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More Workers Delay Retirement

A growing number of Americans are working beyond the traditional retirement age of 65, motivated by both economic need and personal preference. This could change not only the nature of retirement, but the American work force as well.

Mary Riemer may not look like a trend-setter, but as a 67-year-old full-time member of the workforce, she represents what lies ahead for many older Americans.

In the last 10 years, employment among women age 65 to 69 has increased from 17 percent to 23 percent, according to Census Bureau data. And more than half of these women now work full-time, compared to 40 percent a decade ago.

Thirty percent of men the same age are working -- up from 27 percent. And those working full-time rose from 57 percent to 68 percent.

Research surveys show that this trend will likely accelerate as members of the baby boom generation reach retirement age, says Deborah Russell, director of economic security for the American Association of Retired Persons.

"And clearly, a large portion of the boomers [those born between 1946-1964] as many as 69 percent, have told us that they plan on remaining past traditional retirement age, which today would be about 65-years-old."

That's a departure from the American dream of leaving the workplace forever behind and spending the so-called golden years traveling, pursing hobbies and living a life of leisure.

That lifestyle requires assets far exceeding the government-funded Social Security payments available to nearly all retired workers. The median yearly benefit is $10,400.

When asked if Social Security is enough to live on, Mary says, "No."

"Absolutely not… If I had not moved in with my daughter, I could not have lived in my house… that's the truth."

Other financial pillars of retirement include pensions paid by an employer or a union, savings, and the value of a person's house.

However, only about one third of people age 65 and older will receive a pension, according to a Census Bureau annual survey.

And the median value of retirement savings, such as 401(k) and IRA accounts, is $55,000. That's sufficient to purchase, at age 65, a life annuity plan yielding about $400 per month, according to the Federal Reserve Board.

And because people are living longer, assets must last longer. In 1960, a person aged 65 could expect to live another 14 years. But by 2002, that increased to 18 years, according to the National Center for Health Statistics.

Ms. Russell says people stay in the workplace for different reasons. "I think that the future outlook of retirement will be less of a linear thing where you come into the workplace and work 30 or 40 years and then you don't work anymore. I think what we're going to see is that retirement will be much more of a cyclical kind of thing. People will come in and out of the workplace for a variety of reasons."

People, such as Tom Henderson, who continues working 20 hours per week as a contractor at the PEPCO electric utility holding company, even though he officially retired from the company at age 55, after a 30-year career he explains.

"They were offering severance packages, and it was an opportunity for me to receive a lump sum of money, and then at the same time work less and still pretty much earn the same amount of money."

The first wave of baby boomers is now about 60-years-old, only two years away from the average retirement age.

Ms. Russell says it is doubtful the trend will change, "Let's face it, there are 78 million boomers in the pipeline right now, in the workplace right now, and I think its going to be difficult for employers to ignore that."

And for every five workers who retire, only three younger workers will be available to replace them.

Ernest Jenkins is human relations director of PEPCO Holding Company. "In the next five years, we have the potential to lose about 39 percent of our workforce. We're going to need those people, so we're going to utilize those institutional knowledge and skills that these people have acquired of these years, and we're going to continue to use that."

Versatility and flexibility is also a reason why employers are willing to hire baby boomers. "Many older workers are willing to move into the fields where there are shortages - health care, retail sales... We have people who are willing to work longer, in jobs that perhaps may be difficult to fill. And we have jobs that need to be filled. So here we're seeing a perfect match, and I think more employers are going to begin to see that," said Ms. Russell.

Many employers, such as PEPCO and others, already do.