AUSWR
The Association of U S West Retirees
 

 

 

Ranks of Older Workers Swell as Losses Shorten Retirement
By Kelly Evans
The Wall Street Journal
Friday, May 9, 2009

SCOTTSDALE, Ariz. -- Jose Villareal once had a successful career as a franchising executive with Pepsi Co.  Now, at the age of 67, he can't even get a job as a school custodian.

Mr. Villareal is among the growing numbers of retirement-age Americans battered by financial losses who are trying to get back into the work force -- or never left it.

Participation in the labor force by workers over age 65, which has been creeping upward in recent years, hit 16.9% in April, the highest for that month since 1971, the Labor Department said Friday.  Meanwhile, unemployment for workers in that age group was up sharply in April from a year earlier, to 5.8% from 3.5%.

"We're just living day-to-day," Mr. Villareal said.

In an April survey, 22% of workers nationwide said they were "not at all confident" that they will have enough savings for a comfortable retirement, surpassing the number who are "very confident" for the first time since the survey began in 1993, according to the Employee Benefits Research Institute, based in Washington, D.C.  A fifth of those workers said they now plan to work into their 70s.  One in 10 doesn't plan to ever retire.

Mr. Villareal's predicament is increasingly common in this Sunbelt city, where a fifth of the 215,000 residents are 65 or older, compared with one-in-eight nationwide.

Scottsdale's economy has long thrived on retirees, tourists and second-home buyers bringing their wealth to the city.  Now, the massive loss of wealth in the U.S. has left the city vulnerable.

Luxury-car dealerships, restaurants and shops struggle for customers.  Nearly a third of prime office space is vacant.  Earlier this week, the swanky Copper Wynd resort, situated between Scottsdale and neighboring Fountain Hills, became the struggling economy's latest victim, closing its doors after 10 years.

Scottsdale is part of the Phoenix metropolitan area, which lost 136,000 jobs in the year that ended in March, tying Detroit for the largest percentage of jobs lost in the period at 7.1%, according to the U.S. Labor Department.  The Arizona Department of Commerce projects that the metro area will shed another 6% of its jobs by next year.

The Villareal family's money troubles started earlier this decade, but have been exacerbated by the bad economy.

They lost much of their savings and cashed out their retirement funds in 2000 after a string of pizza restaurants Mr. Villareal opened in Mexico went bust.  He then turned to running a small consultancy, but business dried up over the past year as the economy slowed.

Taking a big cut in pay, Mr. Villareal spent several months working in the cafeteria of a local high school, his daughter's alma mater, until a back injury ended that stint.  Among other efforts, he applied for a custodian position in the school district, for which he was judged overqualified.

"I don't buy $200 shoes like I used to," said Mr. Villareal, dressed in a white polo shirt bearing a EuroDisney logo, chino shorts, loafers and ankle socks.  "I'll wear these clothes for another 11 years -- what do I care?"

Because Mr. Villareal can't get a job, his 62-year-old wife, who had left the work force two decades earlier after the birth of their daughter, started working at a discount retailer where she earns $10 an hour.

Others her age haven't been as lucky. Unemployment among those between the ages of 55 and 64 jumped to 6.3% in April, compared with just 2.7% a year ago.  Even those who are employed have been battered by 401(k) losses, upending their plans for retirement.

A study by human-resources consulting firm Hewitt Associates found that the typical 55-year-old worker will need to work for two more years to replace 401(k) losses in 2008.

Meredith Schimmelman, 60, is among those who would like to retire but can't afford to right now.  Sitting in a Scottsdale restaurant with her husband, Art, who is 67, she said with a half-smile that while she enjoys her administrative job at a mortgage company, "it would be nice if he had a job and I didn't have to work."

The couple moved from California nearly six years ago and owe more on their home than it is currently worth.  Mr. Schimmelman borrowed against it to finance business ventures that didn't work out.  He also moved much of the couple's retirement money a few years ago into the precious metal palladium, which is closely tied to demand from the auto industry and has lost more than half its value.

Mr. Schimmelman is looking for a job but hasn't had any luck.

"I've never felt so paranoid about the future as I do now," he said.  "If she lost her job, the bottom would really fall out for us."

Write to Kelly Evans at kelly.evans@wsj.com
http://online.wsj.com/article/SB124183060618602703.html