By DOUG WILSON
Herald-Whig Senior Writer
Kevin Payne expects to work for the rest of his life because he lacks the retirement savings needed to supplement what he will receive from Social Security.
"I had certainly intended to start my savings at a younger age, but I've just started to save in the last 10 years," he said.
The 53-year-old Quincy man will have plenty of company as large numbers of baby boomers -- the 78 million Americans born between 1946 and 1964 -- find that their savings, pensions or other retirement plans are not going to be enough to cover their expenses if they quit work altogether.
Many have jobs that provide paltry pensions or none at all, as many companies have been moving toward less generous retirement packages in the past decade. Many boomers expect to work the rest of their lives because they have little cash put away for their old age and they worry Social Security won't cover their bills. Some hope to move to jobs that are less physically demanding.
Payne works as a weekend radio announcer for STARadio and drives for Railcrew Express, taking railroad crews to meet trains or picking up crews when their shifts end.
He hopes to keep working as long as his voice and his driving skills last. He also hopes to bring in money doing voice work for commercials and providing private lessons in music and voice. He's been painting church icons used by Eastern Orthodox churches and has been looking at other activities he enjoys that could help supplement his income after he starts collecting Social Security.
Mo Wang, co-founder of the Human Resource Research Center at the University of Florida, told the Associated Press it would be unfair to consider low-wage workers who lack retirement plans as slackers.
"People don't have adequate earnings. It's not because they don't want to save. It's because they just can't," Wang said.
Many people don't save enough for their own retirement because they lack financial literacy skills, Wang said. Also, he said it can be incorrect to assume that people with lower incomes have more financial concerns than people with higher incomes. Psychologically, the important thing is the ratio of life earnings to wealth -- how much money a person earns in a lifespan, compared with how much of it he or she gets to keep.
"Whether they have the 401(k) is not the decisive factor in influencing how well they live," Wang said. "Whether they have their own house is a big factor."
For homeowners, about 50 percent of wealth is typically tied up in the house and other investments, while a pension accounts for about 25 percent and Social Security accounts for about 25 percent, Wang said. For people who don't own their homes, particularly those who've worked low-income jobs, "Social Security is super important," he said. "Social Security is one way to pull them out of poverty."
People can receive full retirement benefits from Social Security between ages 65 and 67, depending on when they were born, and Medicare coverage at 65.
A survey conducted by the American Institute of Certified Public Accountants, supports Wang's research. It showed that nearly 40 percent of working Americans said they will never afford retirement.
Among those respondents, 56 percent said the reason they were not saving for retirement was that they were having trouble covering the costs of gasoline, food and other necessities.
Respondents also had trouble estimating how much savings they needed to retire at age 65 and live for 20 years. Most of those earning between $50,000 and $75,000 a year thought they needed $250,000 in savings, but that amount would run out in less than 10 years, the AICPA said.
"These statistics suggest we are on the verge of a retirement crisis in America," said Jordan Amin, chairman of the National CPA Financial Literacy Commission, in a written release.
"Americans don't know how to prepare for their twilight years, and many have put off figuring it out because they're struggling to make ends meet now."
Payne said his lack of adequate savings is a result of tight finances, not a lack of information. His parents emphasized savings and preparation for retirement. He also knew that saving is a good habit to start.
However, for some people, paychecks barely cover expenses.
"If I could go back and do it again, I'd try to save $100 a month, or at least save something," Payne said.
He knows people on both sides of the retirement divide. Some will have to work all their lives.
"I have a couple of friends who are like that. They don't even bother to think about it," Payne said.
Others have pensions or individual retirement accounts that will allow them to quit work and retire.
"I'm glad for them. Some of them say they'll keep working anyway," Payne said.
Bob Reich, a veterinarian and owner of Animal Medical Clinics of Quincy, is among those who plans to keep working because he enjoys his work.
"I get to play with dogs and cats every day. I kind of dread the day I don't work -- it's jumping into the unknown," Reich said.
Now age 65, Reich said he is fortunate to have a job that he loves and one that should not exceed his physical capabilities. He also has lived frugally and should have enough savings to last his lifetime.
Rodney Heimer with Heimer & Associates Accounting has worked with clients in all the baby boomer categories. Some say they can't afford to retire. Some plan to retire and others have the finances to retire, but hope to keep working.
"A lot of farmers say they won't retire," Heimer said.
Farming is often an asset-rich but cash-poor proposition. Heimer said many of his clients own farmland worth hundreds of thousands, even millions of dollars. Yet if those farmers want to pass the operation along to their children or grandchildren, the second and third generations may lack the funds to buy the land outright.
"A lot of these farmers have built up a legacy, and they stay involved to protect the assets they've accumulated," Heimer said.
Heimer has semiretired clients who are department store greeters or work at fast-food restaurants to supplement their incomes.
"I've got to give those people credit that they're willing to take a job and that they do not feel it's beneath them," Heimer said.
When he's counseling younger customers about saving for retirement, Heimer shares the common-sense advice that can be found in a variety of locations.
º The longer an individual invests or saves, the more compounding helps boost an account.
º If an employer offers to match a 401(k) plan, the worker should contribute at least enough to qualify for that match.
º Pension programs are becoming rare and employees need to take more responsibility for investing in their own retirement accounts.
º As investors age, they should move toward more conservative investments in order to avoid unnecessary risks of a stock market crash, a recession or a depression.
Heimer's most important advice is to save -- and plan -- for retirement. And the longer one saves, the better.
AT A GLANCE
The percentage of U.S. workers who are 55 and older has grown quickly and that trend is expected to continue, according to "The Oxford Handbook of Retirement 2013." Older workers represented 12.4 percent of the work force in 1998. That segment of the work force rose to 18.1 percent in 2008 and is expected to be nearly 25 percent by 2018.