WASHINGTON - Our nation doesn't just have a retirement problem, it has several of them.

Social Security and Medicare are unsustainable in their current form. Traditional pensions are going away, and people haven't saved enough on their own. A vicious bear market has eroded our 401(k) accounts.

Not only that, but the suggested remedies - work longer and save more - don't work for everyone. The number of unemployed people between ages 55 and 64 has risen 143 percent in the past year, and the number of jobless over 65 is up 73 percent. It's hard to work longer if you can't find work.

Even if you make it to retirement with a decent-size nest egg, medical costs may gobble it up. Fidelity Investments says the average 65-year-old couple can expect to spend $240,000 on health care during their retirement years.
Are there any answers to these big problems?

A stronger economy and a stock market comeback would help a great deal. Dallas Salisbury, president of the Employee Benefit Research Institute, calculates that if 401(k) accounts earn just 5 percent a year, most workers' accounts will be back to their December 2007 level within four years. That doesn't mean you'll have recouped all your losses, but it does mean that you'll have had time to replenish your account.

"The dynamics of investment return plus the power of new contributions are significant," Salisbury told a group of journalists recently at the National Press Foundation in Washington. "That doesn't make it easier. ... The need to work longer ends up being somewhere in the two- to four-year range for the vast majority of individuals."

Salisbury is optimistic that most people will make such adjustments, even as their employers become stingier. In the last 17 months, 188 large companies with 4.7 million employees have suspended their matching 401(k) contributions.

When Salisbury studied similar suspensions during the 2001 recession, he learned two things: Companies that survived the downturn eventually restored the employer match. And employees didn't just complain, they reacted by putting significantly more of their own money into the 401(k).

Some of our retirement problems, however, can't be solved by kitchen table decision-making. Social Security, Medicare and health care costs will have to be addressed instead at congressional committee tables.

Sen. Bob Casey, D-Pa., cautions that the issues will be tackled one at a time, and that health care will occupy almost all of Congress' attention this summer.

"Obviously, when you dedicate that kind of time, you are crowding out time for a lot of issues," Casey told our group of journalists. "There's no question that these issues on retirement security are being crowded out."

There's a case to be made, though, that retirement policy shouldn't be made piecemeal. Individuals can't plan adequately if they don't know what's going to happen to the big federal retirement programs.

Isabel Sawhill, a senior fellow at the Brookings Institution, goes even further. She says the nation needs to forge a new social compact, encompassing tax code changes and educational funding as well as retirement policy. Older workers and retirees may have to give up tax breaks and accept less-generous benefits, she says, in order to invest more in the young.

Today's children, after all, will be the tax-paying workers of the future. One way or another, they're going to have to finance the baby boom generation's golden years.

If we don't invest enough to make those kids the best-educated, most productive generation in history, then we really will have a retirement problem.

David Nicklaus  is a columnist for the St. Louis Post-Dispatch. Readers may write to him at: St. Louis Post-Dispatch, 900 North Tucker Blvd., St. Louis, Mo. 63101, or e-mail him at  dnicklaus@post-dispatch.com.

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