3 generations of retirement plans
By H.J. Cummins, Staff Writer
Mpls Star Tribune
Sunday, September 25, 2005

One American family traces the course of retirement income from big, safe-bet pensions to a 401(k), to a third generation that expects nothing from anyone. They are the Williams family -- grandpa Bruce, son Brian and grandson Erik.

Grandfather;  Relies on the security of regular pension checks

Bruce Williams went to work for the Northwestern Bell telephone company in Rochester in 1951, right out of high school.  From lineman, Williams worked his way up to public affairs manager for outstate Minnesota, overseeing the company's support for community programs.  He reluctantly took early retirement in 1987, when he was 53 years old.

"They were starting cutbacks, and a lot of other people were being forced into retirement, anyway," he said.  Two days before the deadline, Williams took the deal the company had offered:  An extra three years to his age and three to his years of service in the retirement formula that calculated his pension.  He now gets a check for just under $2,000 a month, not quite half his salary when he quit.

"A lot of the guys took a lump sum, which would have been a good deal if they'd all played it smart and invested it," he said.  "I chose the pension, because I'm not an astute financial guy."

Williams now lives in Plymouth, with his wife, Jerry.  They still prefer the security of those pension checks.

"For me, anyway, it gives me peace of mind," he said.  "This way I can budget better.  I've got this much money from the pension and this much money from Social Security.  I know exactly what's coming in so I can better control what's going out."

The Williamses have one big worry, though.  They see other companies canceling health benefits to their retirees, and they know there is no law to stop it from happening to them.  Qwest, the successor to Northwestern Bell, still covers retirees at virtually no cost to them.  Williams just got a hip replaced.  His wife takes 12 pills a day for various conditions, mail-order prescriptions that cost them only $2 a month each.

"With the health care needs we have right now, I'd be in deep trouble if I had to pay for it myself," Williams said.

Son;  Has experienced only 401(k)s and ESOPs

Brian Williams is vice president and branch manager of the Star Bank that opened earlier this year in Annandale.  The bank offers its employees a 401(k) plan but no company match.

"Right now, with competition and everything, margins are so squeezed it would be hard to provide more," said Williams, 46, married with three children.

Throughout his banking career, with five different employers, Williams never had the kind of pension his father has.  Instead, he has had all 401(k)s and one employee stock ownership plan (ESOP), which pays out company shares as an employee benefit.

He's comfortable assuming full responsibility for his retirement, even though he counts himself among those who have had setbacks with their savings.

"I saw all this coming," he said.  "As a banker, I know what you need to live in retirement.  I know my limits, and how much to spend and how much to save.

"I've got a diversified portfolio and 21 years before I retire," Williams said.

Not everyone is preparing as they should, though, he said.

"I know a doctor.  One day I said to him, 'If you were treating me, you'd tell me when I was in trouble,' " Williams said.  " 'So, I'm telling you, you're in trouble.' "

Grandson;  Sees his retirement plan as his responsibility

Erik Anderson is in his junior year at St. Cloud State University.  He wants to be a nurse because he admired the nursing care his mother, Terry, got when she had breast cancer several years ago.  (Terry Anderson is Bruce Williams' daughter and Brian Williams' sister.  The Andersons live in Plymouth.)

Erik actually factored his retirement years into his career choice.

"It's not the most important thing, but it's definitely something you should plan for," he said.  "When you choose what you want to study at college, you look at how well you'll be set up late in life."

Erik's parents started an investment portfolio for him 10 years ago, when he was 10 years old.  They see it not just as savings but also a way to teach Erik all that he'll need to know to be financially secure on his own.  They usually include their son in talks with their broker, for example.

All this helped develop Erik's conviction that finances are a personal responsibility.

"You want to plan and save," he said.

Social Security? "I'm not holding my breath," he said.

Erik and many of his friends support President Bush's proposal to privatize Social Security, he said.  The old notion of Social Security as a shared safety net for all Americans doesn't fit their view that the new expectation is self-reliance.

"That sounds like welfare," Erik said.

H.J. Cummins is at hcummins@startribune.com.