Insecure Retirement

May 2 -- Frank and Louise Bonacquisti know they will not be able to afford the retirement they wanted.

"We did the smart things and unfortunately the smart things were not good enough," says the 62-year-old former Navy man whose military pension of $25,000 a year seemed adequate 15 years ago.

Today that's barely half his income. The Poulsbo, Wash.-resident hoped to supplement his pension with the $500,000 he'd saved in his 401(k). But that lost half its value when the stock market collapsed.

Financial planners say to live comfortably in retirement, you need enough savings to guarantee 75 percent of your pre-retirement income for at least 20 years, assuming you retire at 65.

But now a new study comes to a grim conclusion — by that yardstick, the majority of Americans will not have enough money to maintain their standards of living in retirement.

Shift Away from Pensions Hurt Many

An especially alarming finding in the study is that Americans' nest eggs shrunk even during the stock market boom. Between 1983 and 1998, when the Dow Jones industrials rose 777 percent, the median retirement wealth of Americans fell 11 percent, from $197,000 to $175,000.

Some simply didn't save enough. Others invested their savings badly. The bottom line, according to the study, is that the shift away from company-managed pension plan — to self-managed 401(k)'s — has hurt many people.

Explains Christian Weller of the Economic Policy Institute, which published the study: "The traditional benefit plans are safer in terms of retirement savings because … the individual will get a monthly benefit that is guaranteed by the employer, whereas with a 401(k) plan the individual is basically by himself."

Feeling very much on her own is 54-year-old Karen Zarky of St. Louis. She is among the 25 percent of Americans with neither a traditional pension nor a 401(k). For the last 10 years, her … savings, now about $100,000, have taken a back seat to putting four children through college.