, further scaling down his retirement pay.

Eventually he and his wife took in an elderly boarder whom his wife cares for to make ends meet. "It's been difficult," he said.

The McKinsey survey included retirees, for which it had a 3.2 percent margin of error, and people who are not retired, for which the margin of error was 2.4 percent. It was conducted in March and April among people 40 to 75 years old.

Among those who retired earlier than they expected 47 percent cited health reasons and 44 percent pointed to job loss. The remaining 9 percent said they had to care for an ailing family member.

Wealth also had a big influence on how people's jobs come to an end. Workers with less than $50,000 in assets were most likely to be forced out of their careers because of health problems. Those who had more than $1 million pointed to job loss as the greatest reason for retiring.

For many, there is no way to see a forced retirement coming.

"They get laid off," said Sandra Timmerman, director of the MetLife Mature Market Institute in Westport, Conn. "They have health issues that prevent them from working. The company merges. A spouse gets sick. A parent gets sick. The job becomes more pressured."

At the same time, Timmerman noted, workers face the need to maintain their careers to set aside money for retirement. "I think we're seeing the realization on the part of people that they ought to extend their work life longer than in the past," she said.

It is a realization brought on by the changing landscape for retirement security. Many employers no longer provide traditional pensions with guaranteed monthly payments. Instead, they offer 401(k) savings plans, and it's up to the workers to salt away enough money to last them in old age.

The oldest members of the vast baby boom generation turned 60 this year. Members of this generation often mention the need to boost retirement savings as a reason to keep working, Hunt said.

"Many of the boomers we interviewed, especially those in their early 50s, believe that they will be able to afford retirement by continuing to work - and often put off the sacrifice of saving today with this in mind," he said.

John Rother, AARP's executive officer for policy and strategy, said the findings underscore the fact that many expecting to stay on the job will face an uphill battle to keep careers moving forward.

"We know that people who lose jobs in their 50s and early 60s have a very difficult time finding new employment," Rother said.

For much of the 20th century the trend was toward earlier retirement as America became more prosperous and elderly people were able to survive with the help of Social Security. In recent years, the retirement age has begun to edge upward, said Joseph Quinn, dean of arts and sciences at Boston College and an expert on retirement trends.

Better health, laws against age discrimination and a phase-out of penalties in the Social Security program for working past retirement age have made it possible for people to work longer, he said.

Jonathan Peterson writes for the Los Angeles Times.

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