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are plenty of different configurations that a sample portfolio could take. One possibility might look like this: 25% large-cap, 20% mid-cap, 15% small-cap, and 5% international stocks; plus 20% government bonds, 10% corporate bonds, and 5% cash.
Early retirement wasn’t all it was cracked up to be for Monica Williams. Things had been tough since her husband died at age 36, leaving her to raise their two sons, now grown, on her own. A bus operator for nearly 29 years with the Chicago Transit Authority, Williams looked forward to calling it quits in February of 2004 at age 51.
Eager to relax, Williams spent time with her four grandchildren in Chicago, went to visit her sister in Daytona, Florida, and traveled to Arkansas. However, by the fall she was restless. “I got bored,” says Williams, now 53.
Williams also discovered that she would need more than her $2,300 monthly pension to retire in the style she really wanted. So after all of eight months in “retirement,” she went in search of another job.
“I figured I’d work for another 10 years, until I’m eligible for Social Security,” says Williams, who lives in Blue Island, Illinois, just outside Chicago.
Looking for a less stressful job than driving the city bus, Williams opted for piloting the shuttle bus at Midway Airport. The job nets her about $1,200 a month, which supplements her pension. Although her monthly expenses, which include the mortgage on her condo, total approximately $1,900, unexpected car repairs and her desire to travel to places like Europe, Mexico, and Hawaii, often have her needing additional cash.
Williams says she’d like to retire for good at age 62. She’ll have her existing pension and the accumulated amount of $300 a month she has been saving since starting her new job. Her current savings is only about $3,000. And over the last five years, she reduced her credit card debt from $23,000 to $2,000. “I doubled and tripled my minimum payments,” says Williams. “It was hard, but I focused on what I needed to do.”
The Fabulous 50sWilliams knows she needs to invest, but says she’s a novice and needs a financial adviser to guide her through the process of creating a plan to maximize what she has to work with. “I want to know where I can put my money without too much risk,” she says.
When she does retire, Williams wants to devote more time to her church. She also wants to spend time taking dance and exercise classes, visiting her sister in Florida, and taking other “affordable” excursions.
“I’ll be a little older, so I might be able to settle down and relax more next time,” says a hopeful Williams. “I love my grandchildren, but my sons shouldn’t expect me to spend all my time babysitting,” she says with a laugh.
Finances in your 50s
It’s crunch time for just about everyone at this age. To help Williams and others like her get their retirement plans right, Pierre Dunagan, president of The Dunagan Group in Chicago, suggests the following