Starting From Scratch At 50

Nancy Jo Eckerson and her husband used to be quite a team. For more than decade, the New York couple ran successful delis on Long Island, and later, an upscale restaurant in a charming Victorian hotel in upstate New York.

Then came divorce in 2000--and at age 50, one month shy of her 25th wedding anniversary, Eckerson found herself without a home or an income. While she had poured her life (and a small inheritance) into the food business, as part of the settlement, she had to fork over her stake in the house and the restaurant to cover her share of debt the couple had accumulated renovating the turn-of-the-last-century building. Eckerson's one saving grace: three years of experience teaching foreign languages to high school students, though that was back in the 1970s, and she had long since given up her certification.

Eckerson's woeful tale is all too common. Every year, throngs of people--no one really knows how many--are forced to start from financial ground zero because of layoffs, bankruptcy, divorce or even a spouse's death. And while about half of marriages now end up in separation and divorce, plenty more husbands and wives will stay trapped in miserable unions for fear of braving new, unstable futures.

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For women--especially those who have been out of the workforce for years--the transition can be particularly tough. "Most women have devoted more time and effort to their families," says Heidi Hartmann, president of the Institute for Women's Policy Research. "Then, when there's a divorce or spousal illness, they suddenly realize they need to get cracking."

In 2000, the percentage of working women 55 and over was 26.1%, according to the Bureau of Labor Statistics. Last year, that number crept up to 33.2 %. "Clearly, women don't do as well financially when there is a divorce," says David Popenoe, co-director of the National Marriage Project, a Piscataway, N.J., research group. Consider, too, that fewer than one in three women have pensions (compared to one out of every two men), and those that do typically receive about half the amount men do, according to a December report by the Institute for Women's Policy Research in Washington, D.C.

For baby boomers feeling the sands shifting beneath them--or those who just like to be prepared--there are steps you can take toward terra firma. But start right away: With any luck, you've set aside three to six months of living expenses to weather the storm--but those evaporate fast.

Dust Yourself Off

First step, make a budget. For most people, the biggest expense by far is the monthly rent or mortgage payment--in the neighborhood of 30% of pre-tax gross income.

Eckerson downsized to a small nearby apartment, chopping monthly housing costs to $600 in rent versus a $1,500 mortgage (plus utilities) for her four-bedroom family home (the couple had two kids). And still, she had to rely on some family support to make ends meet. Deciding whether to own or rent is tricky, especially in a slumping housing market. Don't forget to take into account soaring property taxes, insurance and maintenance costs.

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