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September 03, 2006|By Janet Kidd Stewart | Janet Kidd Stewart,Tribune Media Services

Robyn Michaels is in a tough spot.

She's looking for work, spends more than she takes in and is coming up on retirement. But, experts said, the situation is not hopeless.

When her dog-grooming business slowed last spring after eight successful years, Michaels first tried to downsize her 1,700- square-foot shop, Northshore Clippers, into smaller quarters.

But when she couldn't find a smaller rental space that would allow pet traffic, she started to rethink her entire financial picture. At the end of May, she closed the business, picked up some part-time grooming work and started hunting for a long-term job.

Michaels, 52, had been running the business, self-insuring her own health care and trying to save what she could for retirement on her own.

She chose a 15-year mortgage and owes less than $113,000 on her Chicago home, a two-apartment building valued at about $460,000. She regularly rents out the other apartment and also rents a room in her apartment, which together bring in about $20,000 a year. And she's managed to save $97,270 in individual retirement accounts and other investments.

But she had a sinking feeling she wasn't earning and saving enough.

"I realize I am not in a dire situation compared to most, but I would like to retire in 10 years if at all possible," Michaels wrote in a letter requesting a Money Makeover.

Your Money then enlisted a team of financial and career experts to help Michaels figure out if she can reach her goal.

The bottom line? She's got a long way to go and a short time to get there.

Financial planner Sarah Hussey of the Weston Financial Group in Bridgewater, N.J., estimates Michaels will need a nest egg of about $440,000 at retirement to make sure she won't outlive her money.

"Oh, my goodness," Michaels said to Hussey when she heard the estimate. "I'm way behind."

Hussey's estimate is based on an initial-retirement-year withdrawal of 4 percent, or about $18,000. Assuming the mortgage is paid off by retirement, her investments and rent, plus her Social Security checks, should cover her inflation-adjusted expenses, Hussey said.

If she could accumulate $360,000, Michaels would have to take an initial withdrawal of 5 percent to meet expenses, and that scenario carries a higher risk of running out of money before she dies, Hussey said.

To get to the $440,000 figure in 10 years, Michaels would have to save $12,000 a year and have the money grow at 10 percent annually, Hussey said. Both of those scenarios seem unrealistic, especially with Michaels chewing through savings while she contemplates her next career move.

Her dog-grooming income this year, including what came from the business through May and her occasional part-time work, is expected to amount to about $9,600. Rental income from her roommate and from the other unit in her building will generate another $20,040. That leaves a $12,852 shortfall after living expenses.

But things could improve quickly if she finds a job soon.

Before launching her pet-care business, Michaels had spent the bulk of her career in the nonprofit world, and she said working with organizations that have a cause still is important to her.

That passion, and her fast-paced speaking style, sometimes can leave her frustrated with the mechanics of a workplace, said career coach Tim Ursiny, founder of Advantage Coaching & Training in West Chicago, Ill.

Ursiny worked with Michaels in a telephone session to help her sharpen her interviewing skills.

"In talking with Robyn, I heard four themes," Ursiny said. "In this order, she needs to work with people she respects, have some creativity in her work, be with an organization that is making an impact and the job itself needs to be a personal challenge."

Having been disappointed with her work environment in past jobs, Michaels also needs to be realistic about whether she would be a good fit in a workplace, the experts said.

"You're energetic and optimistic off the bat, but check [prospective employers] for areas that wouldn't meet the priorities you know are important," Ursiny said.

Resume expert Elizabeth Handlin, founder of Ultimate Resumes (, helped to polish Michaels' resume and made some specific job-hunting recommendations.

Handlin added more detail to Michaels' description of the nonprofit organizations for which she's worked, then gave her some tips on culling information from Internet job postings to zero in on companies that might be a good fit.

Assuming she takes a new job soon, she'll need to start putting her finances in order, too, Hussey said.

Once employed at a salary of at least $35,000, she'll need to begin plowing money into a Roth IRA, Hussey said. At that income level, her tax bite will be minimal, so it's better to forgo the up-front deduction associated with traditional IRAs and fund a Roth IRA, in which money comes out tax-free at retirement.

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