Can You Afford to Retire?

Producer Rick Young remembers a departed steel worker and worries about the future for his widowed wife -- and for all retired women.

On March 23, 2006, an overflow crowd of more than 500 gathered in a church in the Cleveland suburb of Macedonia to bid farewell to Chuck Kurilko. Most of those who came knew Chuck as the big, gregarious, four-fingered hockey coach of the Garfield Bulldogs -- a club where he'd helped kids of all ages for some 30 years.

But when I first met Chuck, in January this year, I knew him only as a guy who'd spent his entire life working at the local steel mill. I'd come to Cleveland to understand more about the bankruptcy of LTV Steel and how it had affected thousands of retirees. LTV was one of the first cases in a recent trend of big corporations using Chapter 11 bankruptcy to walk away from their pensions and other retiree benefits. With the help of the Steelworkers Local 979, I called on several former LTV workers, and late one afternoon I pulled up to a white, single-story house along a classic middle-American street, where I met Chuck and his wife Carolyn.

steel factory

HIGH LOW

LTV's Bankruptcy - A Bellwether Case - What happened to workers' pensions and health care benefits when LTV Steel went bankrupt with its pension fund $2 billion in the red.

We sat at their dining table, wedged between the living room and kitchen, Carolyn keeping Chuck's 64-ounce plastic mug filled with iced tea. We talked about how they'd come to Cleveland. High school sweethearts in southwestern Pennsylvania, they were married not long after Chuck, at 18, followed up on an ad in the local paper for steel mills hiring in northeast Ohio. They never looked back. "He loved it. He enjoyed every day," remembered Carolyn. "He worked because he had something to work for. We were raising our children, and he said, 'Just have patience. Let's educate our children, and then there will be time and enough money for me and you later.'"

We talked well into the evening, mostly about Chuck's love of the steel mill and some, of course, about hockey. And we also talked about fear. Chuck had already had two heart attacks and multiple episodes of congestive heart failure; the fear of another, perhaps fatal, incident was on both their minds. Yet sadly, it wasn't the fear of dying they seemed most concerned about, but rather the fear of living in poverty.

After 38 years in the mill (most of it working night shifts so he could be with his kids after school), Chuck had retired from LTV in late 2001 with a lifetime pension and guaranteed health coverage for himself and Carolyn. "It was looking great," recalled Chuck. "The first retirement check I got was $2,700 a month. And that's a nice pension." Health insurance, he said, was running about $200 a month.

But the Kurilko's retirement security didn't last long. Through bankruptcy, LTV had sold off its productive assets and jettisoned its unwanted and underfunded liabilities, like pension and health benefits. LTV's pensions were taken over by the Pension Benefit Guaranty Corporation (the PBGC), the federal corporation that insures private pensions. PBGC uses a reduced payout formula for retirees under 65, and retirees like Chuck were among the hardest hit. He saw his monthly pension checks slashed by $1,000, and his monthly health insurance payment skyrocket to $1,300. The bankruptcy proceedings that "saved" LTV cost the Kurilkos about $25,000 a year, a devastating turnabout in fortunes. By the time I arrived, the Kurilkos' savings were down to about $13,000. Every month was a struggle to keep from digging the financial hole deeper.

I expected anger and dismay. What I found was more troubling. Good people that had been justifiably proud of what they'd accomplished through a lifetime of hard work -- in the mill, in their community and at home -- had lost control of their financial future, and with that their dignity. "We just shouldn't have to live like this," Carolyn kept saying, shaking her head as if it was all just a bad dream.

A couple months later, Carolyn's nightmare got worse. She called me in early April to tell me that Chuck had died from a massive heart attack. We talked about Chuck and about his funeral, and after we talked, I began to think about how Chuck's passing had come to represent the passing of an era when a lifetime of hard work, at most big companies, was rewarded with retirement security and with dignity. I also thought about Carolyn and the financial predicament she suddenly faced alone. But it wasn't until later that I came to understand that Carolyn too represents a troubling national trend -- the growing number of women facing severe financial difficulty in retirement.

One huge problem in retirement for women like Carolyn Kurilko is longevity. On average, women live longer than men, and nearly a third of all women who reach 65 will live to at least 90. "Chances are the husband will die and the wife will live on and on and on, and she will be the poorest she's ever been in her whole life," explains Notre Dame labor economist Teresa Ghilarducci.

The other mounting difficulty for women is the rapid shift from lifetime pensions to 401(k) plans in America's retirement strategy. While 401(k)s offer some benefits like portability -- women tend to stay in jobs for shorter periods than men -- the effectiveness of the plans is dependent on consistent long-term savings and wise investment decisions, particularly with lump-sum distributions at retirement. All the data suggests that people are saving way too little, way too late.

Some experts believe women will be hit particularly hard by the convergence of longevity, rising health care costs and our increasing dependence on 401(k)s. It's telling that one in four elderly women without husbands are living in or near poverty already. Among single women over 85, the number is more like one in three, according to the Center on Retirement Research at Boston College.

Ghilarducci says the problem of poverty among elderly women is getting worse, and she points a finger directly at 401(k)s. "The culprit [are] these defined contribution [401(k)] plans," she says. "Most older women over the age of 80 are living alone, and they are without their kids and without their husbands and they face the highest risk of poverty that they have ever faced in their entire lives. And they won't be able to go back to work to make up for that income. It's a national tragedy."

In one sense, Carolyn Kurilko is lucky. Her kids are helping her out financially. She hopes she can afford to stay in her house another year before having to move in with her daughter. As she sorts through all the paperwork of pension and Social Security benefits, Carolyn is increasingly uncertain about being able to patch together a liveable income. "People are going to have to feed me," she says, pausing before returning once again to the stark reality she can't seem to get beyond. "I shouldn't have to live like this."

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posted may 16, 2006

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