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These days, nothing is more important to Jennifer Jones than building her nest egg. During her lunch break last November, the 43-year-old designer of data circuits for AT&T in Lithonia, Georgia, was cruising the Web in search of information on retirement planning when she spotted our financial fitness contest. She entered the contest with no expectation of the outcome. “I didn’t think I would win,” she says. “I entered because I needed some help. I needed someone to set me up with a plan.”
For years, Jones, who is single, has had to make sacrifices. Over the past two decades, most of her income went to the care of her two sons, who are now grown up. And, last year, she depleted $4,500 in savings to realize one of her dreams: home ownership.
To achieve her new goal, she has no time to waste. Jones, who has an annual income of $41,000, seeks to retire in 12 years and hopes she can spend part of her post-retirement years as the proprietor of a clothing outlet. “I don’t want to work until I’m 65 years old,” she says. “I don’t want to have worked hard and made sacrifices and then not be able to retire with some level of comfort.”
Jones has several challenges to overcome. She currently has $3,381 in credit card debt. Much of it comes from money she spent to decorate her home, including $2,800 in new furnishings. Also, her 401(k) account, her primary retirement investment vehicle, stands at $2,300. She also has 12 shares of AT&T stock, which she can’t touch until she retires.
An admitted “shopaholic,” Jones is already making moves to correct her financial status. To reduce her debt burden, she recently arranged a debt-consolidation loan from her credit union. She has also made a commitment to boost her savings by more than 15% of her after-tax income and keep better track of her bills so that she doesn’t get behind in payments.
But she believes the key to a healthy retirement will come through gaining financial advice that will help her become a savvy investor. In fact, Jones has already targeted much of the $2,000 in contest winnings to be invested in mutual funds. “I need to find a way for my money to work for me,” she says. “I want to place my cash in a solid investment and not touch it.”
In order for Jones to start her financial fitness program, BE arranged for her to have her initial consultation with Les Netter, a financial advisor with SalomonSmithBarney in Atlanta. Focusing on her retirement goal, he suggested the following:
- Increase savings and find supplemental sources of income. As Jones whittles down her debt, she needs to significantly increase her savings, including an emergency fund with three to six months of income. Then she can start investing in mutual funds that will provide her both with diversification and professional money management.
- Make the maximum contribution to her 401(k) plan. Netter says Jones should take full advantage of her company-sponsored