Retirement Tales: Beat adversity with a plan – Yahoo! News

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Retirement Tales: Beat adversity with a plan – Yahoo! News

by Associated Content Contributors

Boomer Weathers Down Job Market, Eyes Retirement by 66

As part of the Baby Boom generation, I expected to retire comfortably and quietly, reading books and taking naps under a shady tree. Born in 1951, near the peak of the boom that started in 1946, I figured I could manage retirement by the age of 62. I was wrong.

According to my Social Security statements, which I received annually but only really paid attention to in the past five years, I cannot receive full benefits until 66. I can still retire officially at 62, but I would lose 25 percent of my benefit amount — or $1,159 a month. That was bad enough, but then in 2008, the bottom really fell out of the financial landscape.

We Boomers had just started to breathe again. We thought we had ridden out the worst of it when the Nasdaq crashed in 1987. I had about $2,000 invested in tech stocks. When my balance plummeted to near zero, I closed the account. I subsequently got divorced, had to file for bankruptcy and was out of work for about a year. I cashed in some bonds I had to get by. I then took a job in 1991 as a senior store manager for Suncoast Motion Picture Company and set up an IRA retirement fund through my employer.

I live in Warwick, R.I., and, when employed, worked up north in Providence, where the unemployment rate has been one of the worst in the nation. (In Rhode Island, it’s currently at 12.3 percent) I was a full-time office manager for the Judge Group, a technical executive recruitment firm, which provided a retirement plan. After my layoff in December 2008, I was able to collect unemployment and continued my medical coverage under COBRA.

I am 59 and underemployed. Between my age, the overall unemployment rate, my hefty resume and some health issues, my chances of landing a job are slim. I do have teaching credentials, but Rhode Island is in such dire straits that even tenured teachers have lost jobs.

My sister, who works full-time, and I have already moved in together to save. After my layoff, I used my credit cards to supplement costs my unemployment didn’t cover. After six months, I realized finding work was not going to be easy, and after a year, I realized what a mistake it was to keep using my credit cards. I racked up $32,000 in credit card debt.

Still, I hope to retire at 66 with assistance from Medicare, Social Security, frugal living and the continued generosity of my family. Here’s how I’m working at it:

* In December 2009, I used $32,000 from my Ameriprise IRAs to pay off my debt.

* I’ve had a TIAA-CREF retirement fund through the University of New Hampshire since 1982, and I had the good sense to put in $25 every other week for most of the last 30 years. I’ll probably have a little less than $100,000 in it when I reach 66.

* I am living as the American extended family once did years ago. My 29-year-old son is also living with us. We share household expenses the best we can, and we live very frugally. We have gone back to a Yankee philosophy of “making do.” It’s a philosophy we Baby Boomers grew up with, so it is not foreign. But it is an adjustment.

* I find part-time writing assignments to supplement my income. My sister and I are both members of AARP and receive several e-newsletters with plenty of retirement tips and offers.

I may not have a lot of money, but I
have at least some time. As an economics professor of mine once said: “Time is what you need for financial growth, not a lot of money.” He was so right.

By Mary DeBerry, Associated Content


Struggling at 39, but Aggressively Planning for Retirement

I am 39, and retirement is a long way away. Financially, I am not where I want to be. I struggle to make ends meet. I have more than $15,000 in credit card debt. I am three years into a $145,000 mortgage. And my salary at a Fortune 500 company is a little more than $30,000.

However, I am aggressively planning for my retirement. I contribute to a 401(k) retirement plan, an employee stock-purchasing program, and I consider my home in Harpers Ferry, W.Va., an investment. The payroll deductions I use to contribute to the 401(k) plan and stock plan pays me first with money I don’t see and don’t spend. Here’s how I’m getting to retirement:

Becoming Debt-Free

Our family’s finances would be in better shape if we were not paying close to $800 a month on credit card bills and $1,000 a month on a mortgage. Eliminating that $1,800 a month would make retirement planning easier. Money I pay in finance fees and interest are definitely not a wise investment, although the purchases on my credit cards were almost always necessary. Splitting the $800 a month would add $400 to my retirement and $400 in the budget. At least I don’t have a car payment.

Bolstering Retirement Plans

I have $12,000 in my current 401(k) and another $10,000 in other 401(k) plans. I contribute roughly $2,600 a year — about 4 percent. My company matches dollar-for-dollar on the first percent, 75 cents for the second 2 percents and 50 cents on the fourth percent. In other words, $48 every two weeks from me means my employer contributes $36.

I’ve also taken a more aggressive approach to my 401(k) portfolio, which helps with long-term planning. And when my income goes up, I’ll increase my retirement allotment another two percent because my company will match 50 cents up to 6 percent. Investment-matching programs are the smartest decisions an employee can make; it is free money toward my retirement nest egg.

Taking Advantage of Discounted Stock

My company offers a stock-purchasing plan. By participating, I purchase stock at a 15 percent discount of the lower price on the first day of a six-month period or the last day — whichever is lower. I am contributing 4 percent and have at least $4,000 in stock.

Investing in Real Estate

My family of four bought our house below market value with an attractive interest rate of 5.87 percent. The house is modest. But it does sit on just over an acre of land 60 miles from Baltimore and Washington, D.C., and it’s close to commuter train service to the D.C. metro area. The location is favorable; the property is to likely increase in value before our retirement. The house would give us the option of selling and moving to a lower-priced home or retire in our home without a mortgage. If we moved, the difference could be added to our nest egg.

By Mike Spain, Associated Content


Careful Planning, Education Are Keys to Successful Retirement

At 79 years of age, because of my careful and long-term planning, I enjoy a comfortable retirement in Hamburg, N.Y., a small town 15 miles south of Buffalo. With $2,450 a month in discretionary spending, I am still able to purchase luxuries, tr
ips and gifts with no hardship.

What’s the best advice I can offer? Save early, enroll in matched retirement programs and earn educational degrees that will pay you more in the long run. My pensions, 403(b) matching and my graduate degrees helped me get where I am.

I retired in 1995 from the Buffalo Public School System after serving 26 years as a teacher and a supervisor in the district’s central office. Like most state employees, I opened a 403(b) retirement plan early and contributed a significant amount of money from each paycheck — about $14,000 annually, the maximum amount allowed at the time.

At one point, my total savings amounted to approximately $130,000. There were ups and downs, of course. When the bottom fell out of the economy, I lost a large amount of this money. Fortunately, I had already used a large portion of it for my children’s college education and two weddings. There is now about $30,000 left in this account, which I do not touch, so it does not fluctuate much.

In addition to the 403(b), I am fortunate to be part of New York’s state pension system. My pension pays slightly less than $3,000 a month and Social Security gives me $1,686 a month.

When I retired, I was making $58,000 a year. Taking into account taxes on this amount plus savings, I was able to live comfortably on approximately $30,000 a year. Since retirement, my monthly income after taxes (pension plus Social Security) is slightly less than $4,000. Out of this, I save $250 a month toward my next car, and I put $100 per month into an account for unforeseeable expenses.

Additionally, I would encourage any young person to obtain at least a college education with the possibility of a master’s or doctorate degree on top of that. I received my master’s (1975) and doctorate (1981) in education, and those degrees added significantly to my income. Education is the best insurance for a comfortable retirement.

I did not have to make any lifestyle changes in order to retire. I have always lived a fiscally responsible existence and continue to do so in retirement.

By Mary Carol Herwood, Associated Content


More from Associated Content:

Retirement for 73-Year-Old Is a Work in Progress

At 28, Investor Bitten by a Bad Market but Still Forging Toward Retirement


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