Retirees hit by "longevity risk"

By Tom Brown

MIAMI (Reuters) - Like many other elderly Americans, Edie Stark has been hard hit by the meltdown in U.S. financial markets. She is 84 and has been worried a lot lately about outliving her savings.

A retired nurse, Stark is a prime example of what financial planners coldly call "longevity risk," a reference to the need for a secure income and lasting savings at a time when growing numbers of Americans can live for 30 years in retirement.

Life expectancy in the United States has already reached a record high of 77.8 years, up from 70.8 in 1970, according to the U.S. National Center for Health Statistics. Fueled by continuing health gains, the U.S. Census Bureau projects life expectancy in the world's wealthiest country will reach 79.2 years by 2015.

Stark said she and her husband had seen more than 50 percent of their retirement assets wiped out since the stock market started tanking several months ago.

She still plans to see out the end of her days with her 88-year-old husband at the Palace, an upscale retirement complex where they live on the palm-fringed southern outskirts of Miami.

She acknowledges that may not be possible, however, as her life savings vanish.

"I have fixed expenses so I can add it up and tell you how many years we can live unless the market comes up," said Stark.

"We wanted to have money to leave our children. That's not possible anymore," said Stark, whose husband suffers from dementia and is cared for in an assisted living facility at the Palace.

Dorie Ryder, 89, a retired school teacher and neighbor of Stark's at the Palace, said she had lost about 25 percent of her assets to the recent stock market downturn.

She has fond memories of better times when she and her husband lived just a block away from the home of former President Richard Nixon on nearby Key Biscayne.

But Ryder said she is now contemplating a move into a Miami-area apartment, where she'd live alone but pay less rent than the $3,500 she forks out monthly at the Palace.

"I just do the best I can and I'm worried," said Ryder, who has a small pension. "I don't know how long I'll be able to stay here."

Coping with financial fears is not unique to the elderly, especially at a time of record home foreclosure filings, crumbling real estate values and rising unemployment.

It can be especially painful for the elderly, however, even for those who are still a long way from being destitute.

"Money anxiety when you're older is just different than when you are young. You don't have a chance to recover," said Teresa Ghilarducci, a retirement expert and professor of economic policy analysis at New York's New School for Social Research.