More Retirement Planning Is Needed

WASHINGTON, the corporate sector, and the American public need to focus greater attention on retirement planning (including the politically controversial issue of long-term health care), as the nation's population continues to grow older, say a number of experts on aging and retirement. Yet, many retirement experts add, most individual retirement plans - when they exist at all - are based mainly on social security benefits and traditional passbook savings accounts. Little thought is given to the life style of retirees - or the need for special long-term health care.

``But what we're discovering is that retirement, or growing older, is a different animal altogether than just involving money,'' says Kay Wright, a corporate training specialist with the American Association of Retired Persons in Washington. AARP is a public-interest group representing retired or older Americans.

``Retirement,'' says Ms. Wright, ``involves the use of time, programs designed to aid persons who need special care, as well as actually going back to work.'' Wright says one-third of AARP's 30 million members would like part-time work. ``Most formal corporate retirement programs, however, are based on trying to help people out the door.''

The need for a long-range evaluation of retirement planning has been underscored by several new reports released in recent weeks:

A study by Merrill Lynch & Co. finds that most Americans still do not prepare for retirement adequately; there is a major gap between what workers expect from their retirement years and what they will be able to afford. The lack of realistic planning is shared by corporations. Only about a quarter of all benefits managers at major corporations, for example, say the cost of long-term care is or will be part of company planning during the next five years. Two-thirds of the companies studied do not plan to provide long-term care programs.

Moreover, the study found, most pre-retirees invest in traditional savings plans such as passbook accounts. These are not suited to offset inflation or rising health-care costs, and are invariably inadequate for long-term health-care needs.

One-fifth of the employees studied say they have done little or no retirement planning. Such findings represent a ``warning flag'' about the inadequacy of current retirement planning in the United States, says John Steffens, president of Merrill Lynch Consumer Markets.

According to an innovative new study released by AARP and the Travelers Foundation of Hartford, Conn., there is a need for US businesses to provide far more attention to ``care givers'' - employees who provide assistance to another person, usually age 50 or over. The recipient of the help is very often an older family member who lives within the employee's household or nearby.

Although the care-giving issue would not seem to involve retirement, experts point out that the linkage will become more pronounced as the current crop of workers, including large numbers of women, move into their retirement years. (Many people who now need special care are women who never entered the work force, according to an AARP official.)

Care providers, however, are usually women who are required to be away from their jobs for significant periods of time. Moreover, 36 percent of the care givers, the study found, are men. Another 36 percent of the care givers are under the age of 35. The problem is that too few corporations formally aid employees in their care-giving activities. Moreover, many care givers, AARP found, have had to take leaves of absence from their jobs, go from working full time to part time, take early retirement, or give up their jobs altogether. Not only does this hurt productivity, but in many cases there is a loss of employment benefits caused by job status changes, the report concluded.

The study notes that further analysis is needed to find the impact of care giving on productivity and loss of job benefits.

Ironically, one financial plan designed to help offset long-term retirement and health-care costs has been played down in the past year: the individual retirement account. Congress, as part of tax reform, tightened eligibility requirements for a tax deduction based on contributing to an IRA. Part of the rationale was that IRA money tended to be ``transfer'' money rolled over from other forms of taxable savings (such as passbook accounts) into nontaxable, sheltered accounts, thus ``costing'' the US Treasury lost tax dollars. But a study by Merrill Lynch finds that up to 80 percent of the money put into IRAs in the 1980s was ``new money.''