Q. I am a 45-year-old single woman with no children. I make $155,000 a year, have $165,000 in savings and $125,000 in a 401(k), and owe nothing other than my mortgage (14 years left on a $240,000 loan at 3.5 percent). What's the best way to make my dream of retiring in ten years come true?

A. My advice is to modify your dream right now. You simply don't have enough set aside in retirement savings to stop working as soon as you'd like. Let's say the $125,000 that you have in your 401(k) grows at an annualized 6 percent rate and you manage to add $15,000 a year to it—that's just 10 percent of your salary—you could save about $430,000 over the next decade. I know that sounds like a lot, but those funds might have to last you for at least 30 years. And that's not because I'm suggesting you're going to be an old-age outlier; the average life expectancy for a 55-year-old woman today is 83.

In the first year of retirement, you should plan to withdraw no more than 4 percent of your total funds. (You can adjust that sum for inflation in subsequent years, but even that rate is pretty aggressive for someone planning to retire at such a young age.) Four percent of $430,000 is $17,200. But because a withdrawal from a traditional 401(k) is taxed as ordinary income, you might net $13,000. That's less than $1,100 a month, and I doubt that's enough for you to live on, even if you're frugal. So let's say we shift half your current savings into investments on the assumption that $82,500 is an adequate amount for your emergency fund; that's still not enough money for you to retire comfortably. I know you don't like hearing that you'll need to work until 67 or 70, but better to hear it now than to realize you've made a big mistake later.

If you save diligently over the next 17 years and withdrawing 4 percent a year (adjusted annually for inflation) generates enough cash for you, you may be able to retire early—at age 62. (Use the free retirement income calculator at to analyze your options.) Even though you will be eligible for Social Security at that time, think seriously about delaying your benefits until at least 67, when your payout could be 30 percent higher. Consider working part-time—or better yet, full-time—for a few years to supplement your income until the checks arrive.

Q: I'm a 46-year-old single woman earning $34,000 a year. Sometimes I feel so anxious about having enough to retire on that it takes away from my enjoyment of life. I have $30,000 in mutual funds and IRAs (but no pension), and no debt apart from my mortgage, which will be paid off in about eight years. I've been unemployed twice due to layoffs, so I'd like to have access to my money. Assuming I can work for quite some time, roughly how much do I need to save? I live simply but don't want to end up eating cat food.

A: While I understand your concern, I have to say that you're doing an impressive job considering your relatively modest salary. Many women making twice as much as you are saddled with debt and a huge mortgage they'll be paying down well into retirement. Give yourself credit for being so good with your money.

The best news here is that you'll finish off your mortgage in your early 50s. That means you don't need to save nearly as much as someone who anticipates having to keep making mortgage payments after she stops working.

Once you pay off the house, I want you to keep making monthly payments—to yourself. Invest that same amount in a Roth IRA. If you follow a few simple rules, you'll be able to withdraw all the money in retirement without paying a penny of tax. When you reach the annual maximum contribution for the Roth, build up an emergency cash reserve. The more you put away, the better.

Because you've been so house smart, once you turn 62 you will be eligible for a reverse mortgage: If you find your own retirement savings aren't enough, a reverse mortgage allows a lender to pay you income (in a lump sum, a monthly advance, a line of credit, or a combination of all three) based on the value of your home. There's no risk of losing the property. I hope that hearing all this will help you enjoy your life more fully today.

Next: Supporting your short-term needs vs. saving for retirement


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