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Retirement Postponed

Newsweek, 3/22/08

Abstract:

Charles Burge had been counting the days until retirement. He spent decades as a New York City employee, starting as a trash hauler and working his way up to middle management. Along the way he worked part time as a physical therapist, pouring extra cash into retirement accounts. In mid-2006, Burge, who's now 54, told his boss he'd retire at the end 2008—but things have gone downhill ever since. His financial planner, David Frisch, moved some of Burge's savings into cash, but the portion remaining in stocks has steadily lost value as the market slid. The worth of his Long Island home, once a half-million dollars, has dropped by $70,000 thanks to the housing bust. Lat last fall Burge and his wife, Anna, 57, a homemaker, decided the numbers looked bleak: instead of retiring to a Florida condo later this year, he now plans to work until 2011 to maximize his city pension. "I don't feel as wealthy and secure as I did," he says.

Join the club. The triple whammy of the housing bust, the weakening economy and the turbulent stock market affects most Americans, but few are as shaken as leading-edge baby boomers on the brink of retirement. "There's a lot of sheer panic out there," says financial planner Bert Whitehead of Cambridge Advisors. For many boomers who'd planned the stereotypical retirement play of selling their house and downsizing to a sun-belt condo, falling home values and a lack of offers have put those plans on hold. For others, the financial markets are the biggest complication: today's soon-to-be retirees are far more reliant on 401(k)s, with their fluctuating values, than on traditional defined benefit pensions with stable values. And for would-be retirees who aren't ready or positioned to quit working entirely just yet—a group that includes many of the employees considering buyout offers from companies life Ford, General Motors and Delta—the weak economy is making them question the ease with which they'll launch a second or part-time career.

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