Looking to the financial future in your 50s

Carmen Wong Ulrich Mar 25, 2011

Looking to the financial future in your 50s

Carmen Wong Ulrich Mar 25, 2011

Tess Vigeland: For the 50s, we are making beautiful music. At this point in your life, you may well be asking, “Wait a minute. What, exactly, does my future look like?” For some answers to that question, we head to Tucson, Ariz.

Marina Sturm: My name is Marina Sturm. I’m 55 years old and I live in Tucson, Ariz. I play with the American Symphony in New York City. Well, I’m also a professor at the University of Nevada, Las Vegas, and so I’m really a freelance musician. American Symphony is part time and so I fly in and play so many concerts a year. Since I’ve become a professor, I’ve cut down on the amount of times I go back and forth. It’s getting more and more expensive.

I think anybody in the arts is seeing a real change. And obviously in education — higher education — we’re extremely concerned. We’re getting pay cuts or furloughs, so everything I seem to choose to like to do is not having a very good time in this recession.

I tend to live pretty frugally and money was never a motivating factor for me in choosing my career. My father was a professional musician and I knew that also being a teacher that these are not places that I’d make a lot of money. Money is not what rules my life. But I am, of course, concerned about retirement.

I think when you’re in your 30s, you never think like that. Then 40s you go, oh I’ve still got time. Then all of a sudden 50s, you go, whoops. I mean I don’t know, without having children and things, I feel like I probably should have saved more, but I traveled a lot. I still travel a lot and I’m quite happy about it.

I’m not very smart with money. I could use some help. I perhaps haven’t been that wise with it and I’m not shrewd at all. I think I’m kind of naive about it. And also, I don’t want to think about it. Not that I don’t want to think about aging and all that. I don’t want to think about money. I want it to just, it’s sort of like I try to have a relationship with it kind of like music. I try to not have it rule me or fear it too much. It’s all it is, is money.

Vigeland: Carmen Wong Ulrich is now with us. She’s a personal finance journalist and the author of “The Real Cost of Living,” and she spent the day with Marina at her home in Tucson, Ariz. Hi Carmen.

Carmen Wong Ulrich: Hello, Tess. Thanks for having me.

Vigeland: Marina, first off the bat, said that money was not a motivating factor for her in choosing her career. But I’m going to start with money. What kind of money is she bringing in from these two jobs?

Wong Ulrich: She’s bringing in around in total $60,000-something a year. But she mentioned the furloughs and she’s looking at possible 5 percent pay cuts down the road.

Vigeland: Well one of the things that I was stuck by in the tape was that point where she says, ‘You’re in your 30s, you think, oh I’m OK. You’re in your 40s, you think, oh I’ve still got time. Then 50s she says, whoops, too late.’ It’s not too late, is it?

Wong Ulrich: Not at all. She was put into action basically. And she has money saved up in retirement, four separate IRAs from past jobs. She has some pension — not a big one, but it’s some pension — and Social Security. So she’s in pretty good shape compared to a lot of people. But she moved in her mother.

Vigeland: Into her home?

Wong Ulrich: Yes, in her home that she bought in Tucson. She’s in 89, she’s in great health. But this type of lifestyle change at 55, it’s very important — vital — to look at your money and to really make some big decisions.

Vigeland: So what is she most concerned about at this point in her life? How different are the 40s from the 50s?

Wong Ulrich: Well, in your 40s you can still say, you know I think 20 years kind of seems like a quasi-magic number. In her head, well I’ve got 20 years. Once you hit your 50s…

Vigeland: You don’t have 20 years anymore.

Wong Ulrich: Yeah. And if you want to retire at 65… And in terms of all the rules of long-term investing and long-term growth, you always want to have at least 20 years sock money away and invest it. And I think that a lot of folks in their 50s — a lot of Boomers especially — are taking care of aging parents. And this is definitely the age where your lifestyle changes and your responsibilities change.

Vigeland: Who was our financial adviser and what were some of the recommendations that this person made?

Wong Ulrich: Our financial adviser was Kimberly Overman, founder of The Financial Well, and she’s out in Florida. She’s 52 years old. She’s also single, no children. And her advice to Marina was pretty much to organize. And this was the first time that she had ever really pulled together her finances. And the most basic part of Kimberly’s advice was actually the most painful for Marina and that was budgeting.

Vigeland: Ah.

Wong Ulrich: That was something Marina has never done. And when Kimberly asked her, ‘Can you see where your money goes on a daily basis, when you go to get your coffee, when you go to the grocery store,’ and she says that that runs counter to the musician mind. You know, this kind of hunt-and-peck is not very fun.

Vigeland: Well how typical is Marina’s situation for a 50 year old?

Wong Ulrich: Yeah, having and taking care of an aging parent in your 50s is becoming more and more common. And for most folks in their 50s who have children, what’s really common is the battle between college costs and taking care of the aging parents and their retirement. You really do have to take care of yourself in order to take care of other people. Another great piece of advice that Kimberly has worked through with Marina is to consider, in her case, long-term care insurance because Marina doesn’t have anyone, no children to take care of her. And you also don’t want to bankrupt children either, but long-term care insurance can cost a lot. But in terms of Marina’s case, Kimberly said, let’s cut the benefit to 50 percent of your expenses, let’s limit it to 3 years. So when you start kind of chopping away at it, you still have the coverage, but it’s at a more manageable cost. So she came up with a plan that’s closer to what Marina pays in auto insurance. For Marina who doesn’t have anyone really to care for her, it makes more sense.

Vigeland: Carmen Wong Ulrich is a personal finance journalist and the author of “The Real Cost of Living.” Carmen, thank you so much.

Wong Ulrich: Thank you, Tess.

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