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Seniors anticipate ‘rewirement’

By Jocelyn Green

Ken Baxter retired from the John Deere facility in Waterloo, Iowa, at customary retirement age. But when given the opportunity to work again as an electronics engineer for Distek Integration, Inc., Baxter, now 70, jumped at it.

Unlike some seniors who go back to work, financial incentives didn’t factor into Baxter’s decision.

“That chance to work with electronics again really motivated me to do this,” he says. “I want to keep my mind active. Plus, my ‘honey-do list’ was getting longer and longer at home.”

The traditional view of retirement has been that it’s a time to sit back and relax. But some of today’s seniors, who might live another 30 years, aren’t in the mood.

“I don’t like to sit around, so that’s not an attractive option for me,” Baxter says. “I’m still enjoying working very much.”

In jumping off the retirement bandwagon, Ron Eberhardt joined a new movement of retirement-age workers who remain in the workforce, rewired to fit elsewhere. The 2006 American Community Survey shows the share of people aged 65-74 still working jumped from one in five in 2000 to one in four in 2006.

Those who retired also are finding their way back to the workforce. Eberhardt, 61, is working with his wife, Betsy, in a new career in Grand Rapids, Mich., where they purchased two franchises with a national junk removal service.

Eberhardt says the income is the primary reason to keep working for him. “Working for a nonprofit the last 20 years did not help build my retirement nest egg — and neither did helping our children with their college expenses,” he says.

There are other reasons people continue working into their late 60s, but lack of money is the most compelling. Two out of three baby boomers have less than $50,000 in the bank.

“If you are 20 to 30 years of age and looking at the retirement of your parents, you have to be gasping in fear,” says Moving Up to Millions author Kathleen Connell, a financial adviser in Washington, D.C. “You are likely to live longer than your parents, have reduced pensions, rapidly escalating health-care costs, limited savings, and, most probably, no chance of an inheritance, as your parents will live longer than planned. Your obligation is to amass savings as early as possible.”

“Saving is priority one,” says Kyle Dana, senior vice president of AG Financial Solutions in Springfield, Mo. “Learn how to save, even if it’s just $10 to $15 a month. The compounding power makes the biggest difference.”

Dana recommends tithing 10 percent, saving 10 percent, and living on 80 percent — and trying to increase the percent saved yearly.

Taking advantage of a 401(k) plan puts compounding power to work even more.

“For any worker, young or old, it is critical to set aside money in a 401(k) plan,” says financial planner Mark Mills, co-author of Boomers! Funding Your Future in an Age of Uncertainty. “The smart move is to save at least as much as the company will match. Saving any less means turning down free money.”

For example, if a 22-year-old contributes $2,000 a year to her 401(k) and her employer matches that with another $1,000, she would accumulate $988,000 by age 65, assuming her account earns an average of 8 percent a year.

Someone who starts investing at age 35 would end up with just $340,000 at age 65, (assuming the same interest rate). By starting 13 years earlier and setting aside an extra $26,000, the early saver ends up with $648,000 more than the worker who waited until age 35 to get started.

“Money earning 8 percent a year doubles in value in nine years,” says Mills, of Brooklyn, N.Y. “By starting early you get that extra doubling, or more, compared to someone waiting until their mid-30s. And that extra doubling is the big one, the one that turns a modest retirement account into a small fortune.”

Connell has devised a life savings calculator ( whereby a person can quickly learn what life savings would yield by plugging in variables such as age and amount per month.

According to Dana, the average individual doesn’t start saving for retirement until the age of 45. Other pressures, such as financing children’s college education and paying off a mortgage, often take priority, albeit misplaced.

“A child can qualify for financial aid when applying for college,” Dana says. “However, parents cannot apply for loans to finance their retirement. I recommend that parents set up a matching plan whereby any funds their kids save for school would be matched by the parents. This helps the child save but more importantly, it helps them understand the value.”

“Just as we tithe, we need to be diligent in setting aside some savings,” says Dave Weston, director of Assemblies of God Senior Adult Ministries. “There’s never an easy time to start setting money aside, you just have to do it, even if it’s just a small amount. The discipline of setting aside is invaluable.”

During research for her book Don’t Retire, Rewire!, co-author Jeri Sedlar of New York City found there are 85 reasons people continue working (or volunteering). These motivators include spiritual fulfillment, sense of belonging, accomplishment, making a difference, and recognition.

“Most say that they want to continue to be engaged in meaningful activities,” Sedlar says. “They want to work for a variety of financial, social, physical and emotional reasons. Retirement as we know it today just might morph into something else.

“I’d rather have people think of saving for the future so they have financial freedom and security. If they have resources, they can look at new options that lead to a more fulfilling life.”

Many older people are looking to the church as a way to be fulfilled through volunteering.

“The church is wise to look at these people and recognize their gifts and talents, all they have to offer,” Weston says. “Young people still working are not able to contribute in a way a retired person could.”

Denver-based financial planner Joe Sturniolo offers workshops to help people find a meaningful focus for the remainder of their lives.

“God has directed us to be active,” he says. “I don’t believe that just because you reach a certain age that all of a sudden, God says, ‘Time’s up, you don’t have to do anything.’ He’s put you on earth to continue to serve.”

It’s an idea that resonates with Eberhardt. “There are times that I say I look forward to retiring at 70,” he says. “But if God blesses me with good health why wouldn’t I look for ways to serve Him?”

JOCELYN GREEN is a frequent news contributor and lives in Cedar Falls, Iowa.

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