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Less bang for the boomers

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As a Pan Am stewardess in the 1970s and '80s, Cindy Hounsell assumed that her retirement would be secure. Even after the financially troubled airline froze pensions in 1982, she thought, "I have a pension, so I'll be just fine." Recalling her youthful naiveté, she adds, "I didn't know that you needed a lot more savings."

"A lot more savings." That's the sobering reality dawning on a growing number of current and future retirees as they confront the changing landscape of retirement. Longer life spans, combined with rising healthcare costs and declines in traditional pensions, are creating a gap between dreams and reality.

As a result, many of the 77 million baby boomers - Ms. Hounsell's generation - could face a reduced standard of living in the proverbial golden years.

"People can expect to live one-fourth or one-third of their life in retirement," says Jeffrey Brown, an economist and author of a recent study released by Americans for Secure Retirement. "That requires a lot of planning." The challenge, he explains, is to make a nest egg last a lifetime in the face of uncertainty about how long one will live and what future expenditures will be.

Boomers, in particular, appear at risk because of poor savings habits, faulty planning, and the fading away of pensions.

In the past, many retirees could count on a corporate pension to provide monthly income as long as they lived. Today, as companies shift to 401(k) programs, and as Congress considers privatizing Social Security, workers must increasingly take a do-it-yourself approach to retirement finances. Self-reliance is the new buzzword.

"In the world economy, we've seen whole industries slide into bankruptcy - steel, airlines," says C. William Jones, president of the Association of BellTel Retirees. "This has really transferred responsibility for people's financial future to themselves."


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