Overcoming Challenges: Real Stories, Real Solutions

REAL CHALLENGE: Preparing for retirement when you've gotten a late start

REAL STORY: "I am soon to be 42 and I worry that I will never have enough money to live my life the way I want. I want to live a peaceful life now that my kids are grown and on their own, but I honestly do not know how. I have to learn to find a balance in my life and to put myself first once in a while."

REAL SOLUTIONS: "At age 42, you can use contributions to IRAs and/or other tax-efficient strategies to have enough to retire," says Maddie Brooks, a seasoned Financial Professional who also has responsibilities as a wife and working mother. "You should also think about a new career doing something you really love. That way, you can have the best of both worlds!"

Amanda Panico, a Financial Planner who also understands the delicate balance motherhood requires, offers her take. "While 42 is not right out of college, it's also not too late to start. You likely still have 20-25 years until full retirement. Get online and build a financial plan or sit with an advisor. Attention to details and a strong focus on retirement can help make up for some of that 'perceived' lost time."

REAL CHALLENGE: Rebuilding emergency savings

REAL STORY: "After being diagnosed and overcoming Stage 3 sarcoma, the battles involved during and after made me wonder if I would ever have my life back. I had to retire from teaching way before I planned and a good deal of my savings went to medical and living expenses."
"Every day I am thankful to have survived this life-threatening illness, however, it has definitely made me worry about the future, old age, and whether or not I can afford to live and pay for any other unexpected obstacles."

REAL SOLUTIONS: "Luckily, you had a retirement plan to help fund your health needs," says Panico. "As you rebuild this time, consider not only putting money into retirement, but consider short-term liquid-type of investments in your local bank, such as savings or money markets. Try to accumulate 6 to 12 months' worth of unforeseen expenses in this fund."

"In the future, you may want to consider disability income insurance protection or long-term care coverage (if you are aged 55-60) to provide additional coverage if you suffer an income loss."

REAL CHALLENGE: Enjoying your Chapter 2 while still saving for the future

REAL STORY: "A little over a year ago, I left my home state and moved to Florida. It was very difficult for me to make the move, but my children encouraged me. A new empty nester, they told me I had raised them to be autonomous and it was now my turn to begin my new life."

"I'm 51 years old and I have this opportunity now to figure out who I am. It's been quite an adjustment as I could only identify as their Mom for the better part of my life. I'm still trying to figure out what the next chapter will bring."

REAL SOLUTIONS: "Finding a balance between saving and living life to the fullest is an art form," says Panico, "A very personal and intricate strategy based on your goals must be developed."

"I would make a bucket list and a realistic budget (and probably in that order for the sake of fun!). Evaluate how much discretionary money you have left over on a monthly basis—after you save for retirement of course—and earmark funds toward your bucket list and 'next chapter' activities."

REAL CHALLENGE: Borrowing from your 401K—advantages and disadvantages

REAL STORY: "I was let go from my job and being a struggling single parent, I had no savings and no one to fall back on financially. I had no other option but to borrow from my 401K. More importantly, I came to find out what the stress of the job had done to my body."

"Losing the job was the best thing that could have ever happened to me physically and emotionally—and it definitely brought me closer to my children. Even through my times of struggles, I always knew that I would make it out!"

REAL SOLUTIONS: "The advantage to a 401K loan," says Maddie Brooks, "is that when you take one, you pay yourself back as opposed to getting one from a bank. A disadvantage is that you can only take one loan at a time. Therefore, if something comes up before the first one is paid back, taking another loan is usually not an option. And if you wanted to do a rollover in the future, if the loan is not paid back it becomes a taxable event."

Amanda Panico also weighs in, noting these kinds of loans "can be ideal for short-term financing needs, but be careful—there are downsides. If your job is terminated for any reason, including layoffs, the entire outstanding balance could become due and payable within 60 days. If you can't pay it back, full income tax can be due along with a 10% penalty if you are under the age of 59 1/2. While the loan balance you owe is outstanding, you are no longer invested; thus, you are not earning any interest. 401K loans are also paid back with your after-tax dollars. I'd recommend evaluating all finance options before taking a 401K loan."

REAL CHALLENGE: Dealing with unexpected loss of income due to a loved one's illness or death

REAL STORY: "At 48, I lost my husband unexpectedly. Our combined income was over $100K. Now, four4 years later, I live on under $30,000. I have a son in college whom I have not been able to help as planned."

"After losing my husband, I realized how hard he worked and how short life really is. I have always volunteered to help others in need, but decided to pursue my passion and trust my skills. Although I work a full-time job, I partnered with a friend and we were recently awarded our 501c3 for our Not For Profit. We have raised over $26,000 to help individuals meet their medical needs."

"Taking the leap of faith to care for others has helped me deal with my losses. Knowing that we can help one person at a time has helped release those fears that four4 years ago caged me."

REAL SOLUTIONS: "I have seen many people in a similar situation," Panico offers. "You were living happily during the asset accumulation phase and then tragedy struck. Unfortunately, it sounds as though there was not enough life insurance to provide for income replacement due to the loss. I suspect you have made some major lifestyle changes and you had to reevaluate your living arrangements, automobiles, and all fixed and discretionary expenses."

"Is there a means of turning that passion to help into a full-time career that could be both emotionally and financially rewarding?"

REAL CHALLENGE: Saving for both retirement and a child's education

REAL STORY: "Growing up, my mother was constantly sick so I held down full time jobs ever since I was 16. Using student loans, I eventually sent myself to college and obtained a degree. While I am now a college graduate, my school loans are still my biggest debt and I have no idea how to start paying them back. I worry about how my son will go to school."

REAL SOLUTIONS: "Saving for retirement and a child’s education could be difficult if resources are tight," says Panico. "But I've witnessed first-hand the worry it causes adult children when their loved ones lack financial security into retirement. That's why I'm confident that the greatest gift you can give your son is your own financial preparedness and stability."

"Consider saving first for your own retirement. For holidays and birthdays, ask for cash to put in your son's 529, and as he grows older, encourage him to get a part-time job to contribute towards his education. When it comes time for college, look at your child's eligibility for state-level or private scholarships. You could help him out by using some of the cash flow from your discretionary income and he can get some student loans, if necessary."

"If you can make these suggestions work, you will not only accomplish your retirement goal, but you will teach your child a valuable life lesson: With hard work and planning, we can create our own financial security. A most precious gift indeed."