Daniel Marsula, Post-Gazette Click illustration for larger image. More Coverage: Companies wonder: Can workers be led into savings plans like horses to water? With online calculators, it's 'So many questions, so little time' Benefits shrink if you retire early, grow if you retire late

Toni Yates has been working for a social services agency in Armstrong County for nearly 30 years. The 57-year-old divorcee is looking forward to retiring in five years, selling her home and moving to an apartment in Pittsburgh to be near one of her two grown daughters.

"I've been in this small town [Ford City] all my life. I feel like I need to move on," she said.

Still, Ms. Yates is worried she won't be able to swing it financially.

"I don't live extravagantly. I don't require a lot," she said. "But am I going to have enough money to pay my rent?"

So far, she's saved about $82,000 in a 401(k) plan at work. She's hoping those funds, plus proceeds from the sale of her home and Social Security benefits will be enough.

Unfortunately, unless Ms. Yates considers part-time work, retiring early from her full-time job looks like a nearly impossible stretch.

She is projected to receive about $10,000 a year, or around $830 a month, in Social Security benefits if she retires as planned at age 62. Right now, her living expenses are about $20,000 a year, or roughly $1,500 to $1,700 a month.

Because she already is living frugally, there isn't much she can do to cut back. She doesn't take vacations, spend a lot on clothes or eat out much.

"I have a pretty simple lifestyle," she said.

She'll also have to budget for a major expense that she doesn't have right now: about $400 a month or more for health-care coverage until she qualifies for Medicare at age 65.

Although her current living expenses are about $20,000, Ms. Yates must consider that inflation likely will require her to spend more in future years, said Robert Feyche, a financial planner with CF Advisors in Green Tree. He estimates it will cost about $27,000 a year to maintain her current standard of living when she reaches age 67, and about $36,000 at age 77.

	Robin Rombach, Post-Gazette Click photo for larger image. THE CASE: Who: Toni Yates, left, of Ford City. Age: 57 Household income: $30,000 ($2,500 per month). Major monthly expenses: $400 mortgage; $275 car payment; utilities. Savings: $82,000 in a 401(k). Monthly contributions to savings: $325 including employer contributions ($3,900 annually). Goals: Retire in five years at age 62.

Ms. Yates appears to be facing a significant shortfall that puts her in danger of outliving her nest egg.

"She really needs that part-time work," to bring in $6,000 to $10,000 per year to supplement her income, at least until Medicare kicks in, Mr. Feyche said.

In her case, if she keeps annual earnings under about $12,000, she won't trigger a reduction in her Social Security benefits or federal taxes on them, he said.

Currently, Ms. Yates contributes 5 percent of her salary to her 401(k). Coupled with her employer's 8 percent contribution, her annual savings are about $3,900 a year.

To maximize her nest egg, Mr. Feyche recommends that Ms. Yates try to bump up her savings rate to 6 percent.

He also advises shifting the fund's allocation to 65 percent stocks and 35 percent bonds in an attempt to boost her annual return to about 8 percent. Currently about 75 percent of her portfolio is invested in a bond fund delivering "abysmal" returns, Mr. Feyche said.

After reviewing the plan's offerings, Mr. Feyche recommended this mix: 40 percent in American Funds' American Balanced R3 (Ticker: RLBCX); 20 percent in MFS Total Return A (MSFRX); 15 percent in American Funds' Fundamental Investors (RFNCX); 10 percent in the Templeton Foreign Fund Class A (TEMFX); 10 percent in Principal Investors Intermediate Term Bond Fund (PHIRX); and 5 percent in MFS Emerging Growth A (MFEGX).

Assuming an average annual return of 8 percent and five more years of contributions, Ms. Yates' 401(k) would be worth about $145,000 on her expected retirement date, Mr. Feyche said. Together with the $110,000 she expects to net after selling her home, her nest egg would total about $255,000.

Barring any major unforeseen expenses, and assuming Ms. Yates maintains her thrifty lifestyle and can find part-time work for a few years, "she's looking pretty good," Mr. Feyche said.

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Saving Boot Camp:
If you would like to be considered for a free savings check-up and are willing to have your name and a snapshot of your finances appear in the newspaper, contact reporter Patricia Sabatini. Include your age, occupation, household income, daytime telephone number and brief description of your savings situation, goals and concerns. Patricia Sabatini can be reached at psabatini@post-gazette.com or 412-263-3066.