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Saving for the Future

More to her liking, she said, is Ritter's suggestion that she not really retire. She could work part time in a job that is less physically demanding than her current one, a tactic many older Americans are pursuing, and one that Federal Reserve Chairman Alan Greenspan has encouraged.

Ginsberg, who already puts in guest appearances at cooking classes, said she would be open to teaching. "I've always worked. There is no way I would stop working and sit at home," she 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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But Armstrong cautioned that even if she makes sacrifices, saves steadily, and earns a good return on her money, Ginsberg may run out of cash before she reaches age 81, the current life-expectancy for American women. Under three different scenarios, Armstrong assumed Ginsberg saved $4,000 annually, and earned an aggressive investment return of 8.4 percent, but received different Social Security benefits. Even with private accounts factored in, she projected Ginsberg would run out of money between age 76 and 78, leaving her to survive on her Social Security check alone.

"It doesn't appear the private account affects her much," Armstrong said.

On a recent evening, Ginsberg digested the planners' recommendations over a cocktail and a bowl of bisque at a French restaurant a few blocks from her home.

"What am I going to do about it?" she said. "I'm just one tax-paying citizen. . . . I will have to think about [retirement] more than I have. I mean, hindsight is 20-20 right? All the money I've blown . . ."

Ginsberg said the 8.4 percent rate of return Armstrong believes she can earn did make her more inclined to invest. She already has her eye on at least one stock. She noted that Smithfield Foods, the Smithfield, Va., pork processor and hog producer, earned $98 million dollars for the third quarter of 2004.

"I was out of my mind for not buying Smithfield stock," she said. (Her instincts may be good: Smithfield stock has roughly tripled in the past five years.)

Ginsberg was less enthusiastic about the austerity measures she would need to undertake to save enough money to last her into her old age.

"What am I going to do? Go home everyday?" she said. "Life is too short."

"I don't think I'm going to live that long," she said. "But I guess I have to think like I am in case I do."

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