For decades, Americans have viewed retirement as an American dream that ranks in the same category as home ownership. However, the Enron and Worldcom scandals, the subprime mortgage meltdown and the continuing recession have effectively forced many older workers to radically redefine their post-career years. (Are you on track to post-work bliss? We'll tell you how to find out. Read A Pre-Retirement Checkup.)

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Delaying the Dream
A study done by the AARP in 2004 revealed that over 75% of baby boomers planned to continue working after retirement. Although many of those polled at the time wanted to keep working primarily for emotional reasons, this has now become a financial necessity for millions of older workers. The Bureau of Labor Statistics has confirmed that the number of baby boomer workers who are still working full-time has almost doubled between 1995 and 2007. The Health and Retirement study in 2008 and 2009 also showed that an increasing number of older workers are delaying their retirements for various reasons.

Other Remedies
Not all older workers are dealing with the current economic climate by stretching out their tenures at their current positions. Many are also cutting personal spending in many ways, such as foregoing luxuries like new cars and vacation cruises. Coupons, sales, blood donation and garage sales have become common means of making ends meet in many older households. Memberships at discount houses such as Sam's club and Costco have also helped many retirees stretch their spending dollars. (We'll show you how to choose between Roth IRAs, Traditional IRAs and 401(k)s. See Which Retirement Plan Is Best?)

Starting Over
Many retirees who have not been able to hold on to their old jobs are also exploring new careers in fields such as sales, consulting and customer service. The customer service industry has experienced something of a rebirth in America in recent years, as the shift of call centers to other countries such as India has sparked a great deal of customer dissatisfaction. In an attempt to address this, some companies have turned to hiring retirees to work from home as independently contracted customer service representatives. Other firms are rehiring employees who have retired from consulting, even after buying them out early in some cases. Many retirees have also suffered serious setbacks in their retirement savings from the recent market fallout, and this has also forced many would-be retirees to remain in the workforce longer than they intended or desired.

However, depressed market prices and recent legislation have combined to make this a very attractive environment for Roth IRA conversions, since the taxable balances being converted are lower and the MAGI restriction on these transactions has been removed for the time being. Furthermore, the tax from any conversion done in 2010 can be spread over the next two years.

Many retirees are also devoting at least a portion of their resources towards paying down credit card debt; over $80 billion of credit card balances were paid off in 2010. The drop in real estate prices has also frustrated many who planned to sell their current residences and move into something smaller when they retired. The baby boomer generation has not been immune from the mortgage meltdown, and many older homeowners have found themselves upside down on their mortgages as a result of declining home values. All of these factors have combined to keep many older taxpayers in the workforce for at least five to 10 years longer than they anticipated.

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The Bottom Line
Those contemplating retirement now should keep in mind that the current economic climate will not last forever. The markets will eventually recover, and those who are willing to adapt and make sound financial decisions can still get a piece of the good life with a little luck. (It's not too late, but if you want to retire comfortable, you'll have to be aggressive. Check out 6 Late-Stage Retirement Catch-Up Tactics.)

For the latest financial news, see Water Cooler Finance: Canadian Takeover And U.S. Tax Breaks.

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