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Many of LTV Steel Mining's 3,500 former workers and retirees in northeastern Minnesota will see their retirement benefits significantly cut when the federal government takes over their pension plan Sunday. The Pension Benefit Guaranty Corp. said Friday it will assume control of the bankrupt LTV's pension plans, the largest federal takeover of a corporate pension plan. LTV's three pension plans cover 82,000 workers and retirees, including the 3,500 in Minnesota.

LTV Corp., once the nation's third-largest steelmaker, owned LTV Steel Mining in Hoyt Lakes, Minnesota's second-largest taconite operation. It closed in January 2001, jettisoning 1,400 workers. By the end of last year, Cleveland-based LTV had collapsed completely, idling its steel mills in Ohio and Indiana. LTV's three pension plans are underfunded by about $2.2 billion. The pension plan for LTV Steel Mining Co. alone is short by about $70 million, according to the PBGC, which is a pension insurance program funded by employers.

The older a person is, the more likely he or she will continue to receive a full pension benefit when the PBGC takes over. Under federal law, workers retiring in 2002 at age 65 are eligible for a maximum $3,550 monthly benefit payment under a PBGC-run plan.

But because of federally mandated limits on what the PBGC can pay out, many LTV workers and retirees will face benefit cuts. Some workers who retired within the last five years will lose as much as $400 a month in pension benefits, said Jerry Fallos, president of United Steelworkers of America Local 4108 in Aurora.

Workers laid off when the plant closed will lose even more. For instance, one 50-year-old employee with 27 years of experience would've been eligible for $1,800 per month under the LTV plan, but now will get only $1,200 per month, said Fallos, whose local represented LTV's hourly workers in Hoyt Lakes.

Many other veteran LTV workers who are still in their 40s or 50s stand to lose around 50 percent of the benefits they had accumulated under the LTV plan, Fallos said.

The PBGC is taking over the plans because no buyer of LTV's assets has agreed to also take on the company's pension plans. Plus, LTV itself is going out of business and will no longer be around to run the plans and pay out benefits.

The takeover is the federal agency's largest since it assumed the $841 million pension plan of the bankrupt airline Pan Am about 10 years ago.

LTV workers or pensioners with questions can call the PBGC at (800) 707-7242 or go to the agency's Web site at www.pbgc.gov.

WASHINGTON, March 2 — Physical and sexual abuse of nursing home residents is not being promptly reported to local authorities and is rarely prosecuted, federal investigators say.

In a new study, the General Accounting Office, an investigative arm of Congress, says, "Nursing home residents have suffered serious injuries or, in some cases, have died as a result of abuse." Existing safeguards are clearly inadequate, the report says, since more than 30 percent of the nation's nursing homes have been cited by state inspectors for violations that harmed residents or placed them in immediate jeopardy.

The accounting office conducted an 18-month investigation and plans to present its findings on Monday at a hearing of the Senate Special Committee on Aging, headed by Senator John B. Breaux, Democrat of Louisiana.

The report says workers who abuse patients in one state can often be hired by "unsuspecting nursing homes" in other states because the states do not exchange information and there is no national list of workers who have abused patients.

The inspector general of the Department of Health and Human Services recommended such a national registry in 1998. Medicare officials are still studying the feasibility of the idea, the report said.

About 1.6 million people live in 17,000 nursing homes nationwide. Medicaid and Medicare help pay for three-fourths of the patients and spent $58 billion for their care last year.

The General Accounting Office found that "alleged physical and sexual abuse of nursing home residents is frequently not reported in a timely manner," and that "few allegations of abuse are ultimately prosecuted." Even when charges are brought, some frail and elderly victims die before a trial can be held, the report said. The federal investigators said they had found several reasons for the delays:

• Patients and their relatives are often reluctant to report abuse, because the patients fear retribution and the relatives fear the patients will be told to leave.

• Nursing home managers are reluctant to report abuse because they fear that it will cause "adverse publicity" or that state regulators will impose fines and other penalties.

• Nursing home employees "fear losing their jobs or recrimination from co-workers" if they report abuse.

• In some states and at some nursing homes, it is difficult to learn the correct telephone number for reporting abuse.

Nursing homes rarely incur any penalty for failing to report abuse, the report said.

Investigators from the accounting office reviewed records and interviewed officials in Georgia, Illinois and Pennsylvania. Police officials in all three states reported that they were "seldom summoned to a nursing home following an alleged instance of abuse," the study said.

The report's findings were borne out in interviews with relatives of several nursing home residents around the country.

Violette King, 58, said that her father, Louis H. Papagianis, 85, had been abused by a nurse's aide at a nursing home in an Illinois suburb of St. Louis. Mrs. King said she found her father with bruises, scratches and cuts on his arms, neck and cheek and behind his ears.

"Other nurse's aides reported the abuser to the nursing home administrator," Mrs. King said, "but nothing was done for eight or nine months. I filed a complaint. The Illinois Department of Public Health held a hearing. The abuser eventually lost her right to work at nursing homes in Illinois, but I understand that she's now working across the river in Missouri."

Mrs. King said: "My father had become combative. Now I understand why. He was trying to save his own life."

In another case, Barbara A. Becker, 54, of Evansville, Ind., said her mother-in-law, Helen M. Straukamp, 83, had been fatally attacked by a patient while living in a nursing home.

"My mother-in-law was standing in a hallway," Mrs. Becker said. "A male patient came down the hall behind her, cursing at the top of his lungs. When she turned around, he grabbed her by the elbows, lifted her off the floor and slammed her into a wall. She fell to the floor unconscious.

"The nursing home sent her to a hospital emergency room, but there was no mention of the assault in the records that went to the hospital. The case was described as a fall. An employee at the nursing home later told us what had happened."

New York appears to be more aggressive than many states in prosecuting those who abuse nursing home residents. Since January 1999, the Medicaid fraud control unit in the office of the state attorney general, Eliot L. Spitzer, has filed charges of patient abuse against 86 people. Kevin R. Ryan, a spokesman for the unit, said that 60 people had been convicted and nine had been acquitted, while two cases were dismissed and the others are pending.

Elizabeth B. Dowdell, an assistant professor at Villanova University College of Nursing in Pennsylvania, studied 20 cases in which nursing home residents had been sexually abused.

"Many of the victims suffered in silence," Ms. Dowdell said. "The assault became known only after evidence or suspicious clues were noted by family members or nursing home employees."

A Tennessee man was recently sentenced to three months in jail after he pleaded guilty to one count of sexual abuse. While working as a shift supervisor in a nursing home, the man had sexually assaulted a male resident, the Tennessee Bureau of Investigation said.

Law enforcement officials in other states reported several cases of physical abuse.

The attorney general of Vermont, William H. Sorrell, said a nursing assistant pleaded guilty last summer to one count of abusing an elderly, disabled resident of a home in Burlington. The employee had slapped an 82-year-old man, who had Alzheimer's disease, across the face.

In Maryland, a nursing assistant pleaded guilty to one count of assault last August. The defendant acknowledged that she had attacked a woman who was a resident of a Baltimore nursing home. The victim, who was severely disabled and used a wheelchair, had been repeatedly hit in the face.

The General Accounting Office gave this example of the problems it found in many cases: "A resident reported to a licensed practical nurse that she had been raped in the nursing home. Although the nurse recorded this information in the resident's chart, she did not notify nursing home management. She also allegedly discouraged the resident from telling anyone else.

"Two months later the resident was admitted to a hospital, for unrelated reasons, and told hospital officials that she had been raped. It was not until hospital officials notified the police that an investigation was conducted."

When Peter Bona retired from IBM's Research Triangle Park campus in 1985, he left with a sweet deal on retiree health benefits. IBM paid 80 percent of the former facilities repair technician's health insurance premium for two years. Then, when Bona turned 65 and had major medical insurance through the federal Medicare program, IBM offered him supplemental coverage to help pay for prescription drugs and other services not covered by Medicare, which covers the disabled and people 65 or older. The IBM plan also covered his wife, Annette. Best of all, it didn't cost them a penny. IBM paid the Bonas' entire premium.

That didn't last. But when the bills did start to arrive a few years ago, they were so reasonable -- initially, the Bonas paid just $7 a month for health, vision and dental benefits -- the couple didn't mind paying them. Just last year, the Bonas were paying a still-manageable $35 a month for the IBM-sponsored plan.

Then, in January, the ax fell. Bona, now 79 and living in Knightdale, opened his monthly benefits statement and found a bill for $201 -- nearly six times the amount he had paid just a month earlier.

"It was such a big jump that I thought it had to be a mistake," said Bona, who worked at IBM for 11 years, seven of them in the RTP site. "But when I called IBM, they said there was no mistake, that's just what it costs. At this rate, I don't see how we can keep up."

Now, between the premiums and copayments for medicine and doctor visits, the Bonas spend nearly a third of their monthly income from Social Security and his small IBM pension on health care and are dipping into savings to get by. They're worried, and they're not alone.

Nearly a third of all Medicare-eligible retirees, or about 14 million people, get supplemental health insurance through their former employer or through a spouse's retiree benefits. More than 2.2 million retirees ages 55 to 64 who are not yet eligible for Medicare get health benefits through their former employer. Many retirees in both groups are paying much more for employer-sponsored coverage or have lost it entirely as companies that once offered generous, lifetime medical benefits to retirees have scaled back or eliminated them. The number of companies offering retiree health has dropped sharply in the past 12 years. And with health-care costs rising at nearly three times the rate of overall inflation and 6 million baby boomers nearing retirement age (the first boomers hit 65 in 2010), employers who haven't cut or eliminated retiree health benefits are rushing to do so.

IBM is just one employer with a significant Triangle presence that has changed its policies on retiree health coverage. Progress Energy, the parent of Carolina Power & Light, trimmed its package for future retirees a few years ago. And Duke University this year tightened eligibility criteria and increased the amount retirees pay for the benefit, citing growth in its work force and soaring medical costs.

"With the economy slowing, we're starting to see these benefits being cut again," said Larry Levitt, a vice president of the Kaiser Family Foundation, a California-based national health policy research organization. "There's no reason to believe this trend is going to reverse."

In 1998, two-thirds of companies with 200 or more employees offered retiree health benefits, according to Kaiser. By 2001, a little more than a third of employers that size offered them.

(Companies with fewer than 200 employees rarely offer health benefits to retirees; last year just 3 percent did.) The larger companies that do offer coverage have made it harder to qualify for them, and they are asking retirees to pay a larger share of the premium. Some companies have capped what they will pay, although retirees can generally continue the coverage at their own expense, as the Bonas are doing.

"On some level we've been incredibly naive and trusting to think that employers would never come to this," said Robert Jackson, executive director of the state branch of AARP. "A lot of us didn't realize how fragile these benefits are."

There is nothing in federal law to prevent a company from changing, cutting or eliminating retiree health benefits, which many large companies added after World War II to attract employees and encourage loyalty.

Companies lost their enthusiasm for retiree health benefits en masse after 1992, when a change in accounting standards forced them to begin recording what it would cost to provide benefits for future retirees.

"All of a sudden you went from no liability to a multimillion-dollar liability," said Paul Fronstin, a senior research associate with the Washington-based Employee Benefits Research Institute. "It made the business look a lot less attractive and, in theory, it would affect their stock price."

For many businesses, the solution was clear: Eliminate the benefits, eliminate the liability.

Fronstin predicts that retiree health coverage might eventually cease to exist as a benefit. Many companies require 20 or more years of service to qualify for the full health benefits package in retirement, he notes. And with in our increasingly mobile society, most workers expect to have multiple jobs or even careers over their working life, meaning still fewer will ever qualify for coverage. Many new-economy employers such as Dell Computers, Microsoft and America Online never offered the benefits, Fronstin said.

AARP's Jackson now advises people to include providing for health insurance or health-care expenses in their retirement planning.

"When you don't have health insurance, the emotional trauma, the financial trauma, in a family can be devastating," he said. "It throws your retirement planning out the door." The Bonas say they know how valuable their IBM plan is.

About three years ago, Peter Bona had quadruple bypass surgery, and the medical bills ran almost $100,000. With Medicare alone, the Bonas could have been responsible for 20 percent of the tab. With their IBM plan, they ended up paying no more than a few hundred dollars, Bona said.

And then there's the medicine: Annette Bona takes at least six medications daily, which cost almost $100 a month in copays under the IBM plan. Her husband has his own arsenal of pharmaceuticals, which run another $85 a month in copays. It's a lot, but without the IBM coverage, they would be paying retail, and the prescription bill would easily run more than $600 a month.

"I'm so thankful for IBM, so we have that coverage to fall back on," Peter Bona said. The Bonas didn't intend to bootstrap their way through retirement. But things happen and plans go astray.

Three times, Peter Bona gave 10 years to companies that pulled up stakes, leaving him with no pension. Then in 1974, he got on with IBM in White Plains, N.Y., and started buying company stock through the employee purchasing plan. But in 1980, his mother had to move into a nursing home and ended up spending the last 10 years of her life there. Bona, who by this time had moved to IBM's RTP site, cashed in his portfolio to help pay for the $3,400 a month care, exhausting his nest egg.

To manage financially, the Bonas have "downsized" their lives a little more each year. First, they sold their 1,800-square-foot home near Crabtree Valley Mall in Raleigh and moved to a much smaller one in Knightdale.

"It's paid for," Annette Bona said. "So thank God for that."

The Bonas sold their 1995 GMC pickup and travel trailer, which they had used for occasional trips to the coast. Peter Bona, who turns 80 in April, lined up odd jobs doing repairs or electrical work until his knees started bothering him. He now is readying their 1997 Oldsmobile sedan for sale, hoping to save on insurance and pick up some extra cash. The couple's only vacation for years has been to a friend's beach house on Topsail Island, which they use in exchange for Bona's maintenance work on the place.

"We've gone downhill [financially] a little more every year," Peter Bona said. "At the end of the month, though, there's still a whole lot of money going out for our expenses, and health care is the biggest one. It hits us in the eye every month."

Polaroid Retirees Lose Benefits

After taking early retirement from Polaroid, Karl Farmer called the company to ask how his first severance check would arrive.

He was stunned to find out it wasn't coming at all.

Polaroid abruptly halted severance payments to those who were laid off or retired early, and health subsidies for roughly 5,000 retirees, days before declaring bankruptcy Oct. 12. Despite the cutbacks, the company moved ahead with plans to give top executives millions of dollars in retention bonuses.

That's when retirees began fighting back. A group of former workers hired lawyers and is asking to be formally recognized in bankruptcy court, which would give them legal standing to file documents, object to motions and investigate company actions. They've also filed an objection to the Polaroid bonus plan and are urging Congress to enact legislation protecting other retirees from similar benefit losses.

But they face an uphill battle. Benefit experts say chances are slim that any federal action will be taken. In a December hearing, U.S. Bankruptcy Judge Peter Walsh said the picture presented of Polaroid ''is not very flattering to the management of this company.'' But he also noted that what retiree committees typically get out of liquidation cases is ''not very helpful.''

Nevertheless, retirees' claims could be moved ahead of other creditors in some cases, lawyers say. And there are other legal avenues, such as filing a lawsuit against Polaroid executives.

Fragile safety net

But this story goes far beyond Polaroid. The retirees' struggle shows how easily employees' financial safety nets can be torn away when company business fortunes change. It also illustrates a growing willingness by once-loyal workers to mobilize when benefits, 401(k) savings or severance are in jeopardy.

''The question is: 'How can the people protect themselves against Corporate America?' '' says Farmer of Hampstead, N.H. The 54-year-old former manager expected more than 20 weeks of severance. Instead, he defaulted on a loan and moved out of his apartment because he couldn't afford the rent. ''This was a slap in the face. The system has to protect us against them.''

Polaroid officials say they had no financial choice but to eviscerate benefits. The executive bonus plan also was necessary, they say, to retain key managers. The first installment of about $1.5 million is being paid in January and February, but officials say they're now revising the rest of the bonus plan before submitting it to the court.

''Retention bonuses are very common for companies in Chapter 11. You want to retain your management team to get through a difficult financial situation,'' says Polaroid spokesman Skip Colcord. ''The bankruptcy has been difficult on all of us. The cutback in benefits is not something we wanted to do, but it was necessary.''

In fact, companies often pay some bonuses in a bankruptcy, which compensation experts say courts have upheld when the payments are tied to retention agreements.

''It's very common and has become increasingly so,'' says Paul Platten in the Boston office of human resources consultant Watson Wyatt Worldwide. ''Chapter 11 is an awful process. People can walk away.'' More companies cut benefits

The effort by Polaroid retirees is being closely watched because it comes as more companies slash benefits once considered by employees to be almost guaranteed. The number of firms offering health insurance for early retirees tumbled from 46% in 1993 to 29% in 2001, says consulting firm William Mercer.

Experts expect more reductions as insurance costs climb and corporate bankruptcies accelerate. Roughly 10 million retired people age 55 and older rely on employer-sponsored health insurance; those hardest hit by the cutbacks include retiring baby boomers not yet eligible for Medicare.

''For employees at other companies, what's happening at Polaroid is a wake-up call,'' says Al Gray, a lawyer at Greenberg Traurig in Boston representing some of the retirees. ''Congress should be looking at this.''

But critics say federal intervention could prompt companies to drop retiree benefits altogether. And they say financially strapped firms, such as Polaroid, can't be blamed for cutting expenses not vital to survival.

''Long-term employees for the first time are paying attention to benefits they spent the past 20 years ignoring. Frankly, it's a little late,'' says Nevin Adams, executive editor of PlanSponsor.com. ''Employees have a false sense of security. This is an issue that's going to loom larger.''

Turning against family

For Polaroid employees, the issue is hitting home now. Many are allied against a company they had devoted their working lives to. Some are former managers who worked in the upper echelons of the corporate hierarchy, controlling multimillion-dollar budgets. A number joined the firm as high-school grads. Going against Polaroid, they say, feels like turning against family.

''The greatest difficulty has been what's happened to the reputation of a company we tried so hard to build up,'' says Paul Hegarty, 63, a retiree in Arlington, Mass., who lost his dental, health and life insurance. He's spending $7,200 annually to get coverage on the private market.

''(Polaroid) was a true American icon, and now the name's being trashed about. Colleagues have had great difficulty in joining any action against the company,'' he says.

In many ways, Hegarty personifies the classic Polaroid employee. He joined as a high-school graduate in 1956, packing cameras in the Polaroid warehouse, and retired in 1996 as a purchasing manager overseeing a $135 million budget.

That commitment to advancing employees earned Polaroid a gilded reputation. Under the leadership of founder Edwin Land, Polaroid's human resource practices included tuition reimbursement and a doctrine of social responsibility. It was among the first to divest in South Africa, and it consistently ranked among the top firms to work for. The corporate culture espoused equality. Retirees still talk about how Land used to join employees in the cafeteria, eating his grilled bologna sandwich for lunch.

Financial troubles mount

But the company that popularized instant photography struggled financially. Its much-ballyhooed motion-picture system flopped in the late 1970s as it competed against videotape, and Land left his CEO post in the early 1980s. He died in 1991.

A new CEO, Gary DiCamillo, arrived in 1995 to boost the ailing company by curbing research costs and slashing thousands of jobs. The comeback faltered. From its art-deco headquarters on the Charles River, the company that once dazzled Wall Street was seen as obsolete and out of sync. The debut of digital imaging also created new financial hurdles.

Today, Polaroid has atrophied from about 21,000 employees in 1978 to about 6,000 workers. Its stock, which had traded at just under $60 a share in 1997, dropped to around 10 cents. Since 1988, Polaroid has been in debt to the tune of more than $600 million. But the softening economy has compounded the problem, saddling it with nearly $950 million in debt.

Company officials point out Polaroid was profitable in 1999 and 2000 and had been making inroads in digital imaging before the economic slowdown. Nevertheless, many retirees say they consider themselves victims of executive mismanagement and greed.

Most are still reeling from the loss of benefits: Some retirees discovered they had no coverage while trying to get prescriptions filled; others found out after arriving at the hospital for scheduled surgery. Polaroid officials say they've apologized for the way the change was communicated and helped connect retirees with private insurers.

Many retirees also believe Polaroid officials misled workers by making severance agreements they never intended to keep. They say they suspect this because the decision to file for bankruptcy is often made months in advance. But in the weeks before filing, the company was still signing severance agreements. They're worried about the security of their pensions. And they're upset because a Polaroid stock-ownership plan generally barred workers from selling shares until they left -- leaving them little way to react as retirement savings drained away.

Company officials say retiree benefits were part of a broader cutback. They say workers who lost jobs last year have been told they'll get a minimum of four weeks severance. And they say retirees still are getting pension payments that are competitive in the marketplace.

Taken by surprise

But retirees like Betty Moss feel as though they've lost it all. After more than 35 years with Polaroid, the former operations manager in Atlanta took early retirement in July, bought a motor home and set out with her husband to see the USA.

She didn't get far. While sojourning in Colorado, she was surprised to find out she was bouncing checks. The reason? After two months of paying her severance, Polaroid had stopped depositing the checks. Her health insurance had been canceled, too. Moss has the autoimmune disorder lupus, and her husband, who also is retired, has diabetes; now she fears no private insurer will cover them. No one from her former employer ever called or wrote, she says, to tell her the severance or insurance was being cut off.

There's little money to draw on, she says, because the more than $200,000 worth of Polaroid stock she once held has dwindled to almost nothing.

''It's been a horror show,'' says Moss, 56, adding that she lost six months of expected severance pay. ''It's changed the lifestyle we thought we were secure in. I hate feeling like a victim, so that's why I'm getting involved. At least I feel like I'm doing something.''

That's why she and other retirees are getting active, meeting at hotels to plan strategy. They're conducting TV and radio interviews. And they're counseling former colleagues who now are uncertain over what to do financially. Peter Bass, who heads up a retiree association, was at one time receiving up to 40 e-mails or calls a day. He never expected to become an activist, he says wearily, but he also feels he has no choice.

''This issue isn't just about Polaroid,'' says Bass, 69, of Lexington, Mass., who retired as a technical specialist with Polaroid after 35 years. ''They're cutting benefits and giving bonuses to the people who ran it into the ground. It doesn't make sense. We were very hurt. God only knows what's going to happen next.''

A Nightmare for Retirees

Thousands of retirees and their families are faced with the nightmare that results when a former employer modifies or terminates retirees' insurance benefits.

Employers seeking immediate expense reductions have turned to retirees. Laws require pension plans to be adequately funded and provide a safety net (through the Pension Benefit Guaranty Corp.) if a pension plan fails. But there are no comparable protections for retirees when welfare benefits, such as health and life insurance, are terminated by employers.

Many retirees face financial crises at a time when they are least equipped to handle the loss of insurance benefits.

Retirees who learn that their insurance benefits have been terminated are shocked to discover they have limited options. Those with the financial resources to pay for the continuation of their benefits may rely upon COBRA. But retirees who have limited resources and who based their retirement budget on anticipated insurance benefits must make difficult decisions as to which items can be eliminated from their budgets in order to maintain insurance benefits.

Retirees may sue to challenge the modification or termination of their benefits, but lawsuits are time-consuming, costly, and unpredictable, particularly for retirees who are struggling to replace health and life insurance.

Even retirees whose former employers are in bankruptcy - who may be represented by a court-appointed committee, whose professionals are paid by the company, not the retirees - may face delays that take a toll on them and their families.

A more effective approach would entail Congress's immediate enactment of legislation that would ensure that the costs of retiree benefits are not foisted upon retirees. Congress could:

• Require employers to fund insurance benefits at the time that they are granted, to ensure that such benefits will be available to retirees.

• Establish a federally funded corporation, similar to the Pension Benefit Guaranty Corp., to ensure insurance coverage for retirees whose insurance benefits are lost if the employer or plan lacks sufficient assets to fund such benefits.

• Prohibit employers from eliminating benefits for a selected class of people. For example, Congress could prohibit employers from modifying benefits for retirees without providing for similar modifications to benefits for current employees; such legislation would likely have a chilling effect upon attempts by employers to single out retiree benefits.

Immediate Congressional action is appropriate to prevent the most vulnerable from being harmed.

Gary R. Greenberg is a shareholder in the Boston office of the national law firm Greenberg Traurig, whose representations include the Ad Hoc Committee of Polaroid Corporation Retirees.

Severances, Insurances Must Remain

Add rising debt to the financial aches and pains facing older Americans.

Thomas Hill, a retired security aide with the Chicago Board of Education, was forced to take a part-time job delivering newspapers after he ran up $19,000 in credit-card bills. Hill, 78 years old, has whittled that sum down to $2,600 during the past two years. But he still carries about $48,000 in home and auto loans. "I didn't use (debt) judiciously," he says.

As memories of the Great Depression fade, the number of older Americans with debt is growing. Just 41.2 percent of older households carried no debt last year, down from 65.5 percent in 1992, according to SRI Consulting Business Intelligence in Princeton, N.J. The average amount owed by people age 65 and older has nearly tripled during that time, according to SRI, climbing to $23,000 from $8,000. With many people taking out new home mortgages in their 50s or even 60s, burning the mortgage before retirement is becoming just a dream for a growing number of homeowners.

Already, the rising debt load is taking its toll. Bankruptcy filings by the elderly are expected to climb to 82,200 this year, up from just 23,890 in 1991, according to Teresa Sullivan, vice president and graduate dean at the University of Texas in Austin. Auriton Solutions, a credit counselor based in St. Paul, Minn., says the number of elderly Americans seeking credit counseling has increased about 50 percent this year.

"In the space of a decade, older Americans have become more financially vulnerable," says Elizabeth Warren, a professor at Harvard Law School who is studying bankruptcy filings. "They have more years to provide for themselves and less assets to do it."

Older people, on average, still owe less than their children and grandchildren. But it's harder for them to dig their way out of debt when medical problems arise or economic circumstances change. Heavy debt increases the chances they will outlive their money and reduces the inheritance they will pass on to children and grandchildren.

The ranks of elderly borrowers aren't limited to those of modest means. Dick Wagner, 68, a retired college art teacher, this month refinanced the $252,000 mortgage on his two-story West Oakland, Calif., loft. Wagner figures he will never pay off his new, interest-only mortgage, which carries a 6 percent rate that floats after five years. "I probably won't live that long," he says. Though he doesn't think he would ever do it, Wagner figures he could always tap the equity in his home, which he says is worth close to $500,000.

As a new generation of Americans retires, values of thrift are being replaced by the free-spending attitudes of baby boomers. "We're seeing the advanced wave of the baby boomers who are extremely comfortable with debt," says Larry Cohen, director of SRI's Consumer Financial Decisions Group. A case in point: Roughly 46 percent of seniors with debt have credit-card balances outstanding, according to SRI.

Dee Rogers, 64, and her husband, Michael, 57, ran up $63,000 in credit-card debt before they started credit counseling this fall. Rogers, a laboratory-services specialist who spent 30 years at International Business Machines Corp., remembers washing out aluminum foil for her aunt when she was a child. Those Depression-era values "rubbed off on me," she says. "But I was more on the edge of the baby boomers. I came up through plastic. Credit cards. Spend. Spend. Spend."

Lenders, meanwhile, have fed the debt wave by littering mailboxes of older Americans with credit-card offers. "Standards (for issuing credit cards) have dropped," says Arnaa Alcon, associate director for the National Center on Women and Aging at Brandeis University in Waltham, Mass. "They're not very income sensitive or age sensitive." Wagner, the retired teacher in West Oakland, gets at least three credit-card offers each month. "I think it's insane," he says.

Like the rest of America, older people are increasingly using their homes as piggy banks. Nearly one in four elderly households had mortgages or other home loans in 1999, the last year for which data are available, according to the Census Bureau. That's up from 18 percent a decade earlier. The median amount of principal owed rose 86 percent to $33,133 during the period.

In part, that may be because when stock prices were soaring, some older Americans chose to take on debt to pay for home repairs and other expenses rather than dip into their retirement savings. Now, with interest rates near record lows, many people in their 50s and 60s have jumped on the mortgage-refinancing boom, even though it means they may not pay off their new mortgages until they are in their 80s or 90s, if ever.

At Wells Fargo & Co., people 51 and older account for more than one-quarter of customers who refinanced their mortgages during the first nine months of this year. Roughly half of them took out loans with 30-year terms. Close to half took cash out or arranged for a home-equity loan when they refinanced.

"I've been counseling my clients over 50 never to pay their mortgage off," says Doug Thorne, Wagner's financial planner. "Interest is so cheap, that after you factor in tax deductibility, it's better not to pay back the principal."

Ralph Marshall, 63, an information-technology consultant who lives in Chapel Hill, cut his monthly payments by about $200 when he refinanced his mortgage two months ago. His new $135,000, 15-year loan carries a 6.5 percent fixed rate and combines the balance on an earlier, 15-year mortgage with the $55,000 home-improvement loan Marshall took out in January to build a first-floor addition for his ailing wife.

"I had a lot of mixed emotions about the whole thing," says Marshall, who spent hours discussing whether to refinance with his financial planner, Ed Fulbright. "The thought was, before Sept. 11, that I would be making more money in the stock market than I was paying in interest." Marshall says he continues to "have strong faith the market will rebound. If it doesn't," he adds, "I will cash out and pay (my mortgage) off."

Marshall says he's "a lot more liberal now about debt than I may have been 10 years ago." He says, "I was raised to pay off my mortgage. If I fall back to my early training, I should have no debt."

Employee Advocate note: Now many retirees are receiving less pension money than they were promised by their employers. It is now very possible to out live your pension money. To make matters even worse, many retirees are being cut off from their promised health care. The retirees delivered their labor for decades, and will receive broken promises in return. Expect financial problems to get even worse for retirees in the future.

December 10, 2001 (PLANSPONSOR.com) - A group of Polaroid retirees have filed a motion to oppose millions of dollars in bonus pay for the company's top executives.

The instant filmmaker's retirees rallied last week to elect an ad-hoc committee after learning that Polaroid's motion with the US Bankruptcy Court in Delaware sought up to $19 million in bonuses and incentives for about 45 executives. Another $1 million, in part, could be available to employees outside that group.

Polaroid's lawyers are expected to argue that the money is necessary for retaining executives as the firm works to sell all or part of the company.

However, the week before Polaroid declared bankruptcy, several senior executives quit on fears the government would end up taking over Polaroid's pension plan and cap annual payouts at $40,704.

Lump Sum Walkouts

Insiders have said that by resigning early, Polaroid executives were able to take their pensions in lump sums, totaling millions of dollars. This came after more than 3,000 employees were laid off as part of Polaroid's restructuring plans.

Polaroid filed for Chapter 11 bankruptcy protection in October after failing to meet payments on nearly $1 billion of debt. The same month, the company notified its employees that its pension plan was underfunded by about $100 million.

And, days before it's filing for bankruptcy, Polaroid dropped medical coverage, life insurance, and severance benefits for retirees. The Pension Benefit Guaranty Corp. (PBGC) was ready to step in, Polaroid said in an October 1 letter. However, the company warned retirees that if the PBGC took over the pension plan, it was unlikely lump sum payouts would continue.

For pension plans terminating in 2001, the maximum guaranteed annuity amount is $40,704 per year for a worker who retires at 65. That annual payout would be $18,317 for workers who retire at 55, Polaroid said.

Oct. 19 - Legislation to protect workers and retirees of bankrupt employers should be considered in the wake of Polaroid Corp.'s elimination of severance payments and retiree insurance coverage, U.S. Rep. William D. Delahunt (D-Quincy) said yesterday.

Polaroid, which sought Chapter 11 bankruptcy protection a week ago, notified retirees on Oct. 9 that it scrapped their medical and life insurance plans. It then stopped making severance payments to workers who lost jobs in recent cutbacks.

Some of those retirees and former workers met Monday with Delahunt and Sen. Edward M. Kennedy (D-Mass.). Delahunt relayed one anecdote of a Polaroid retiree's wife who went for her breast cancer medication this month and was told by the pharmacist that she no longer had health coverage. Delahunt called the manner in which retirees and former employees were informed ``callous.''

``That's just not treating people with the dignity that they deserve - people who made the company a great company before the dramatic decline in its fortunes,'' Delahunt said.

A Polaroid spokeswoman said it's working with a retirees association and government agencies to provide information, and has identified alternative coverage options, including COBRA.

Delahunt said he's considering legislative options, including one that would give severance payments and retiree medical and insurance claims priority status in bankruptcy proceedings. While pension claims may receive some level of preferred status, and are somewhat protected by the federal Pension Benefit Guarantee Corp.'s insurance program, there is little protection for many other benefits.

That's hit home for former Polaroid workers who have lost severance or find themselves uninsured. Many have scrambled for alternative coverage and are trying to understand options.

``I was so shocked when I got home last Friday and got that letter saying my insurance was cut off,'' said Carol Harakles, 66, of Wayland, a retired process technician who worked for 30 years at Polaroid. ``I almost cried.''

Harakles, a widow, said she's never been able to save a lot of money. ``There's got to be a change. You cannot just throw people out like that and leave us with no insurance.''

Today, directors of the Polaroid Retirees Association, initially a social group, will gather in what leaders are calling an ``emergency meeting.''

Polaroid notified retirees that those over 65 can get group coverage with Americana Financial Services Inc.

The retiree group has notified its 1,700 members it is working to make an Americana group plan available by January for retirees under 65.

Retirees Fear Blow to Benefits

Even before Bethlehem Steel petitioned for Chapter 11 bankruptcy protection, Joseph Streamer was calculating the cost of doing without the generous health benefits he receives as a retired plant superintendent.

Streamer, 69, of Buffalo, N.Y., said he pays a co-payment of only $10 each for the six prescriptions he and his wife must fill each month.

``It will cost in the $400 to $450 range to pick up what Bethlehem does for us now,'' Streamer said. ``On a fixed income, that's something to think about. We'll survive, but our standard of living will be different.''

Streamer and other retirees know that cheap health care benefits for 130,000 people, including 13,000 active workers, 74,000 retirees and their family members, may be one of the first costs cut as company and union officials and a bankruptcy judge try to keep Bethlehem Steel afloat.

Robert S. Miller, chief executive officer, said after the company filed for Chapter 11 bankruptcy protection on Monday that he would push for government help with $3 billion in health care obligations.

``Medicare at the moment does not cover pharmaceutical costs for our retiree base,'' Miller said. ``If that problem were lifted we would be the greatest beneficiaries.''

United Steelworkers Union President Leo Gerard said Bethlehem's woes showed the need for Congress to pass a $1 billion a year package to cover health care benefits for 600,000 steel industry retirees, including Bethlehem's pensioners.

``If the federal government would do that, every other industry would be asking for the same thing. I don't know how you could structure it so you could say steel is so special we should do it for them,'' said Edward Ketz, a Penn State University accounting professor who specializes in corporate finance.

Health care benefits negotiated by Bethlehem Steel's unions for hourly workers over the years have been passed on to salaried employees and made available to retirees, said Bruce Davis, an attorney representing former employees.

``Only about a third of major companies provide health care benefits after Medicare eligibility,'' Davis said. ``We're talking about a generation that has looked to Bethlehem Steel to provide health care benefits.''

The company pays $280 million a year for health care. It would take the $3 billion to cover those costs for the expected life of all the beneficiaries, said Davis, a former Bethlehem Steel vice president who is general counsel for the Retired Employees' Benefits Coalition.

John Pancoe, 78, of Hellertown, retired in 1978 after 31 years running machinery in the plant in Bethlehem that fabricated the underpinnings of structures including the Time Life Building in New York and the Sears Tower in Chicago, and later working as a metallurgy technician.

Pancoe now worries that the health care coverage he and his wife receive for $50 a month will end. In addition, he fears his pension check of $550 a month ``might be taken up by payments for my medical coverage. That's my main concern,'' Pancoe said. ``You're in limbo.''

Federal Judge Rips McDonnell Douglas