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Retirement
A sprinter's portfolio
September 12, 2000: 10:10 a.m. ET

A divorced baby boomer needs to save fast to reach retirement comfortably
By Staff Writer Jennifer Karchmer
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NEW YORK (CNNfn) - Richard Sealey doesn't plan on retiring sitting down - literally. In fact, this 54-year-old doesn't spend much time sitting at all. He's a Web designer by day, but by night and on weekends, you'll catch him sprinting around a track training for the 200-meter dash.

"My expectations when I retire are different from a lot of people," said Sealey, who competes nationally in the 50-to-55 age group. "I won't be puttering around the garden. I plan on taking out my bikes and my spikes."

But as a divorced man with two daughters: Kendall, 10, and Coco, 8, Sealey says he's on a track that many baby boomers find themselves on as they approach retirement. Sealey was forced to dip into the retirement accounts into which he had been saving since his 20s, to pay for legal fees and other expenses during his divorce.




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He's not bitter, but with about 10 years to go until he expects to retire, he's wondering how he can realize his dreams of buying a vintage Airstream bus and taking his bike around the world.

"I have to say it's bad planning," said Sealey, originally from England. "It's very easy to say it was my divorce, but it's a question of planning."

Running on empty?


So how can a baby boomer plan for retirement when he's basically starting from scratch? Some financial planners say it's a difficult situation but Sealey can make progress if he starts saving right away.

Surrounded by the White Mountains of New Hampshire, Sealey's hometown is an ideal setting for a runner and avid mountain biker. He trains with Carl Wallin, the highly regarded track coach at Dartmouth College.

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"You train. You get up early and go to the gym. Or I'm out my door and I'm on the hill," Sealey said with a laugh. At his age he gets a few more aches and pains than the college-age athletes, but he holds his own, he says.

Most recently, he clocked 25.46 in the 200 meters, placing him in third place at the USA Track and Field National Masters Indoor Championships, which were held in Boston in March.

When he's not hitting the trails, either on foot or with bike, Sealey works as a Web designer for his own consulting business in Boston. But he's switching gears now. In October, he will begin working for a non-profit organization closer to home.




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While he'll take a substantial pay cut - a $60,000 salary instead of the $100,000 he was previously making as a consultant - he'll be much closer to home, so he can spend time with his daughters. Also he says, the new job affords him numerous benefits, including a company-sponsored retirement plan, either a 401(k) or 403(b) plan, and the opportunity to move up the ranks and increase his salary to $100,000 in two years.

"It's a security issue," he said. "I have good vacation time, reasonable salary, benefits and health insurance, and an opportunity to work with an organization that will allow me to grow."

Meanwhile, his biggest monthly expenses are his mortgage ($480), his car payment ($480), and child support costs ($1,300). He boasts no credit card debt but his expenses are mostly for food since he eats out often. As an avid athlete, he spends money on sports equipment and trips with his daughters, who are also into running, biking and their latest craze, surfing.

Sealey would like to retire at 65, when his youngest daughter enters college, at which time he'd like to rent his house for $1,500 and focus on buying a 1966 Airstream bus to make home base. He expects to receive about $450 a month in Social Security benefits.

"We have this kind of attitude that we're impervious to life, we were hippies with the long hair," he said of the baby boomer generation. "That consciousness continued to the year 2000 and now we're 55 and have this consciousness that everything will be OK, provided we're healthy."

Taking some bad medicine


Certainly as a world-class sprinter and cycling enthusiast, Sealey himself brags of a strong bill of health, but his retirement portfolio would fail a blood test.

"He's got to take some tough medicine," said Larry Johnson, a certified financial planner (CFP) near Chicago. "He's just 10 years from retirement and starting at ground zero and he needs to live within a lower income."

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Johnson, president of Sterling Financial Advisory Services, says Sealey's first step should be to get his daily expenses in line so he can live on the $60,000 salary, which is a lot different from $100,000.

That means cutting back on eating out and really keeping track of where every penny goes.

"You have to separate your needs from your wants," added CFP Steven Kaye. "You don't need to eat out every day, but he'll have to trim some expenses."

Let's figure eating out every day costs Sealey about $400 a month. That may not sound like big bucks today, but if Sealey invests that money in a mutual fund that gains even a conservative 6 percent over the next 10 years, that dinner fund would be worth $65,880, according to Kaye.

Sprint for the finish line


While Sealey does have some hefty monthly payments - the child support and the mortgage and the car - as soon as those expenses end, he should then divert that money into mutual funds. Johnson recommends growth or balanced mutual funds or even an index fund with a heavy technology focus.

"Bonds aren't going to do it for this guy," Johnson said.




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Secondly, as soon as he's eligible, Sealey should take advantage of his company's retirement plan and maximize his contributions, which are typically 15 percent of his pre-tax pay, or $10,500.

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Also, he may want to consider downsizing his house, which is worth about $160,000, and buying something slightly less expensive, Johnson said.

So while he's socking away pre-tax dollars in a 401(k) plan and trying to save some in mutual funds, Sealey may find himself in a boat in which many other investors are paddling against the current.

"We find most of the time when someone gets wiped out [financially] at 50 or 55, they cannot assume the traditional role of retiring at 65," said Kaye, president of the American Economic Planning Group in Watchung, N.J.

"Instead, they have to think of working until 70 or later, or working at least part time in retirement."




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But Sealey is well aware of how much work he has ahead of him in the next 10 years as he approaches retirement age. Like his world-class track training, he takes it in stride.

His latest passion is surfing at Hampton Beach in New Hampshire with his daughters. They each don a wetsuit and grab a body board.

"It's way fun," he said. "Age doesn't necessarily mean that life is over. There are 60-year-old guys cutting the waves on boards."

--Staff Writer Jennifer Karchmer covers news about retirement for CNNfn.com. Click here to send her email.

* Disclaimer




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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.