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READY - OR NOT TODAY'S CUTBACKS AND LAYOFFS HAVE END OF A CAREER SNEAKING UP ON OLDER WORKERS.

Byline: Evan Pondel Staff Writer

Paul Skonberg didn't plan for an early retirement, but he had few alternatives when his employer announced layoffs a couple of years ago.

``I was cut,'' said Skonberg, 58 at the time and at least eight years away from qualifying for his full pension benefits.

It presented a quandary for the technical illustrator. He was too young to enjoy retirement and too old to start fresh in his field.

So Skonberg got a part-time job at Home Depot.

``I'd been looking to get back into the graphics industry for a couple years and thought maybe this would be a better option to supplement the income loss,'' said Skonberg, who took a job in the garden department at a store in Rancho Cucamonga three months ago.

Those nearing retirement are finding themselves in a similar situation as the once-elusive nest egg comes into focus and years of retirement planning prove fruitless due to the loss of a job or simply not having enough money to retire.

Retirement could last several decades these days, requiring a game plan that goes beyond what's already expected from Social Security and savings accounts.

Workers who rely entirely on their 401(k) retirement plans and Social Security will only be left with about 57 percent of their pre-retirement income should they have to pay the full cost of retiree medical benefits, according to Hewitt Associates, a human resources consulting firm in Chicago.

That's why it isn't unusual to hear financial planners advising their clients to find second careers post-retirement.

``Sometimes it's necessary, especially if you want to have a similar quality of life,'' said Carlos Bolanos, a certified financial planner in Claremont.

Retailers are also seeing employment potential among retirees. Last year, the AARP and Home Depot teamed up in an attempt to hire more seniors.

``We try to make seniors aware of jobs here because they are usually knowledgeable and have the dedication to accommodate our needs,'' said Katherine Gallagher, a spokeswoman for the home improvement company. ``We've had former policemen and, of course, contractors that have come to work for us.''

Gone are the days when sound retirement planning would allow retirees to focus on hobbies and vacations instead of part-time employment. But approaching retirement with enough financial know-how can certainly help reduce the need for a second career, Bolanos said.

Of the most important strategies when planning for an impending retirement, the top priority should be maxing out and catching-up 401(k) retirement plans and Individual Retirement Accounts.

``Only about one out of 10 people are maxing out their 401(k)s,'' said Bill Odell, a vice president and branch manager of Fidelity Investments in Woodland Hills. ``So that means you have to immediately look at how much money you've saved so far and how much you're going to need to save for later on.''

Mutual fund companies are attempting to simplify investors' lives by offering preset asset-allocation products. For example, more employees now have the option of signing up for 401(k) plans that invest in funds according to the employee's desired retirement age. This kind of autopilot investing has its benefits, but investors shouldn't necessarily mix the funds with other investment options in a 401(k) plan.

``There should be a mix of investments that fit your retirement readiness,'' said Odell, also noting that older investors should gravitate toward less risk averse investments such as bonds.

Though many analysts argue that traditional 401(k) plans, as invested by employees, will not meet retirement goals, there are two types of preset asset-allocation investments that may offer a possible solution: target retirement and life-cycle funds.

The biggest difference between the two is that the latter allows the investor to determine how aggressive he wants to be, according to Lipper, a mutual fund research company. Target retirement funds are more of a cruise-control approach to investing in retirement.

Both forms of retirement investing are proving popular for future retirees. At the end of December 2004, the funds combined held $139.7 billion in assets under management, equaling a 38 percent increase when compared with 2003.

Despite the myriad options when it comes to investing in retirement, Bill Weber, 58, takes a more simplified approach. He plans on retiring in five years and has calculated that he will have enough money to live on without sacrificing his quality of life.

``But I had to play catch-up to do that,'' said Weber, whose Claremont-based company was acquired several years ago, forcing the construction executive to re-evaluate his retirement plans. ``We no longer could depend on the pension we'd been expecting.''

Fortunately, Weber's employer allows for ``catch-up contributions,'' a pretax contribution that exceeds the limit on 401(k) plans. The option is open to those 50 years old and over, with 2005 catch-up contributions hovering at $4,000.

Regardless of whether or not an employee qualifies for catch-up contributions, Bolanos said people often underestimate future medical costs. Skonberg, who was recently diagnosed with prostate cancer, receives health benefits via his wife's job. But he'll likely sign up for Home Depot benefits at the end of his probationary period.

He considers himself fortunate, considering surgery to remove his prostate would otherwise ratchet up his medical expenses. Fidelity estimates that a couple retiring today at 65 should plan on spending at least $190,000 out of pocket for medical expenses.

At the same time, the investment company estimates today's 45-year-olds could end up paying twice that amount.

Jean Merrill, 48, isn't concerned about medical expenses just yet. The third-grade teacher from Upland said she's at least eight years from retirement.

``We haven't met with a financial planner, either,'' said Merrill, who confesses that her engineer husband seemingly has everything under control. ``The only time we talk about retirement is when we're on vacation.''

According to Fidelity, two-thirds of pre-retirees have not developed a budget for their retirement. ``And it's essential. You have to figure out how much it will cost you to make that house payment. You have to factor future taxes and insurance,'' Odell said. ``And finally, after all of that, you'll want to ask yourself, 'Am I going to have enough money to go on a cruise around the world?'''

Evan Pondel, (818) 713-3662

evan.pondel(at)dailynews.com

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(1 -- 2 -- color) Paul Skonberg unloads a pallet of flowers in the Home Depot garden department in Rancho Cucamonga, where he has a part-time job.

Walter Richard Weis/Staff Photographer
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Title Annotation:Business
Publication:Daily News (Los Angeles, CA)
Geographic Code:1USA
Date:Jul 31, 2005
Words:1082
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