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Pushing ahead - in spite of uncertainty. RETIREMENT PLANNING

By Thomas WattersonStaff writer of The Christian Science Monitor / September 18, 1987


If people were asked to list their major goals, a comfortable, enjoyable retirement would almost certainly be on most lists. Reaching that goal, however, requires astute planning, consistent saving, and wise investing. In the United States, it also requires a knowledge of the tax laws and how those laws affect retirement-savings plans, and knowing what pension benefits to expect. Unfortunately, frequent changes in the tax laws and major changes in corporate America have made retirement planning based on taxes and pensions a difficult and sometimes uncertain proposition.

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``There is no apparent national retirement policy,'' said Harry G. Graham, a lawyer with William M. Mercer-Meddinger-Hansen Inc., a benefits consulting firm. ``A hodgepodge of retirement policies has grown up over the years.'' That hodgepodge includes no fewer than four major tax bills in the last six years that have affected how individuals save for retirement or how businesses handle employee pensions.

Some of those changes came about because Congress did not anticipate the effect of earlier laws, says Mr. Graham, who was chief counsel on the Senate Finance Committee.

In 1981, he recalls, it was estimated that the expanded individual retirement account would cost the Treasury about $8 billion in lost revenues in the first year. But when 1982 figures were added up, the cost was closer to $18 billion. That's one reason last year's tax-reform law severely limited taxpayers' ability to deduct IRA contributions.

While the alteration may have been good for the Treasury, it was yet another case of people having their retirement-savings plans thrown out of whack. After all, banks, mutual funds, and insurance companies had printed all those tables showing how much people would have at retirement if they simply put away $2,000 a year. The tables being printed now show considerably smaller figures. The changing pension

Meanwhile, the once-reliable company pension is becoming a thing of the past. Companies looking for sudden infusions of cash have ``terminated'' their defined benefit pension plans (which guaranteed a certain retirement benefit based on years of service) in favor of defined contribution plans (where the employee contributes part of his or her wages to a retirement fund).

Other companies, fed up with the frequent changes in tax laws and pension regulations, have scrapped their pension plans altogether, leaving employees on their own to save for retirement.

Company mergers have also taken their toll. New corporate owners may not have as generous a pension plan as the acquired company had, which throws more uncertainty into the workers' planning process. And when mergers, bankruptcies, and cost-cutting result in layoffs, many employees find they haven't been able to build up enough time to get the full benefits.

Finally, many of the jobs being created today are in service-oriented businesses or part-time or temporary work, where there may be no benefits of any kind - insurance, vacations, or pensions.

``Companies are making greater use of part-time employees,'' Graham says. ``Small businesses are really getting away from having retirement plans.'' Lingering inflation questions

All this has left many future retirees wondering where their retirement income is going to come from, and how long it will last once they retire and have to deal with inflation and fixed incomes.