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Saving for the Future

Ginsberg, for example, is not eager to take on a mortgage, especially in the current skyrocketing housing market. She can't afford anything in her neighborhood, where a one-bedroom condo runs upwards of $300,000. And because of her hours -- she often doesn't get off until 9 p.m. -- she would like to stay within walking distance of the store.

Armstrong and Ritter agreed, and said that while many American households benefit from the wealth that appreciating home values provide, buying a home is not necessary for a secure retirement. Ginsberg is better off leaving her savings liquid in case of emergencies, Ritter said.

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)

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.
_____Crunching the Numbers_____
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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"She is fine not doing it," he said. "People are under the impression you have to own a house to retire. A house is one way. Investments are one way. Having your own business is one way."

Malgoire disagreed, saying that Ginsberg could get government help to buy a house, "though she probably won't be able to live in Adams Morgan."

"It seems very hard to live on $40,000 a year in Adams Morgan," said Malgoire, whose clients typically have minimum assets of at least $1 million.

The planners also disagreed over whether Ginsberg should follow through on a desire to start her own business. She would like to open a high-tone market with gourmet foods, and tables to sit and eat. She said two would-be investors have discussed the project with her, but it hasn't worked out yet.

Armstrong and Ritter said that as long as she includes investors in the venture, it might be a good idea, and would even support her borrowing money to get it off the ground.

"Another option is to find somebody else who has a business and in five to 10 years is looking to sell to someone," T. Rowe's Ritter said. "If she can manage the transition that way, it accomplishes her goal without a huge capital investment."

Malgoire was adamantly against the idea. "It's way too risky for her to do it on her own," she said. As an alternative, she suggested that Ginsberg get a job with a unionized supermarket such as Giant Food or Safeway so she can have better pay and healthy benefits.

But working for a corporate supermarket -- without flying cows or bar mitzvah invitations -- doesn't appeal to Ginsberg.

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