Investor Profile: Investing & Making Ends Meet

Investors: Gina Brown
Age: 41
Income: $44,000
Family status: Divorced; two children, John, 11, and Emily, 9

In her wildest dreams, Gina never thought she'd be a single mom. But her high school sweetheart and husband of 20 years left, leaving her with two children and plenty of worries about the future.

While she's been tempted, one thing she won't do is stop investing for retirement. She learned a lesson from her parents, who waited for an inheritance that never came. They now live in a mobile home on a small pension and monthly Social Security checks.

Gina works in a marketing job at a bank. She contributes 6 percent to her 401(k), which is matched by the bank. It now totals $49,000. She's invested in Roth IRAs for three years and has $7,500 in her account. She's managed to put away $10,000 for emergencies, but it's earning only 1.25 percent. She wants to use some of it to pay off $4,000 in credit card debt that costs her 18 percent in interest. She may also cut down her 401(k) contribution until her bills are paid.

Making a commitment to retirement investing has meant tradeoffs. The family rents an apartment because there isn't enough for a down payment on a home. Vacations are summer visits to an uncle's lake home. Groceries are bought at a bag-your-own food warehouse. The family does not eat out. Clothing is often hand-me-downs or from resale shops.

"Sure, I'd love to be able to spend a week at Disney and dress my kids in Abercrombie & Fitch," Gina says, "but no one else is going to invest for my retirement. I may someday remarry, but I can't count on that. So we're trying to live as inexpensively as we can."

Gina said she'd like to be able to help pay tuition and expenses when John and Emily reach college age. Hopefully, she'll be in a better job, making more money. If not, she'll be tempted to tap her Roth IRA, where she can withdraw the contributions she made to the account at any time tax-free and without penalty. She'll also encourage her kids to pay for their own schooling like she did – with scholarships, student loans, and work-study jobs.

  • Not FDIC Insured
  • No Bank Guarantee
  • May Lose Value