Retirement at Risk
Whatever Happened to the Golden Years
One family wonders

BY MICHELLE ANDREWS

WHEN THE weather's good, Ed Beltram heads to the golf course near his
Colorado home almost every day. Most of the time, though, he   isn't there
to play a round. Instead, the 59 year old retiree is scheduling tee times
for others, washing golf carts and manning the counter in the pro shop. The
$7.50 an hour job has some perks: As an employee, Beltram. gets to golf for
free, a $45 savings every time he hits the links. Still, it's a job. And
after 31 years of working at one company to earn what he thought would be a
comfortable retirement, he never expected to be punching a clock.

It isn't what Sherry Beltram, 57, envisioned either. "It's so disappointing
that he even had to consider going back to work," she says. Unfortunately,
neither she nor Ed saw any choice--not after his 401(k) lost $250,000 in
what felt like a flash, and the company he'd worked for almost his entire
adult life suddenly stopped subsidizing the couple's health insurance premiums.

It seems everywhere she looks, Sherry Beltram without an income or pension
of her own and still several years from  tapping Social Security- runs up
against a daunting new reality. Her husband washing golf Carts instead of
driving them. Her 81 year old father watching his employer of 43 years drop
the death benefit that was to help support his wife if he left her a widow.
Her 33 year old son moving from job to job over the first ten years of his
career in the high tech sector, unable to save a dime.

FOR MILLIONS of current retirees - and for the 78 million baby boomers who
will eventually stop working--retirement has become almost a fantasy, not a
life stage you plan for. One example: More and more private companies can't
meet their obligations to those aging out of the workforce. In 2003, 155
under funded private pension plans were taken over by the federal Pension
Benefit Guaranty Corporation (PBGC). In 2004 that number rose to 192. The
surge is threatening the safety net for those who thought they had rock
solid benefits coming. For those who''ve never bad traditional pensions to
count on, shrinking 401(k)s and the issue of Social Security's long term
solvency make for an even bleaker outlook.

"We worry about my parents and we worry about our kids," Sherry Beltrain
says. "Will we be able to help them out if they need it?"

Ed Beltram still draws a decent monthly pension, but he and other retirees
have begun to question how much security they've got. And why not? They've
seen the foundation they thought they'd built for their later years being
chipped away They worry about Social Security's prospects. They feel
betrayed by changes to retiree health care coverage. They fear ex employers
may go bankrupt or merge with less friendly companies, putting their
pensions at risk.  They read about new accounting rules that could make it
harder for companies to meet their pension obligations in the future. And
they worry that the PBGC may not be able to keep up with the demand.

THREE YEARS AGO, Ed Beltram retired from Lucent Technologies, a
communications company spun off from AT&T
in 1996. Beltram. had been with AT&T and Lucent nearly his entire career,
mostly in Oklahoma City as a human resources manager in a factory making
telecommunications switching gear.

In its first years, Lucent was a Wall Street darling. Its stock kept
climbing, making plenty of investors rich and fattening the 401(k)s of many
employees- Beltrarn included. By 1998, he and his wife, reassured by their
healthy nest egg, took the first steps in their retirement plan.

They'd always dreamed of living in the mountains, so Beltram. took a job in
Lucent's Denver office and the couple built a home in Woodland Park, about
25 miles from Colorado Springs. The three bedroom ranch house sits high in
the hills, surrounded by pine trees, with a view of Pikes Peak. The $650
mortgage payment is a lot more than the $151 they'd been paying on their
Oklahoma City house, but between the pension they'd be receiving and their
401(k) savings, they didn't think they'd be stretched too thin.

THEN THE BUBBLE BURST. Between 1999 and 2002, the per share price of Lucent
stock plummeted from more than $64 to just 58 cents. Beltram, whose 401(k)
was heavily invested in company stock, estimates his losses at $250,000. By
2001, the company was trying to cut costs by offering attractive early
retirement packages to employees. Beltram took advantage of an offer that
added five years of service to his pension calculation, boosting his
monthly benefit check to $4,467 ($53,600 on an annual basis)  As an extra
sweetener, the company agreed to cover 90 percent of health insurance costs
for those who retired then--and their spouses, but only half for those who
continued working. The Beltrams decided the offer was too good to ignore.
"The main incentive was health care benefits," Beltram says. "We'd seen how
health care costs were rising, and we wanted to be protected."

After Beltram. retired, the couple got more bad news. Lucent eliminated the
health insurance subsidy for spouses. The Beltrams' monthly premiums rose
from $42 in 2001 to $516 in 2004. The extra $5,688 a year doesn't mean the
Beltrams can't keep a roof over their heads, but it leaves them with less
discretionary cash in their budget. Beltram's job at the golf course helps
fill in some of the gaps.

Sherry Beltram's father, Bob Rockel, is in a tougher spot than her husband.
In 1989, Rockel retired from his job as a shop floor supervisor at the same
Oklahoma City plant where Ed worked. He'd been there for 43 years. one
morning a few years ago, he and his wife, BettyAnn, were sitting around the
kitchen table and going through the mail. BettyAnn opened an envelope from
Lucent. Inside was a notice informing the couple that the company was
ending its death benefit--an amount equal to a retiree's annual salary at
retirement and payable to the spouse if the retiree died first. just like
that, the Rockels had lost $52,000.

"They left us high and dry," says Rockel, adding that if he'd known earlier
that Lucent would yank the benefit he would have bought a life insurance
policy. Now, he says, he and his wife are too old for an affordable
policy--and too old to go back to work as well. "I don't think anybody
wants a 79 year old working, adds BettyAnn, who was employed as an
administrative secretary for 10 years when her children were in college and
draws her own small pension. So they carry on, minding expenses and hoping
for the best. But, BettyAnn says, they're scared: "in the back of your mind
you're always wondering what's next. If they can do this, what else can
they do?"

Lucent spokeswoman Mary Ward confirms that the company has stopped
subsidizing health care coverage for some retirees' spouses, calling it
just one of many "very tough choices."
"We had to make some very difficult, but unfortunately necessary, decisions
to remain a competitive player in the telecom industry," she says, adding
that the rising cost of health care is a national issue, not one confined
to Lucent.
There was similar reluctance to dropping the death benefit for supervisory
employees like Rockel, adds Ward. Yet, "providing a death benefit is
unusual, and most companies long ago eliminated death benefits from their
retiree plans."
While they don't have concrete reason to worry, seeing their other benefits
vanish has the Beltrams and Rockels questioning how solid their Lucent
pensions are. Given the steady increase in companies defaulting on pension
obligations and with the PBGC posting a record deficit last year- their
anxiety is understandable. The agency isn't in immediate danger of
defaulting on pension payments it must cover, but some watchdogs argue that
it must increase the amount it charges employers to guarantee their
pensions- or face trouble. ,

Against this backdrop, many retirees have banded together to try to protect
their interests. As the communications director for the Lucent Retirees
Organization, for instance, Ed Beltrarn writes members of Congress about
the health benefit changes and has lobbied Lucent--so far unsuccessfully-
to audit its pension trust fund to reassure skeptics among its 125,000
retirees. Bob Rockel attends monthly meetings of a group of Oklahoma City
Lucent retirees called the Telephone Pioneers, and is considering joining
one of three pending federal lawsuits aimed at restoring the death benefit.

As for the younger generation, the Beltrams' 33 year old son Dustin has no
pension to protect. A designer of interactive software for a company in San
Jose, California, he's worked for half a dozen companies since graduating
from college. Only one offered a pension plan; the others had 401(k)s.
Hampered by waiting periods and vesting schedules, Dustin had saved just
$1,200 in a retirement account over ten years, and had to cash that in for
an urgent car repair.
Even if the plans had made it easier to save, Dustin says he couldn't
anyway. He and his wife, Bridget Dolan, laid off from her job as a Web
designer last winter, expect their first child in March. They're trying to
pay down high interest credit card debt and start a college fund for the
baby. To reduce expenses, they sold their house in November and moved into
a rental.

Ed and Sherry Beltram worry about Dustin and his brother, Cody, 30. Knowing
their children haven't been able to put money aside, in 2001 the Beltrams
bought a life insurance policy that will pay the boys a combined $1.5
million when Ed and Sherry die. The annual premium: $21,000.

To afford this and other expenses, the Beltram?s budget carefully. They
used to love going out to dinner. But when Ed turned 59 last fall, they
celebrated with lunch instead at The Cliff House, a four star inn and
restaurant in nearby Manitou Springs. (Lunchtime entries were about half
the price.) They need a new car, but can't afford one right now. "We were
hoping for retirement to be a time of comfort and ease," says Sherry. "Not
to live high, but not have to worry about what would happen next month or
next year."

Worry is the rule in the Beltram family. When it comes to his retirement,
Dustin knows he's on his own. "I don't really expect Social Security to be
there;' he says. "And especially after seeing what happened to my dad, I
know I can't count on a company to take care of us.? Once the baby is born
and the family pays off some of their debt, Dustin hopes to come up with a
retirement strategy. For now, his plan is simple: "I'm basically expecting
to work until the day I die."