Richard Rocco, 60, of Voorhees, N.J., planned to work as a sales representative until age 65. It hasn't quite worked out that way.
In January 2005, Rocco's employer, a graphics arts company, downsized and cut his position. Despite 27 years of sales experience, Rocco couldn't find a job. Employers "could get college guys for less than half of what I wanted to work for," he says.

Rocco, who's single, says he couldn't afford to retire. So he used his 401(k) savings and home equity to buy a PostNet franchise, which provides printing and graphics services. He enjoys running his own business, but the hours are long. Rocco puts in about 12 hours a day and has yet to draw a salary. He's living off his savings until his business gets off the ground.

Rocco's story could serve as a cautionary tale for boomers who think they'll be able to fill the gaps in their retirement savings by working longer in their current jobs. It also illustrates the challenges for those who assume they alone will determine exactly when they'll retire.

The stark reality is that most of today's middle-age workers who want to continue working after 60 or even 65 will need to find a new source of income. While nearly half of baby boomers expect to work past 65, only 13% of current retirees surveyed this year by consulting firm McKinsey & Co. actually worked past that age. Forty percent of current retirees were forced to stop working earlier than they had planned, the survey found. The average age when current retirees left the workforce: 59.

Boomers have a financial incentive to work past 65. Older boomers can't receive full Social Security benefits until 66 or later; those born in 1960 or later aren't eligible until 67. Individuals can start taking partial Social Security benefits at 62, but if they do, they'll continue to receive a reduced amount for the rest of their lives.

When retirement comes early

As of 2005, just 60% of 60-year-olds, 32% of 65-year-olds and 19% of 70-year-olds were employed, according to the Bureau of Labor Statistics. Current retirees cited two primary reasons for quitting sooner than planned:

•Illness. About 47% of current retirees who retired earlier than planned were forced to stop working because of health problems, according to McKinsey & Co. Less-affluent retirees were far more likely to cite health problems as the reason for forced retirement than higher-income workers were, the study found. "At lower-income levels, many of these people have jobs that require physical labor," says David Hunt, a senior partner at McKinsey. As they age, some are no longer able to handle the demands of their jobs, he says.

•Unemployment. Forty-four percent of current retirees who retired earlier than planned blamed job loss or downsizing. Unemployment was the most frequently cited reason for early retirement among retirees with more than $250,000 in investments, the McKinsey study found. "Even at reasonably high levels of pay, if you're laid off when you're 53 or 54, it's much harder to get retrained and back in the workforce," Hunt says.

Frank Baker, 57, learned three years ago that his company was laying him off after more than 12 years as a technology consultant. But to get $20,000 in severance, he says, he was asked to train his cheaper — and younger — replacement.

"I was one of the highest-paid guys, and then I found myself out interviewing for jobs and being interviewed by people in their late 20s," says Baker, who now works as a consultant and who believes his age hurt his ability to find new jobs at the same pay scale.

To test whether age bias is real or imagined, researcher Joanna Lahey sent out about 4,000 résumés to firms in Boston and St. Petersburg, Fla., and measured response rates from employers. The results: A younger worker is more than 40% more likely to be called for an interview than a worker 50 or older, according to the 2005 study done through the Center for Retirement Research at Boston College.

Another sobering statistic: The average period of unemployment in 2005 was 24.1 weeks for job seekers 55 and older, compared with just 17.8 weeks for those under 55, a report by AARP found.

"It's a huge issue, and it really comes down to, 'How do I, the established job seeker who is 50-plus, how do I establish my differential advantage so it distinguishes me from my younger counterpart?' " says Damian Birkel, a career counselor and founder of Professionals in Transition, a support group for the jobless in Greensboro and Winston-Salem, N.C.

Some frustrated late-middle-age workers have filed age-bias claims.

The federal Equal Employment Opportunity Commission collected nearly $78 million in settlements involving age-discrimination charges in fiscal year 2005, the most since at least 1992, when the agency took in $57 million. The EEOC received 16,585 charges of age discrimination in fiscal 2005 and resolved 14,076 similar claims.

Nearly 90% of executives are worried they may soon be discriminated against because of their age, and more than 60% believe age discrimination has become more widespread in the past five years, according to a 2005 survey by ExecuNet, a job search and recruiting network. Most believe age becomes a factor at ages even below 50. About three in 10 executives fear that age bias could force them into retirement.

David Ulfik, 55, of Oxford, Ga., who sells analytical instruments, says the concept of retirement has shifted drastically since his father retired a generation ago. He's had seven different jobs since turning 40.

When prospective employers check his résumé, Ulfik says, "They see this guy is 55, and they're apprehensive. You see these old-timers at Wal-Mart. Are they there because they want to be or because they have to?"

He adds, "I think there will always be jobs for seniors who want to remain in the workplace. Whether they are jobs that they want to work remains to be seen."

Frustrated by the dearth of good jobs, older workers are increasingly becoming independent contractors or starting their own businesses.

Among workers 50 and older, 16% are self-employed vs. 10% for the overall workforce, according to a 2004 AARP study. About one-third of older self-employed workers started their businesses after 50, AARP said.

Self-employment allows older workers to put their years of experience to use. It usually also offers more flexibility than a traditional job. Fifteen percent of self-employed workers 51 and older reported having a health condition that limited the type of work they could do, compared with 8% of salaried workers in that age group.

Still, older workers who start their own businesses face a serious challenge: finding health insurance. Only 13% of private-sector employers offer health benefits to retirees. Medicare doesn't kick in until 65. Private insurance policies are expensive for older individuals. And some older workers can't buy insurance at any price.

That's what Richard Rocco discovered after he lost his job. Otherwise healthy, Rocco was unable to buy a private insurance policy because he has high blood pressure. He maintained his insurance coverage for a while through COBRA (the Consolidated Omnibus Budget Reconciliation Act). COBRA lets workers keep their former employer's group coverage for up to 18 months. But to keep the coverage, Rocco had to pay $500 a month.

After starting his business three months ago, Rocco was able to buy a group policy for himself and his sole employee. The cost: about $1,000 a month.

Growing demand?

Some analysts, though, see cause for hope. They think job opportunities for older workers will increase as boomers retire in large numbers.

Employers are expected to face a skills shortage in coming years, and baby boomers provide a varied and experienced labor pool. Over the 2004-14 decade, total employment is projected to rise by 18.9 million jobs, or 13%. Over the previous decade (1994-2004), total employment grew at the same annual rate and rose by 16.4 million jobs, according to the Labor Department.

Tim Driver, CEO of Wellesley, Mass.-based RetirementJobs.com, a job service for mature workers, says he's optimistic that employers facing skills shortages will eagerly welcome experienced workers. While age can be a liability, he says, it can also be an advantage.

"If you are an employer and your customer base is getting old, you're much better off having older employees relate and sell to that customer," Driver says. "Historically, you'd never use retirement and jobs in the same sentence. Now, it's an everyday expression."

In addition, boomers are more educated than previous generations and more likely to hold white-collar jobs. "For them, the odds of having to retire early because of health problems are less than for somebody who has been doing physical work," says John Rother, policy director for AARP.

But there are also major hurdles. More experienced workers command fatter salaries, which some employers will be loath to pay. They're also more likely to have health problems, which place greater demands on company-provided health benefits.

AARP, which advocates on behalf of older Americans, disputes the notion that older workers are more expensive. A 2005 study conducted by Towers Perrin for AARP contends that the additional cost of retaining workers 50 and older is modest, ranging from zero to 3% a year. Those costs are much lower than the cost of hiring and training new employees, the study said. The study was based on an analysis of four industries — energy, financial services, health care and retailing.

The study acknowledged, though, that companies are slow to adapt to an aging workforce. Instead of tapping this labor pool, employers may turn more to outsourcing or push for relaxed immigration rules to fill hiring needs, says Sara Rix, a senior policy officer at AARP. "Things are changing, and more and more (companies) will turn to older workers," Rix says. "But age discrimination does rear its ugly head. If you leave the labor force, getting back is difficult. Bagging groceries may be all you get."

'Old man on the sales force'

Larry Yoder says he feels lucky. At 62, the Kansas City, Mo., salesman, who provides books to stores, is one of the oldest on the sales force. He says his employer values his experience. "I'm the old man on the sales force," Yoder says. "I can't do what I used to do, but you do what you can do. (Travel) is a killer on you physically."

He says friends in his age bracket haven't fared as well. Many say they want or need to stay employed after they hit retirement age. But there's a palpable fear that well-paying jobs may not exist for them then.

"There's no sense of retirement like my parents had," Yoder says. "You work 'til you drop. I hear a lot of fear that their bosses are going to let them go."