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Retirement in tough times

By Jennie L. Phipps ·
Sunday, November 13, 2011
Posted: 6 am ET

I live in a little town in Michigan, which has been hard hit by the state's economic problems, making retirement planning a crap shoot for some of its residents.

When I went to vote last week, the mayor, who was up for election but running unopposed because nobody wants the job, was standing outside the polling place looking glum. Like half of the rest of the people in this Lake Erie waterfront community, he's a retired Ford Motor employee. This will be his second two-year term as mayor. He has waived his already small stipend, and in my view, he deserves a medal for that as well as for making unpopular decisions.

In order to keep the town from having to go bankrupt, no vacant police, fire and municipal jobs have been filled in the last two years, and almost every service has been trimmed. Volunteers have taken over some aspects of maintenance and beautification of our waterfront.  There used to be a senior discount on property tax bills for residents 65 or older, but that has ended. There was a lot of angst when it happened because it raised taxes on some people's property in this modest community by more $1,000 a year. But the State of Michigan said eliminating this discount could be done without a referendum and urged our town to take this step because otherwise we would be facing state takeover.

The economic problems that plague my town aren't all that complex. There's a steel rolling mill within our borders that used to pay millions in taxes. It's still operating two shifts a day, providing steel to the automotive industry, but technology has reduced the need for workers from thousands to dozens, and, likewise, the tax bill has shrunk. Recreational boating that once kept hundreds of marinas, restaurants and maintenance businesses thriving has shriveled in the face of unemployment and high gas costs. On top of that, while we have almost no vacant and foreclosed homes in our community, the values have declined significantly, and that has devastated tax collections.

The major says all of this economic turmoil would be fairly manageable, except for one issue: the high and uncontrollable cost of promised retiree medical care for police, fire and municipal employees already living in retirement. He believes the town can eliminate one -- maybe two -- more positions and continue to consolidate some services with nearby communities, but within two years that's not going to be enough. Unless there's some huge and unpredicted turnaround in our economy, the town is going to have to renege on paying for retiree medical. If we don't do it, the state will do it for us.

These retirees will continue to get Medicare, but losing money that pays for other things will be a big burden for many. Time will inevitably reduce this problem, but in the meantime, it promises to be painful. We're just one little town, but we're not unique. It's clear that for many of us, retirement isn't going to be what we thought it was.

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November 14, 2011 at 8:56 am

And this is exactly why I KNOW that I'll never be able to retire. The American Dream is quickly dissolving as it gets flushed down the drain.

Michigan is just a small sample of what the rest of the U.S. is going through.