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Saving for the Future

Ginsberg shares certain traits with many of those who don't have retirement savings. She is not married. She doesn't own a home and doesn't hold a college degree.

Married couples, in fact, are almost twice as likely as unmarried individuals to own an individual retirement account, the Congressional Research Service reported. Homeowners are three times as likely. And IRA ownership increases with education and income level.


The daughter of a Washington area butcher, Pamela Ginsberg broke her first side of beef at age 7 while standing on a milk crate. She has been in the food business ever since. (Nikki Kahn -- The Washington Post)

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Ask the Experts Financial planners Stuart Ritter of T. Rowe Price, Alexandra Armstrong of Armstrong, MacIntyre & Severns and Mary Malgoire of the Family Firm offer their advice.
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Crunching the Numbers

Karen Preysnar of Armstrong, MacIntyre & Severns Inc. ran several detailed projections based on the assumption that Pamela Ginsberg put $4,000 each year into a Roth IRA that saw an 8.4 percent return -- higher than the 3 percent some economists said is more realistic. Preysnar calculated that Ginsberg's annual expenses add up to $22,500 per year and assumed an inflation rate of 4 percent.

• In the first scenario, Ginsberg receives 100 percent of her Social Security benefits and the money she made in her Roth IRA. She amasses assets of $291,677 at age 65, but that money runs out at age 77.

• In the second scenario, Ginsberg receives 89 percent of her promised Social Security benefits. (After 2041, Social Security may not be able to pay full benefits, according to current projections by the system's trustees.) Her money runs out at age 76.

• In the final scenario, Ginsberg receives 77 percent of promised Social Security benefits, which are reduced under President Bush's plan if she signs up for a private account. But she earns an 8.4 percent return on both a private account funded with part of her Social Security taxes and on the Roth IRA. She amasses $378,582. Still, her savings run out by age 78.

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But many of those who own retirement accounts have made only modest headway. Among the 47.5 million households with a working adult who owns either an IRA, Keogh, or 401(k) plan, the median balance of those accounts was $27,000, a little more than $1,000 a year if spread over a 20-year retirement.

The savings "would not by themselves provide an income in retirement that most people in the United States would find to be adequate," the CRS study concluded. It noted that for older workers, ages 55 to 64, their retirement savings would provide about $408 a month in extra income.

Ginsberg said she never gave her financial future much thought before. Her father died at age 52, her mother at 65, and "I never thought I would live to see 59," she said.

Her work has taken its toll on her, which adds to her unease when she thinks about how much longer she can continue in such a physically demanding trade. The daughter of a Washington area butcher, she broke her first side of beef at age 7 while standing on a milk crate, and she has been in the food business ever since.

In 1995, working at a restaurant in New Orleans, she stepped into a five-gallon vat of tomato-based zucchini soup that had just come off the stove and was stored in the wrong place. She spent several weeks in a burn unit and lost 40 percent of her left foot. For three years she subsisted on worker's compensation.

Three years ago, she had back surgery. While she tries to avoid lifting heavy loads, she still hoists 40-pound slabs of beef from the walk-in locker to her work area. When delivery trucks arrive Monday and Thursday, she often finds herself hauling boxes.

At one point, several years back, she started a retirement savings account and managed to put away $3,200. Then she caught pneumonia and didn't work for several months. While she was out, she cashed out her retirement savings to cover expenses.

While agreeing that Ginsberg needs to begin saving, the three planners split on some other key aspect's of Ginsberg's finances.


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