Sep 23, 2008 10:06 am US/Eastern
What's Worrying You: 'I Can't Afford To Retire'
Reporting
Cindy Hsu
NEW YORK (CBS) ―
CBS 2 has asked viewers what has them most concerned when it comes to surviving the financial crisis. We've been flooded with e-mails ever since, and in our first feature story from our responses, CBS 2's Cindy Hsu meets a woman who wants to retire, but simply can't afford to.
Ellen Bate works for the Social Security Administration and turns 65 in three months, but financially she can't afford to retire, and she's afraid she never will.
"I'll be working until I'm physically incapable of working anymore and I will die at my desk," Bate fears.
Bate raised her son as a single mom and had to go on welfare twice to survive. She made it through and earned her law degree at 45-years-old, but now the crisis on Wall Street is eating away at her savings.
"Since June 2007 to July 2008, I've lost $100,000 in investments," she says.
Right now Bate has about 60 percent of her investments in stocks and 40 percent in bonds. Jack Otter, Financial Editor at
Best Life magazine, says Bates needs to shift that balance.
"Just to be on the safe side, she ought to start trickling out of stocks and I might just look for cash in FDIC insured account, so that you have that liquid cash to pay your expenses," he says.
Otter says a good rule of thumb is to subtract your age from 100, and that's the percentage of stocks you should have in your portfolio.
Bate is contributing more than 20 percent of her salary to her retirement fund which Otter says is great, but he also says she'll likely need to wait longer than she'd like to stop working.
"I want her to keep working as long as possible, I know nobody wants hear that, but the last thing you want to do is retire and start tapping into your retirement account while it's down," he says.
Otter says many retirees end up selling their homes and living off the profits in a much less expensive area, but Bate says that would be very tough for her to do. She's lived in the same coop for 25 years and loves the community, but she does say if things get desperate, she'll consider it.
Bate has had some serious medical issues as well and she's also worried about healthcare costs. Otter says that's another reason to keep working as long as possible. He says there's long term health insurance, but it's expensive, especially as you get older.
(© MMX, CBS Broadcasting Inc. All Rights Reserved.)
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