Can You Afford to Retire?
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Join the Discussion: What are  your views on America's retirement system, given the vanishing lifetime pensions and  inadequate 401(k) savings?  If you're an aging baby boomer, can you afford to retire?  Share your story.

Dear FRONTLINE,

I believe a solution is to let older workers to retire but rehire themas part timers (with the same salary rate). My employer providespost-retirement health care and a pension; and combined with part time employment (which means no benefits) both parties win.Retirees remain active and able to live a comfortable life,work at job which they are best suited for with less workload.Instead of working 5 days and 2 off, they work 2 days and 5 offbut do not suffer income losses. In fact, they actually earn more for less time.

My employer having health and pension already paid for, retainsa senior employee at a part time cost. It also allows the retiree's successor acquire to hard won (and expensive) knowledge and expertise that may be available anywhere.When it's my time to retire, I plan to do the same thing. If thatdoes not pan out I know I need a backup plan as well and mustact according now. I think the say hope for the best but planfor the worst is the best what we can do today.

Los Angeles, CA

Dear FRONTLINE,

I am an attorney, and have made my living 17 years as a financial planner. I am an independent, fee-paid Certified Financial Planner (CFP). I see every day that Americans are not preparing well at all for their future, and am thankful that they need and want help, as these opportunities are now my livelihood. I was shocked that your program did not mention ANY example of individuals who were utilizing their 401k plans and other resources successfully to prepare. The viewer came away from your program hopelessly disturbed, with no direction whatsoever on what they should be doing. At the root of this systemic problem is the fact that understanding and respecting money and finance is not part of our American culture--ironic, considering our spending habits. As a nation, our people need education, at all ages, to form appropriate expectations of what is required to achieve financial independence, and to learn the steps that must be taken over our careers to fulfill realistic goals. Most Americans--middle and upper class alike--have no clear sense of what they will need, not to mention how to get there. As a result, they are vulnerable, and destined for financial disappointment. I would like to be interviewed if you have a program like this in the future. Ember L. Flack, JD, CFP, CLU, ChFC, CLTC

Ember Flack
Dallas, TX

FRONTLINE's editors respond:

The companion Web site for this report offers a good deal of advice on making wise 401K investment decisions, starting with the WHAT YOU NEED TO KNOW section and continuing with the extended interviews, and the articles in the CHANGING WORLD OF RETIREMENT SECTION. Plus, there are many links to the wealth of free information available on the internet for investors. It is a complex subject and such detailed information unfortunately couldn't fit into FRONTLINE's one hour film report.

Dear FRONTLINE,

Great program.

Here's an ironic twist to the retirement dilemma most of us will face: IF we manage to save enough in our own retirement accounts - 401K, IRA, or others - it is conceivable we may face means testing that will limit what we expect to receive from Social Security.

Cambria, CA

Dear FRONTLINE,

I teach at Saint Mary's College (an all women's college at Notre Dame, Indiana)and feel very strongly that our women must be educated in personal finance as part of a well rounded education. I teach a course in financial literacy appropriate for all majors, that covers among other things, pensions, 401k's, IRA's, asset allocation and how to evaluate mutual funds. Students, faculty administrators and alumnae support this effort. Unfortunately, this type of class is unusual and not commonly taught at most colleges and universities.

Thank you for highlighting the fact that the pitfalls of 401k's and employee directed retirement investing. It is disturbing that two employees at the same company can experience vastly different retirements depending on the investment choices each has made. Of course, most of the time, employees are financially illiterate.

Susan Vance
Notre Dame, IN

Dear FRONTLINE,

Why don't you give some guidance to answer the question "Can you afford to retire?" You are bashing industry, the banks and government but you are not helping your viewers. How much savings do I need? I thought there was one sentence about eight times my annual salary. Is that correct?

cedar rapids, iowa

FRONTLINE's editors respond:

Experts vary on how much, but 8 times is in the middle of the range. Some suggest ten times your annual pre-retirement salary, or even more when you factor in longer life-expectancies, health care costs and inflation. For more on this topic, please see the "How Much You Need to Set Aside Theme" and the article, "Why Does Retirement Cost So Much," both in the "Changing World of Retirement" section of the Web site.

Dear FRONTLINE,

Your focus on bankruptcy laws and railing against creditors with "Super Priority" detracted from an otherwise informative show.

The creditors with Super Priority are invaluable to the employees of the troubled company - their funding helps the employees get paid! Otherwise who in their right mind would lend money to a company in bankruptcy. The show did not require this bit of sensationalism to stoke the anti-corporate sentiment.

Russ Kiekhaefer
Midland, MI

Dear FRONTLINE,

I am a 57 year old Texan. At age 48, I was able to retire from the Employees Retirement System of Texas with 34 years of creditable service, which included my Air Force service during the Vietnam Era. I was able to qualify for a pension formula that equaled 76.58% of the highest 36 months of earnings I ever earned for life, whether or not these months were consecutive. The State of Texas pays my health care premiums for life, and I am a single man.I am a very fortunate man in modern day America (all the Americas.)

In 1974, I graduated from the University of Texas with a bachelor's degree in economics on the GI Bill, and finance and investment has become a lifelong hobby. I can still say today that I hold one out of six dollars that I've ever earned. My highest year of earnings ever was $35,439 in 1996. I have seven grand children and one great grand child. Last weekend, I went to the University of Houston to attend the graduation of my oldest grand daughter with a bba in bus mgmt (on the dean's list) and a second degree in economics (as a courtesy to me.) I assisted her financially, but she obtained the scholarships and most of her own financing. I bought my residence and a nearby cabin in the piney woods on owner-financed notes with little cash upfront during several of Austin's endless nosedive boom and bust cycles.I became active in mutual fund and common stock trading in 1990. Most Americans will never have the interest in doing the research online that I often do for 30 hours per week.

I moved into DRIP (dividend reinvestment plan) personal common stock ownership (outside of "street" ownership of one's own shares owned by a brokerage house) when I discovered for myself how high the total fee structure is in mutual funds whether or not you are realizing any gains.The last "universe" I have read about is some 8,500 mutual funds or more out there, and most of them underperform the 10.6% annual return that the stock market delivers over time. With the endless "disclaimers" that you find in every mutual fund prospectus, novice investors symbolically "walk the plank" as they are forced into shark infested waters without other than self-interested help.

I feel sorry for middle-income wage/salary earning US citizens who are watching their financial quality of life sliding lower and lower every year as they age and their health deteriorates.I am reminded of 1966, the year I graduated from Midland Lee High School, the same school that our president graduated from. 1967 was once used by the US Bureau of Labor Statistics to be the base year for US gross NATIONAL product performance (before gdp revisions.)High school buddies who had no interest in college arranged interviews in Dallas with General Dynamics, General Electric, Ling Tempco Vaught (sp), General Motors and many, many others. They came home with offer packages an inch thick to review with their parents, and all had multiple offers.Generous pension plans, profit sharing plans and fully company financed family health care plans. No one considered going to work for the State of Texas, as I did, but then few could foresee the form of "infrastructural osteoporisis" that Ross Perot warned us about in 1992.

Charlie Vines
Austin, TX

Dear FRONTLINE,

Thank you for your incisive discussion of this issue.

But you failed to stress one important point. You made continuing to work seem like a viable way for retirees to acquire the income they need. But due to age discrimination, many older citizens will not be able to continue working in their chosen fields. Some won't be able to get jobs at all. For others, the choices will be limited to jobs near minimum wage level, doing work for which they have no interest or expertise. That's not pleasant for an older person to contemplate, and I believe it contributes to the general feeling of economic insecurity in the U.S. today.

Judy Fischer
Louisville, KY

FRONTLINE's editors respond:

In the CHANGING WORLD OF RETIREMENT section of this web site, you might want to read the "Looking Ahead" feature (scroll down). In it, three experts on the U.S. workforce and retirement issues discuss what's ahead for retirees needing or wanting to continue to work. It's a mixed picture at the present time.

Dear FRONTLINE,

Thank you for your program and as a retiree of United with over 30 years I would like to say that if United would have required me to put in part of my wages into a retirement account when I started there, I would have. But they didn't tell us that. Our retirements were promised according to them.

From July of 1994 till 2001, United was making alot of money as the reuslt of the Employee Stock Ownership Program (ESOP) and the good times and could have funded our retirements the way they should have. But United chose not to because they could.

We employees who have retired don't have the time to go out and make it all over again while CEO Glen Tilton and upper management put away for themselves at the expense of the employees who have sacrificed so much for that company. Mr. Tilton has only been there for three and a half years and why he should be allowed four and a half million for his retirement is beyond me.

John Lathe
Magalia, Ca

Dear FRONTLINE,

Watching the Frontline special was like watching a car wreck--a complete disaster from which one cannot turn away.

I'm shocked at how people are "bewildered" by investment options, yet seem to have no problem shopping for cars, houses, and other multi-option purchases. Have Americans become so stupid, so lazy, that they cannot even read up on what a 401(k) is, let alone an IRA or an index fund?

I finally began saving for retirement last year (I'm 35 now), and I picked up a couple of "For Dummies" books on 401(k)'s and personal finance. I now contribute at least 25% of pre-tax income to my 401(k) (and place it all in a no-nonsense, self-balancing Fidelity target retirement fund). I also have a Roth IRA set up into which I invest $200/month (and I hope to max it out in a few months), and I also invest in one target retirement fund. Simple!

People, stop expecting someone to lead you by the hand and start taking some personal responsibility. Spend less, save more (come on, do you _need_ that plasma-screen TV; do you _need_ that Lincoln Navigator?), and learn a little about retirement options.

Once I learned about funds and investing (and, no, I'm no finance wiz--I'm an English major), it actually became fun and interesting, and it only took a little reading. There are many resources on the Internest as well--check out "Money 101" at the CNN/Money magazine website, for example. I'm not afraid of my retirement years anymore because I took some basic steps to learn a couple of things, and I'm so happy I did so.

To those who don't know how a 401(k) works--FIND OUT! To those who don't know what a mutual fund is--FIND OUT! If you can't bother yourself to take a couple of hours to do this, then the fault is all yours, and yours alone.

Vincent Martinez
El Paso, Texas

Dear FRONTLINE,

Dear Mr. Smith, Thank you so much for your insightful, timely, simply and logically presented documentary on 401(k)s.

I am a 42 year old, college educated, African-American woman, with less than five thousand dollars total in retirement savings, renting a small apartment in one of the world's most expensive cities, and living with a cat whom the Vet believes has perhaps two more years to live.

My current living and savings siutations may seem like a formula for retirement disaster, or at the very least, like a very sad story. And yet (i) San Francisco is one of the world's more politically progressive and diverse cities reflecting my political and spiritual values; (ii) although my retirement and savings plans have fallen prey to my plundering for emergency funds, from the information provided by your documentary I calculate that I need to save at least fourteen thousand a year in order to catch-up and stay current; and (iii) my cat, like my city, has blessed me with intrinsic and intangible lessons that only nature can grant.

When watching your documentary, I was cognizant of the states in which you conducted your interviews. If I'm not mistaken, the interviews were conducted in states with a lower costs of living rate than San Francisco, correct?

With that in mind, I realize that even if I caught-up in retirement savings, retiring in my beloved City is not an opption, but that doesn't necessarily preclude me from retiring in an area with a much lower cost of living rate.

So, I'm interested to know if you could provide me with information on cost of living rates in other states and/or countries, particularly those areas that would enable me to retire with security and comfort?

Thanks again for all your fantastic documentaries!

San Francisco, California

Dear FRONTLINE,

I was saddened to see some of my fellow United Airlines employees in your piece but no pilots. I would imagine that pilots do not seem to be one of the losers in this equation because many people believe we are so well paid as to not have lost significantly enough. Please let me change that perception.

Pilots are "married" to their employers and have virtusally ZERO portability of skills. For that every reason, pilots tend to give up pay to help the airline in times of need and expect to reap some extra rewards when the airline is healthy again. Every seems to remember the cart, but they forget the horse. This time around it is no different.

ALL pilots at United Airlines took a minimum 42% pay cut (most were in the low 50% range) to save the company in bankruptcy. AFTER that, the company THEN said they needed to take our pensions. SO, we have pilots who have worked at United Airlines for well over 30 years whose pensions have now fallen from the $100-120,000 promised them for the last 30 years, to the $28,851.12 promise of the PBGC, which is itself in the red to the tune of over $20B. That is a pension loss of AT LEAST 75% of their pension. For the rest of us, we have lost that much pension AND have to live on 50% less income in an era of health care cost transferrance, rapidly rising real estate costs (inclusing property taxes) and inflation at 4% while earnings rise at 1.5%.

Corporate America has been allowed to run amok for the past 5 years and the number of Defined Benefit Plans that have disappeared is astounding. Where does Congress think the demographic bubble known as the Baby Boom is going to get the money to live for 30 years in retirement? From their children who are being burdened with increasing costs for everything AND now their own retirement too?

I am not sure how this all ends, but I cannot see a happy ending anywhere. Perhaps one of the previous posters has the right idea and emigration is the answer, because the social compact in America is now considered "quaint" and out dated.

Thank you, as usual, for your excellent show. It is one of the few things on TV worth making the effort to see anymore.

Neil Swindells
Arlington Heights, IL

Dear FRONTLINE,

I think there should have been more emphasis on how retirement typically plays out differently for women than men.

In all that I have read, it is most often the widowed wife who ends up destitute in retirement. They have longer life spans and tend to marry men older than themselves, leaving them typically widowed for a significant number of years. They earn less than men during their working years for many reasons and as a result, the bulk of retirement money typically attaches to the husband. And finally, much of the retirement money the couple have is often spent paying for end-of-life expenses for the spouse who dies first, which is typically the husband, expenses such as out-of-pocket medical expenses, nursing care etc.

After the husband dies not only have the couple's retirement assets been seriously depleted, the wife, as the surviving widow is also left with a smaller monthly social security check than what she and her husband were receiving before he died.

There should have been an entire segment of the program addressing the specific challenges women face in retirement. The crisis of facing financial destitution in retirement is in large part a woman's issue.

Bente Pasko
Sammamish, Washington

FRONTLINE's editors respond:

We suggest you read the story by FRONTLINE producer Rick Young of the former LTV Steel worker and his wife ( in the "RETIREMENT STORIES" section of this web site-top of the page). It addresses many of the points you make about the difficult situation facing many retired/widowed women.

Dear FRONTLINE,

I found the program to be somewhat misleading in that one of the biggest benefits of 401k programs relative to traditional pensions was given little attention. 401k programs allow a worker to bring their retirement savings with them from one employer to the next, while traditional pensions do not. In this day and age where workers are more and more mobile between jobs and employers and cannot expect to work at the same place their entire career, this is a HUGE benefit.

I have already changed jobs several times in my life and would not have worked at any one of those locations long enough to have earned any pension benefit whatsoever were it offered. Traditional defined benefit pensions, for this reason, are hugely inefficient and badly structured for today's modern workforce.

Ken Thompson
Houston, TX

Dear FRONTLINE,

I'm 51 years old and have worked in the online information sector since the early 1980s. Like many of the people mentioned in your interviews, my retirement will be funded from a 401k and whatever is left of Social Security. According to the data you presented, I should be able to count myself among those who are on track to a decent retirement. But I'm still worried.

I think the problems with 401k plans are even worse than what you have described. For example, the 401k manager at my company has a record of picking stock funds that have tanked or have been implicated in mutual fund scandals. So the training we get on asset allocation is a joke. The problem I'm facing is not to make my pie look like something a professional money manager would create, but to pick out those funds I trust from the small number of choices I have.

In the companies where my friends work, I've heard horror stories about how they had no stable value funds where they could park their money during the market downturn -- or how they had to choose all of their funds from the same company, whose reputation was suspect.

I could go on, but my point is this: I wonder if my generation is in trouble becase we are captive to 401k plans that are so poorly designed and administered that the problem borders on criminal negligence.

Jean G
Columbus, Ohio

FRONTLINE's editors respond:

There is information on the pitfalls of 401(k) retirement plans and how they can be made to work better. Explore the WHAT YOU NEED TO KNOW section of this web site and the CHANGING RETIREMENT section for experts' views. The INTERVIEW with David Wray, a 401(k) advocate also offers analysis of the problem.

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posted may 16, 2006

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