At 53, it’s time to put herself first

Like most parents, Rose Bloom dotes on her children, which means she’s spending a lot of money toward their education and other needs.

Bloom had raised her two offspring herself and thought little of sending her daughter to England to study for a month and helping her son buy a car as his high school graduation gift.

“I try to help people all the time. I get sucked into that vortex,” Bloom said. “I’m always at the bottom of the pile, which I don’t mind.”

But she’s 53 and has saved only $12,400 for her retirement, in addition to her pension. She always figured she would remain for life at her desk reviewing disability claims for the Los Angeles County Sheriff’s Department.

Now, however, working hard and putting others first are taking their toll. Bloom, who lives in Dana Point, suffers from serious health conditions, including diabetes, that she has left unattended.

“It’s really important that she be a little bit selfish,” said financial planner Victoria Collins of Keller Group in Irvine. “She needs to see that she is important. Her first and foremost investment should be herself.”

Bloom shares a townhome with her children, Erin, 22, and Erik, 18. Erin expects to graduate from Cal State Long Beach in December; Erik plans to move out soon.

Bloom earns $94,712 from her county job, but she carries $13,000 in debt on four credit cards that is accruing interest at rates ranging from 12% to 28.99%.

Because two of her older siblings died young, Bloom said, she never expected to live past 40. The ravages of diabetes have left her in need of dentures, which could cost her $5,000 -- an amount she said she isn’t ready to spend on herself.

In addition to suffering from hypertension and a thyroid condition, Bloom was diagnosed with a heart problem several years ago. The heart medication doctors put her on caused her weight to balloon rapidly from 180 pounds to more than 250, which made it difficult for her to navigate around Disneyland on a recent visit.

“Dang, it’s just miserable,” Bloom said. “I don’t like to pay too much attention to this because it makes it real.”

She stopped paying $120 a month for a weight-loss program after daughter Erin got an opportunity to study Shakespeare at the University of London for about $4,800.

“How do you pass that up?” Bloom said. “It’s one of those things where it’s like, ‘Do you do it for the kids or do you do it for you?’ ”

Collins advised Bloom not to foot any future bills for her children’s education.

“It’s easier for them to finance their education, but you can’t finance your retirement,” Collins said. “So often, parents will shoot themselves in the foot rather than take anything away from their kids. That doesn’t necessarily promote the best values to the children.”

After taking care of her health issues, the planner said, Bloom should substantially increase the amount she pays monthly -- currently $250 -- toward her credit card debt.

Given the terms of her different cards, Collins calculated that if Bloom keeps paying just $250 a month, 30 years from now her total credit card debt will have mushroomed to $117,323 and she will have paid $130,217 in interest.

“Whoa!” Bloom said. “I had no clue.”

Collins pointed to a note that came with one of Bloom’s recent credit card statements: “Important news: You have the flexibility to skip a payment.” This “offer” is actually a trap, not a benefit, the planner said, because charges continue to accrue during months of skipped payments.

“It’s like being an indentured servant to your credit cards,” Collins said.

Things look a lot better if Bloom increases her total monthly credit card payments to $400, the planner said. At that rate, Collins said, Bloom could pay off all her cards in seven years and three months. And she would pay just $3,981 in interest.

Hearing that, Bloom told Collins she believed she could more than double her current payment. Recently, she managed to negotiate a $200 drop in her rent, and by canceling her cable television, she is saving an additional $100.

“That’s $300 right there,” she said.

Collins suggested that Bloom call her credit card companies immediately to try to negotiate lower interest rates.

To maintain her current standard of living in retirement, Collins said, Bloom needs to increase her retirement savings from $12,400 to close to $500,000 -- an amount that sounded impossible to Bloom.

The planner insisted that Bloom could do it.

Given that Bloom is in no rush to retire, the planner based her calculations on retirement at age 67. By next year, Bloom will no longer be spending $4,800 a year for her daughter’s college tuition. Her son does not plan to attend college.

She has three employer-related components to her retirement plan: a pension, a 401(k) savings plan and another tax-deferred plan for public employees. Collins recommended she redirect some of the money no longer used for her children toward her retirement savings.

Bloom started putting money into the two savings plans only in recent years, contributing 2% of her income. Because her employer matches up to 8%, Collins recommended that Bloom increase her savings to at least 4%. That would enable her to save nearly $8,000 a year.

At that rate, assuming an overall weighted return on her investments of 7.5% a year, Collins projected that Bloom would be able to save $464,000 in time to retire.

“That’s such a mind-boggling figure. I’m stunned, to be honest,” Bloom said.

When she turns 67 and begins making mandatory withdrawals from those savings, Bloom will also begin receiving a monthly pension of $3,920 as well as $1,415 in Social Security income.

Once she has attended to her health issues and paid down her debt, Bloom said, she’d like to do more with her time than unwind after work by watching one of the 400 videos in her collection at home. “I don’t have any fun,” she said.

If possible, Bloom said, she’d like to save enough over the next three years to take a repeat trip to Europe like the one she took nearly 20 years ago. It was a highlight of her 30s.

“I would love to be able to go to London again,” she said. “I have a cousin in Germany who would love to see me.”

If Bloom can stick to a budget, Collins said, she can afford to make the trip. Bloom said she’d like to pay for it with some of the money she won’t be paying in interest for her credit cards.

“That’s like a trip to London in business class!” she said.

One of the main reasons Bloom sought out financial planning, she said, is that she wants to help her children make better financial choices than she has made.

Recently, Erin also has been putting other people’s needs ahead of her own. When one of Erin’s friends couldn’t afford to take a long-planned trip to Paris, Erin footed the bill by putting $3,600 on a credit card.

“I was really proud of her for wanting to do this, but then I was worried,” Bloom said. “If I show her how this stuff works, she might not get another card.”

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(BEGIN TEXT OF INFOBOX)

This month’s makeover

Who: Rose Bloom, 53

Income: $94,712

Goals: Pay off credit card debt. Save for retirement. Pay for untreated medical conditions. Set a better example of financial planning for her two children. Take a return trip to Europe.

Assets: $12,400 in retirement savings. Anticipated pension income of $3,920 a month and Social Security income of $1,415 a month at age 67.

Debt: $13,000 on four credit cards with interest rates ranging from 12% to 28.99%. Auto loan balance of $10,669.

Recommendations: Stop paying for children’s educational and living expenses. Pay for pressing health needs, including $120 a month for a weight-loss program and dentures for $5,000. Increase total monthly credit card payments to $400 or more from $250. Pay off cards with the highest balances first. Call credit card companies to negotiate lower interest rates. Double annual retirement savings, including employer match, to $8,000, which should amount to $464,000 by age 67. After attending to health needs and paying down credit cards, begin saving for a return trip to Europe within the next three years. Review financial plan regularly.

About the planner: Victoria Collins is a fee-only financial planner with Keller Group in Irvine.