Getting It Right The Second Time Around

Early retirement proved costly for Shirley Malone

Early retirement sounded like a good idea to Shirley Malone two years ago. She was 50 and suffering from professional burnout, having spent nearly 23 years at telecommunications giant SBC Communications in Torrance, California.

Malone saw a way out and took it in June 2002, when SBC offered early retirement packages. The company eliminated jobs to offset weak growth and increased competition.

As an added incentive, SBC added an extra four years of service to the packages, making Malone’s payout equal to that of someone who had worked there 26 and a half years. Malone walked away with a lump sum of $315,000, including her 401(k). But it wasn’t long before the absence of a regular paycheck started making her feel vulnerable.

Malone enjoyed her first year in retirement: exercising with a personal trainer, redoing her backyard, and traveling. She had more quality time for her son, Jeffrey, then 11, whom she adopted when he was 4, and her 79-year-old mother, who lives with them.

But unexpected expenses started to take their toll. Malone had to put about $4,000 on her credit card to repair two of her three cars. She owns a 1995 Ford Winstar minivan, a 1987 Mercedes 190, and a 1988 Mercedes 190. She had the foresight to close out 18 credit card accounts that had zero balances when she left SBC, but between everyday living and extras such as $1,500 for Jeffrey’s class trip, she soon had $15,000 in credit card debt. Malone had also taken $30,000 out of her 401(k) to have cash on hand.

“It takes a whole lot more than you think to live the way you want. Everything is expensive when there are no checks coming in,” says Malone, who became more resourceful with her money, doing things such as paying Jeffrey’s private school tuition up front to receive a discount. She also reduced her cable television bill and made fewer trips to the mall.

By August 2003, Malone had begun working part time as a customer service representative for Globe Aviation Services. Eventually, she contacted her former employer. SBC had a history of rehiring its employees, and Malone had departed a year prior knowing that she may one day return. The company rehired her, and since April, she’s been content to work for both SBC and Globe Aviation Services. She’s currently earning around $55,000 a year. (She receives $546 a month from the state for adoption assistance.)

But it wasn’t just day-to-day expenses or a sudden financial crisis that made Malone return to work. She now has new goals, which include saving more for retirement; investing in real estate for income; and remodeling her three-bedroom, two-bathroom home. She purchased her home 30 years ago for $30,000 and it is worth about $500,000 today. More importantly, Malone needs to save more money for Jeffrey’s college education. She’s saved $3,000 thus far.

If Malone has her way, she will say goodbye to the working world for good in 10 years. “I want to be that 62-year-old lady who takes a

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