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.

Then comes health insurance--in the hundreds of dollars per month for individuals, not including out-of pocket expenses--followed by food, clothing, utilities, telephone, car payments and maybe cable television. Yes, the numbers add up in a hurry, but putting them on paper is the first step toward truly dealing with them.

Get To Work

Next, start bringing some cash in the door. Take inventory of your skills--no matter how rusty--and see what additional training you need. Community colleges provide good resources for a second act. Buff your resume on the cheap using Internet job boards, like monster.com and careerbuilder.com, as well other online services such as resumeedge.com or 1-on-1-resumes.com. If you have some real guts, think about starting your own company (for more on this, see "Seven Businesses You Can Start Tomorrow" and "Businesses For Baby Boomers."

Donna Coulson of Red Bank, N.J., did it. As she approached 50, Coulson knew she was going to be laid off from her employee-training job at a natural gas utility. After taking an entrepreneurship course at nearby Middlesex County College, she hung out a shingle as a development trainer and coach; soon enough, she landed a steady consulting gig with a firm that trains female executives.

Too strapped to invest in building a new career? Try bartering. Eckerson offered to give Italian lessons to a female career counselor in nearby Buffalo, N.Y., in exchange for a personality test to gauge job suitability. "It was a saving grace," says Eckerson. "I needed help picking out a career, rather than just a job." While Eckerson drummed up some quick cash by going to work as a substitute, teaching Italian and Spanish, she decided that she really wanted to be a writer. After taking classes in writing and publishing at the local community college, she is now working on illustrated non-fiction books for children.

Temporary work can plug the cash drain for awhile. Back in December 2006, Roger Chesser, 57, of Falls Church, Va., was in trouble. Unable to find full-time work after his contract setting up voter registration systems ended, Chesser turned to Senior Employment Resources, a service that specializes in finding jobs for the over-50 crowd. "I felt, this time, I was really on a slippery slope when it came to finding something new," he said. Part-time work (including being an usher at Kennedy Center opera shows) has kept him going while he waits for a full-time voting registration job this election year.

When it comes to part-time work, the good news is that more established companies--including Borders, Wal-Mart and Starbucks--are trolling for older staff. "Employers are happy to have them, because they are reliable, they show up and they do a day's work," says Susan Allan, who heads Senior Employment Resources.

They also bring experience to bear. Bookselling giant Borders, for example, wants employees who read a lot--and who better reflect the demographic makeup of the areas they serve. So far, the company has doubled, to 15%, the number of employees aged 50 and over in its 30,000-strong workforce, and is aiming for 20% by 2010.

See Past Tomorrow

Third step: Get some health insurance. Companies with 20 or more people are required by a 1986 law called COBRA (Consolidated Omnibus Budget Reconciliation Act) to extend existing health coverage up to 18 months at the group rate, even in the event of layoffs and most firings. But if you don't find new coverage within 60 days, there's a risk a new policy could preclude care for a pre-existing condition, such as high blood pressure or diabetes, which often hit the 50-plus crowd.

Some associations and affinity groups (say, for musicians or writers) offer group rates for members. It's usually not a bargain--but it's better than negotiating on your own. For more on individual health insurance, check out "How To Find The Best Deal On Health Insurance."

With life a turbulent mess today, the future may seem all but irrelevant. It's not. As soon as you get your feet, sit down and map out--in writing--where you want to be five or even 10 years down the road. How much do you need to sock away for retirement? Will you eventually move to a warmer clime? Do you need a plan for long-term care?

To get started, set up a consultation with a certified financial planner; you can find them at napfa.org, Web site of the National Association of Financial Planners. Beware, though: Not all planners are worth your time. Vet their track records at sec.gov (Web site of the Securities and Exchange Commission) or at nasd.com (home of the National Association of Securities Dealers).

Remember: Deal with the hard retirement questions early--the answers get even tougher as the years tick on.