NEW YORK (CNN/Money) – For years, Donald and Paulette Scarry dreamed about the massive road trip they'd take across the country when they retired. Their stops along the way would include the jazz joints of New Orleans, the vast sweep of Texas, and northern California's lush wine country.
They planned to hit the road when they both turn 62 -- just next year.
Scarry, a self-employed economist who has stashed his retirement savings in the stock market for decades, estimates that up to half of his nest egg has been lost during the past two-and-a-half years. Paulette is a manager at an ad agency.
"Will we work until we're 68? I don't want to," he said. "I like my work and so does my wife. But I want to do something else."
He's not the only one shelving retirement dreams.
- More than four out of 10 wage-earners believe they'll have to postpone retirement, and 25 percent are "very worried" they won't have enough money to quit, according to a recent study by Gallup Poll.
- Three in 10 individuals over age 60 who are already retired feel "not at all confident" or "not too confident" that they have enough money to live comfortably throughout their lifetime, according to Employee Benefits Research Institute (EBRI).
- Some 1.6 million individuals between the ages of 55 and 65 re-entered the workforce from June 2000 to June 2001, according to the Bureau of Labor Statistics. In fact, the only age group of workers that's growing is that of workers who are 55 or older. Their ranks -- some 30 million strong -- rose 8 percent over the past year.
"People who have been let go are using their retirement savings to fund themselves during a long job search," said Patricia Berg, general manger of career management services at Personnel Decisions International in Minneapolis. "I had a woman in my office the other day who had to sell her home. She had used all her retirement dollars. Now her fear is she has less time to accumulate savings" when she does return to work.
But this grim picture is just part of the equation. And while quitting work to spend the rest of your life cruising through Europe or perfecting your chip shot may seem a distant dream, there are strategies you can make to maximize your chances of a comfortable retirement.
It's not that bleak
Start with saving. Today, one in four workers who stashes money into a 401(k) has less than $5,000 salted away, according to Hewitt Associates. Even if you don't plan to while away your golden years in high style, you'll need a lot more money than that.
The good news is that you can save more tax-free than ever. And those who are nearing retirement have the added benefit of being able to stash away more than others. This year, employees who are 50 and older can save $12,000 in their 401(k), 403(b) or 457 plans in 2002; for everyone else, the limit is $11,000.
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You can also salt away more than ever in a traditional IRA or Roth IRA -- up to $3,000 ($3,500 for older workers). So set a savings goal that's based on some realistic expectations about your earning power, your age, and the kind of life you envision for yourself after you leave the workforce. (To find out how much you'll need, click onto our retirement calculator.)
If you've been saving, make sure you've got the right mix of stocks, bonds and cash to meet your goals. Just 19 percent of wage earners actually tweaked their 401(k) plans last year, down from about 30 percent the year before. With stocks shedding their value, that means they could be more heavily laden with bonds, which may seem comforting now but may not provide enough juice for your savings over the long haul. For tips on how to best allocate your assets, see "The bears mauled your 401(k). Now what?" and Retirement: Plan B.
Of course, there's no denying that playing catch-up is going to be more difficult for older workers. Some may well wind up working longer than they had originally planned. Others may find that easing into retirement with part-time work may be the best mix of all.
In fact, those searching for phased-in retirement may find that an increasing number of employers are willing to accommodate a flexible work schedule.
"Over this next decade there will be more people reaching retirement age than joining the workforce," said Robert Critchley, author of the recently released Rewired, Rehired or Retired. "So when we get back to a stable work environment, employers will have to develop strategies to retain mature workers, who may be looking for part-time work or job sharing."
Consider the case at MITRE Corp., a Massachusetts firm that provides technology research for the Department of Defense, the Internal Revenue Service and the Federal Aviation Administration. Because of the highly technical nature of its work, MITRE has long been reluctant to lose valuable employees with years of experience and in-house knowledge.
"We're becoming aware of the fact that demographics and Baby Boomers will be retiring," said Carolyn Brownawell, the company's executive director of human resources. "The longer we can retain some of that knowledge the better."
So MITRE has developed several programs to encourage senior staffers to retire gradually -- and even return to work on a project-by-project basis. These efforts have earned an award from AARP. Among the company's programs is "Reserves at the Ready," which brings company retirees as part-time mentors.
Those who do sign up for the Reserve program, such as 68-year-old mechanical engineer, Ronald Coleman, agree to have their resumes posted on MITRE's internal company Web site. Division managers search for pros to "fill in the blanks" when the need arises.
Coleman, for example, has been asked back to work three times to help work on military contracts because he has extensive experience analyzing a pricing military equipment. He says the part-time stints have enabled him keep up-to-date with technological advances in his field while passing his knowledge to less-senior employees.
"I worked closely with the younger staff people and I think I broadened their experience," said Coleman. "That was rewarding."