Jack Eade is too old to start over and too young for the retirement that was forced on him in the spring.
Eade and his wife, Susan, both 64, have been relying on unemployment insurance and her income as a nurse.
But the Bellflower residents are worried they won't have enough to make it through their looming old age.
Jack, who was laid off from his sales job, is two years shy of the age when he can claim his full Social Security benefit. But he fears he's not the youthful-looking baby boomer whom firms might be looking for if they hire an older person. He's got gray in his hair and he gets around on a scooter because he has difficulty walking.
The Eades have $403,000 in their retirement accounts and savings. But their medical expenses are ongoing, and their income will drop when Jack's unemployment runs out in a few months, so they're thinking about dipping into the money now.
"They're really the poster children for the current economy," said Delia Fernandez, a financial planner in Los Alamitos who reviewed the Eades' finances for The Times. "They thought they had a plan, and then all of a sudden they didn't."
The couple's gross income has shrunk to $88,000 from $135,000, and now they're relying on Susan's nursing job to fund their retirement. Jack built a successful career selling nuts and bolts to companies such as Steelcase Inc. and Honeywell International Inc. But he believes those days are over. As a childhood polio survivor who faces increasing mobility issues, Jack said finding another sales job in a downturn would be daunting.
"If I show up in my power scooter, they'll say, 'Sorry, Charlie,' " he said.
The Eades have stashed away $366,000 in retirement accounts and have $37,000 more in savings and money market accounts. They carry a $102,000 mortgage on their town home, a $7,000 car loan, a $1,700 medical loan and $3,000 in credit card debt.
The couple's finances are stretched thin. Jack receives about $1,900 monthly in unemployment insurance benefits. But those will end this fall. If he takes his Social Security benefits before his official retirement age of 66, he'll receive about $200 less a month than if he waited.
"If he runs out of unemployment benefits and he doesn't get an early Social Security benefit, they'll have to dip into savings," Fernandez said. "What's hard about that is you're dipping into the pot that you're supposed to be growing for retirement."
Medical costs are another financial strain. The Eades took out an interest-free medical loan to pay for cataract surgery for Jack. Their out-of-pocket prescription costs run nearly $3,000 annually. And Jack said that eventually he'll need to buy another van that can more readily accommodate his power scooter. Even used mobility vans run as high as $30,000.
The Eades have been scrupulous about saving and cutting back. Susan puts away about 25% of her paycheck into a retirement account. The couple add $100 a month to their mortgage payment to whittle down their 30-year fixed loan. After investigating interest rates, Susan moved their savings into an online bank account that paid them a higher rate to eke out more of a return on their money.
The couple have cut back on some of their favorite but more expensive activities. Gone are their annual trips to Bakersfield, where they'd watch drag races and rub elbows with racing greats in the lobby of the local Doubletree hotel. The couple's hobby of trying out new restaurants is a thing of the past as well.
Nowadays, Susan steers the couple to the local Del Taco for its Tuesday-night taco specials, takes bagged lunches to work and clips grocery coupons.
"I really don't want to have debt in my 80s," she laments.
With her father still alive at age 92, Susan believes she needs to prepare for her own longevity. That's led her to consider more drastic measures such as moving out of state to cut the couple's cost of living.
They may not have to take such extreme measures, though.
"It looks to me like they'll have enough," Fernandez said. "But they'll be permanently downsized. It won't take food out of their mouths, but they'll always have to be mindful of their spending."
To secure the couple's retirement, Susan, who loves her job as a clinical educator teaching nurses at a Downey hospital, will have to work at least five more years. She'll also need to keep contributing to the couple's retirement savings, Fernandez said.
If she does, their retirement accounts will grow to about $650,000 by the time Susan retires at age 70, assuming an annual growth rate of about 6%, Fernandez said. Susan would also wind up with nearly $36,000 annually in Social Security benefits. If Jack takes his Social Security benefits early, he'll receive close to $21,000 annually, bringing the couple's total benefits to $57,000 a year.
In hopes of keeping Jack from drawing on Social Security before he turns 66, Fernandez encouraged him to talk to his doctor about whether he would be eligible for Social Security disability insurance. If he is eligible, it would, in essence, enable him to receive his full retirement benefit sooner.
Fernandez also said that after age 70 the couple could safely draw about $24,500 each year from their retirement savings. All told, they could wind up with nearly $83,000 in annual retirement income, provided Susan keeps working and Jack gets disability insurance.
"They need to get through these next five years and get through the rest of their lives without needing long-term care," Fernandez said.
The expense of care in a nursing facility could shave years off the couple's retirement savings. If the Eades require three years of long-term care, for example, they would run out of money at age 94 instead of 100, Fernandez said.
She advised the couple to investigate whether they could qualify for a long-term-care policy that offered at least partial coverage.
Fernandez also recommended that the couple continue to look for ways to trim expenses. She advised them to stop putting additional money into their mortgage, raise the deductible on their auto and homeowner insurance policies and investigate whether they could lower their property taxes by having their home reassessed.
Jack should also check with his former employer to see whether he's entitled to any money pooled in a company profit-sharing plan, Fernandez said. She said if there was any part-time work that Jack could get, it would give the Eades a bit more spending money.
The Eades also desperately need to rebalance their retirement accounts. The couple have nearly 80% of their money invested in stocks, a risky amount given their ages.
Fernandez advised the couple to shift into a mix of 50% stocks and 50% bonds, which would still allow their portfolio to grow but provide more of a haven from the market's volatility. She also wants the couple to look for funds that have lower expenses.
Jack and Susan said that though they weren't entirely surprised by Fernandez's analysis, knowing the financial facts of their future was an eye-opener. It also gave the couple more clarity and direction.
Already, the Eades have raised the deductibles on their home and auto insurance policies, and they're getting paperwork from the tax assessor's office. Susan, who was startled by some of the high fees on the couple's investment accounts, is studying lower-cost funds. She's also planning to methodically reallocate the couple's retirement assets, moving 5% of their stock investments into bonds each year.
"We took her advice very seriously," Susan said about Fernandez's recommendations. "All we can do is prepare for the worst and hope for the best."
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This month's makeover
Who: Jack and Susan Eade
Income: $88,000, not including unemployment payments
Goals: To ensure that they have enough money for retirement and that their investments are properly allocated
Assets: $366,000 in retirement accounts, $37,000 in savings
Debts: $102,000 mortgage, a $7,000 car loan, a $1,700 medical loan and $3,000 in credit card debt
Recommendations: Susan should work five more years and keep contributing to retirement accounts. Jack should see whether he's eligible for Social Security disability insurance, which would enable him to receive his full Social Security benefits sooner. Trim expenses further if possible. Reallocate investments into a mix of 50% stocks and 50% bonds. Invest in lower-cost funds.
About the planner: Delia Fernandez is a certified financial planner in Los Alamitos.