Return to Transcripts main page
CNN Sunday Morning
Interview With Amanda Walker
Aired August 04, 2002 - 09:14 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CATHERINE CALLAWAY, CNN ANCHOR: More and more Americans are working past retirement age, some perhaps because they want to, but others because they have to, due to the anemic economy and the dwindling pension plans that they have. "Consumer Reports" addresses the issue of working past the issue of 65 in its August issue.
So to talk about all of this, we have associate editor Amanda Walker. She's joining us this morning from New York.
Thanks for being with us, Amanda.
AMANDA WALKER, CONSUMER REPORTS: My pleasure, thank you.
CALLAWAY: As you know, we've been soliciting some e-mail out there from people. And they have really been frightening us this morning.
WALKER: Oh, yes.
CALLAWAY: Some very frustrated seniors out there.
WALKER: Sure.
CALLAWAY: A couple of them I want you to hear before we move forward.
Here's one from Duane "Up until President Bush became president, I was gainfully employed in a good job. Now at the age of 58, I find myself without a job and the future very bleak...I've had to use what 401(k) savings I had, plus all the personal savings as well. Had to declare bankruptcy to save my home. And IF I GET A JOB, retirement now looks to be at the age of 85."
WALKER: Oh, Lord.
CALLAWAY: Now political statement aside from Duane, he is not alone in this situation.
WALKER: No, he's not.
CALLAWAY: But are we talking about people working until 85? When is retirement age these days?
WALKER: Well, hopefully, not quite that long, but more and more people are having to work past age 65. And as you say, to a large degree, it's because of these anemic retirement accounts. We've all seen what the stock market's done to our accounts over the last couple of years. Let's not even talk about what's happened in the last month.
The estimates are that are well over 40 million folks over age 65 still in the work force. And that's up significantly from the last couple of decades. And it's expected to continue to rise. And one reason, of course, is just that that age group is going to continue to swell, but certainly, it's because they need to bulk up their accounts.
CALLAWAY: Right. And also, people are, you know, like I know that I'm going to probably have to work in some form or fashion past the age of 65. I can't imagine, you know, I've seen how it's happened with my parents. You just -- you plan on things. It never goes quite as you planned. Let's go to one more e-mail.
"Yes, I'm working full time and I am past 65, so how can I retire? I can't afford to live on Social Security." Who can?
WALKER: Yes, that's a really good point. I mean, you really want to plan ahead as much as you can and think about the fact that you'll probably in the work force longer. And you have to think about things like do you want to continue to work for your current employer? Do you want to switch jobs? Can you afford to go part-time? Do you want to stay full-time? So it's something you really want to think about ahead of time now.
CALLAWAY: Let's talk about some of the reasons why you might want to work, even -- you know, even if you're thinking I worked all my life. I'm so tired. We've gotten questions from people, you know, say they've been working since they were 13. They're tired of working. But let's talk about the benefits of doing it. Should you stay with the employer that perhaps you were with all along? Or you know, what benefits are there?
WALKER: There are some good reasons to stay with your current employer. A lot of that has to do with when you want to take withdrawals out of your account. For example, you want to defer taking accounts from tax-deferred plans as long as possible. If you stay with your present employer, you can do that. That's under a new law. In fact, you can -- don't have to take withdrawals from those accounts until you actually do retire. You'll also be able to keep up any health care coverage you've got. And you won't have to wait to qualify for a new plan if you switch employers.
CALLAWAY: Right.
WALKER: Or to wait to join their retirement plans.
CALLAWAY: Now those sound like some great benefits. But not everybody's able to keep working at the job that they've had through most of their career. What about the tax-deferred plans that you talk about? Is there a penalty? I mean, what is the best advice on which accounts you should stay in and which ones you should start withdrawing from?
WALKER: Yes, as far as Social Security goes, or a traditional pension plans, you want to start withdrawing from those plans when you qualify for your full benefit.
CALLAWAY: Right.
WALKER: For instance, in the case of Social Security, we give an example in the magazine of someone who'd get about $1,000 at age 65. You'd get more if you waited until age 70, because it's based on your life expectancy. But if you get about $1300 a month. In fact, it's like a little over that. But it would actually take that 70-year old up to age 85...
CALLAWAY: Right.
WALKER: ...to accrue the same pot that the 65-year old would get from starting to take benefits right away. So it makes sense to take those benefits right from the beginning, when you first qualify. As far as your defined benefit plan goes, those traditional pension plans, that's a set amount. So you'll want to start taking that as soon as possible too, because you'll get paid longer.
But the tax-deferred plans, you want to put off as long as possible, because for one thing, you'll have to start paying taxes on those plans. You want to avoid that. And for another thing, the reason you're still working is you want to bulk up those plans.
CALLAWAY: Right, and it's complicated issue. It almost seems that these days, seniors have to look at it every year and see where they are, right?
WALKER: That's true. It's a good idea to keep track of those accounts. You can get that information from Social Security and from your employee benefits department.
CALLAWAY: Seems like it's a lot harder to retire than it used to be, Amanda.
WALKER: It is. You really do have to plan ahead.
CALLAWAY: I know. Amanda Walker, thank you for being with us. And thank you for your information.
WALKER: Sure.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
