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Retirement Faces Changing Times

Longer Life Spans Alter Plans

My mother used to tease me about her ability to get discounts through the Association for the Advancement of Retired Persons.  “Just think — when you’re 55 you’ll be able to get hotel discounts, too,” she’d say.  When she discovered I could join AARP at age 50, she was miffed.  She felt the association deprived her of five years of discounts.  The truth, however, is that AARP merely jumped on the baby boomer bandwagon.

AARP needs members to support its initiatives, political lobbies and business as a nonprofit.  In an age when boomers are retiring, it’s understandable why it reduced the age limit for membership.  But this seems confusing amid the many contrary messages being sent about retirement.

One of these messages comes from the Social Security Administration, the government agency Franklin D. Roosevelt signed into law in 1935.  At that time pensions were designed to begin payout at age 65, so that seemed a good age to set for retirement.  Back then a 65-year-old man was expected to live an additional dozen years; a woman was expected to live until age 79.

Today, a 65-year-old man is expected to live an additional 16 years, and a woman’s average life span is now 84.  Therefore, the move to increase the retirement age has begun.  Currently, the age gradually increases with people born in 1938 or later until it reaches age 67 for people born after 1959.  Despite this change, a person still can begin receiving Social Security benefits at age 62 (see “Financial Planner,” January 2004).

Another contrary message comes from Dennis Hopper, born in May 1936 and well into retirement age.  He’s the face of Ameriprise Finan-cial’s broadcast and print ads, in which he addresses fellow boomers with the tagline, “Dreams don’t retire.”  According to a press release, the first phase of this ad campaign helped to transform financial serv-ices advertising with a focus on the positive rather than on fear.

Despite Ameriprise Financial’s positive stance, fear about retirement remains palpable for those who realize these dreams cost money.  Evidence for this trepidation comes from the recent AARP Bulletin, which reported that over 75 million employees have no retirement plan at work.  Additionally, if you looked over your latest Social Security statement, you may have experienced a metallic taste in your mouth after realizing you might expect to receive the sum total of a few mortgage payments from this agency when you retire.

Many boomers might eschew traditional retirement, however, so this fear of the future could be diminished by a willingness to work well after retirement age.  Although some people may want to pursue different paths — including volunteerism — other retirees may need to work to pay medical bills or to continue contributing to retirement savings as the cost of living rises.  The issue then becomes whether enough jobs will be available for those who want to continue working.

Think about this, though:  What will you do when you reach age 80?  Will you be mentally and physically capable of working?  Will there be a time when you’ll actually enjoy life?  Most of the boomers who want that latter option began to invest in 401(k) programs when they were introduced in the early 1980s.  This option was designed to allow you to access funds when you reach age 59 1/2.

It’s essential to plan for retirement, and for dreams.  Planning and doing, however, are two different things.  The older you are, the faster you need to move and the more you need to save to avoid some gruesome golden years.

If nothing else, you can join AARP and take advantage of those hotel discounts.  After all, these benefits are a rite of passage, one that marks the start of retirement’s long siege.

Linda Goin is a free-lance writer who focuses on personal finance and visual communications. She completed her college career this year with a graduate degree in American history at age 50.

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