Rocky markets highlight retirement insecurity

By Pedro Nicolaci da Costa

NEW YORK (Reuters) - With Americans relying more heavily than ever on the stock market to fund their retirements, Wall Street's slide has some starting to worry they will struggle financially in old age.

Even worse, the housing crisis has reduced what employees are able to sock away, and some are even tapping their retirement money for everyday expenses like food and gasoline.

All this has reopened a debate over 401(k) retirement plans offered by many employers in the United States, which give employees responsibility to save for their own retirements and also some control over their investments.

"The 401(k) system today in the United States has been an acknowledged failure," said Alicia Munnell, director of the Center for Retirement Research at Boston College's Carroll School of Management. "It transferred all the risks and responsibilities from the employer to the individual."

The decline in the market has highlighted those risks. Share indexes on Wall Street have lost 14 percent of their value since hitting a peak in October. For someone retiring now with say, $500,000 in savings, that would translate into a drop of around

$70,000.

Peter Mitchell, a 65-year old former mechanic, is the kind of person who normally wouldn't give two cents about the market's ups and downs. But, having retired to New York city from California late last year, he is stressing about the effect of market volatility on his nest egg.

"You're going to see me out here on the street asking for change," he said.