Diane Wildowsky, 61
The challenge: Tapped-out retirement savings
After successful careers in sales, fashion and real estate, Diane Wildowsky had close to six figures in her IRA when the stock market crashed in 2008. Her savings took a dip, but what really hurt was the subsequent decline in her real estate business. Soon she was relying on her nest egg to meet expenses. "Now it's at zero. It's depleted," she says, and she is terrified about the future. "There's no husband. There's no trust fund. My family has been very, very good to me and they're very generous, but they are blue collar, retired, senior citizens themselves, and there is no extra money.
"I'm scared to death, but I haven't really thought a lot about it, because it's so scary."
The advice: Wildowsky has considered getting an additional part-time job to supplement her real estate commissions, a move wholeheartedly supported by Jonathan Duong, a certified financial planner and founder of Wealth Engineers in Denver. Delaying Social Security as long as she can — ideally until 70 — is also key, in order to maximize her monthly benefit. She should also begin cutting expenses wherever she can. City living can stretch even the most responsible budget. Relocating to a more affordable area, Duong says, will make it more likely she can one day retire.
Debbie Smith, 61
St. Charles, Mo.
The challenge: After a divorce, too little saved
Debbie Smith never imagined she'd be facing retirement on her own. When she and her husband divorced in 2008 after 26 years, she felt unprepared for the next year, let alone retirement. "It was so scary to find myself in my mid-50s with no insurance and no real income," she says. She and her ex split their retirement accounts and sold their house. But Smith's portion of the proceeds soon dwindled, first by substantial losses in the 2008 market crash and then by a down payment on a new home. Her retirement account, now hovering around $30,000, has never recovered. Though she'll collect half of her recently retired ex-husband's pension and is now saving what she can in a 401(k) at her new job as a credit counselor, she fears she faces a major drop in her standard of living — if she's ever able to retire. "A divorce is devastating to your finances, especially when you divorce later in life," she says. "You have less time to recoup that loss."
The advice: "The most important thing for Debbie is that she has a job and wants to work," says Nick Cosky, a certified financial planner with Balasa Dinverno Foltz LLC in Chicago. She should plan to work as long as she can, Cosky advises, plugging everything she's able into her 401(k). She also should begin paring back her spending now, Cosky says, to get used to a more modest lifestyle. "Her main financial engine now is her ability to keep her spending in check and her willingness to save," he says. To help trim expenses, she might consider moving to a smaller, less expensive home.
Finally, she should delay taking her Social Security benefit as long as possible. "I would love to see her delay Social Security until age 70 to get the maximum benefit," Cosky says.
Dan McCrory, 60
The challenge: Keeps dipping into his nest egg
After working as a technician for AT&T for nearly four decades, Dan McCrory, who is married, took a company buyout four years ago. "They wanted to drop a couple of bodies, and I saw the writing on the wall," he says. He rolled his buyout money and his 401(k) savings into an IRA and walked away with a nest egg of just over $600,000. His plan was to keep working and watch his savings grow. But finding full-time work has proven hard. "I didn't realize that there was this prejudice against older working people out there," he says. For a time, he was reluctantly selling insurance. But he has needed to dip into his retirement savings two or three times a year to make ends meet. Down $200,000 so far, McCrory is worried he'll deplete his savings way ahead of schedule.
The advice: "He should look for any other job that offers some sort of retirement benefit," Cosky says. A full-time job would not only provide McCrory an income, but it might give him an opportunity to qualify for an employer contribution in a retirement account, such as a 401(k).
Carrie Coleman, 66
The challenge: No retirement savings
After working as an administrator for the American Bar Association for 30 years, Carrie Coleman retired four years ago at age 62. "I was just beat up, tired, worn out," she says, having helped raise her two grandchildren after her daughter passed away.
She began receiving Social Security benefits as well as a small pension, but otherwise has nothing saved for retirement. "I just decided to step out on faith," she says. She says raising her own children, and then her grandchildren, is the reason she was never able to save. She still has a mortgage on her home, having refinanced several years ago to pay expenses during a rough patch. To help make ends meet, she freelances as often as she can, doing Web design, desktop publishing and notary public services. But she can't imagine a day when she won't have to work to get by. "You can't be complacent once you retire," Coleman says.
The advice: Coleman's willingness to work will serve her well, Duong says. She should continue to freelance as much as she can and consider getting a regular part-time job in order to generate more savings. Although the opportunity for Coleman to take full advantage of delaying her Social Security benefits has passed, "she does still have an option that could prove very valuable," Duong says. She can now elect to voluntarily suspend her benefits. Her benefits would then increase by 8 percent per year while they are suspended, up until age 70. By suspending her benefits for four years, the benefit reduction of 25 percent she incurred by claiming at age 62 would be almost fully offset by the resulting increase. If she can suspend her Social Security benefits from age 66 to age 70, "she would earn a huge boost that would help her throughout her entire retirement," Duong says.
See also AARP Retirement Calculator
Bob Ramsey, 63
Vancouver Island, British Columbia
The challenge: Lent money to adult children
When Bob Ramsey and his wife relocated from Nevada to Vancouver Island nine years ago, they envisioned a comfortable and picturesque retirement. But after arriving, the couple made a number of loans to their four adult children. "I suppose our generosity was a little bit overboard," he says. "A couple of them had divorces and tough issues to face." Another daughter lived with them on and off for five years when she had trouble getting work. There were verbal agreements to pay the money back, but little cash has been forthcoming. Ramsey estimates the loans depleted his savings by a third.
He's also found it difficult to find work. Visa issues put his career on pause when he moved to Canada, and he has found it challenging to get work in either insurance or media, the two fields he'd worked in back in the U.S. "The transition to Canada created a career gap," he says. "It's really yet to be filled."
The advice: "I'll be as gentle as I can while still wanting to be clear: Stop lending money to your children," Duong says. "You need to prepare for your own retirement first."
"Often folks make decisions with their heart," Duong says. "But in the case of adult children, they have many, many years to earn money and pay their own debts, whereas you have a much shorter time horizon."
He says Bob should "continue trying to find full-time work as soon as possible," even if it's a job he's not thrilled about. "Retirees or near retirees who are looking for work just need to be really, really flexible," Duong says. He also says Ramsey should delay taking Social Security as long as possible. As for the family loans, Ramsey could ask his children to sign promissory notes to pay at least some of the money back.
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