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For some, retirement is what happens despite the planning

Retirement used to be a virtual entitlement. These days, and certainly moving forward, it must be strategized, plotted well in advance of the completion of one's working life.

Scott and Darcy Watson are years away from retirement, but they started planning early. (Michael Bryant / Staff Photographer)
Scott and Darcy Watson are years away from retirement, but they started planning early. (Michael Bryant / Staff Photographer)Read more

Retirement used to be a virtual entitlement. These days, and certainly moving forward, it must be strategized, plotted well in advance of the completion of one's working life.

Even then, there are no assurances.

Below are the stories of three families that did the due diligence that should have resulted in comfortable retirements. But the outcomes are starkly different.

The Watsons

Darcy and Scott Watson are years away from retirement. The 42-year-olds are raising two boys, Ronny, 8, and Luke, 6, in Mount Laurel.

"Scott has saved rigorously over the years; he's really good at it," says Darcy, who holds an MBA and previously worked at Campbell's. She no longer works outside the home, in order to care for her sons, one of whom has autistic spectrum disorder, which requires some extensive therapy.

When he was just 22, Scott started maxing out his 401(k) with savings, which were matched by his then-employer. He has done so every year since.

"It made sense to me at the time," said Scott, "even though I was making [very little in] pay."

At 32, he and Darcy married, and enjoyed two incomes. Currently, his retirement contribution comes "straight out of my paycheck at Bristol Myers, so I never even see the money," Scott said. The Watsons also rolled in his old retirement fund and Darcy's Campbell's retirement fund into a single IRA plan.

Kids changed everything.

"Before we had kids, we thought we'd retire early - in our late 50s, maybe," Scott said. The couple even went to a financial planner to determine how much they would need to save to manage early retirement.

"But we were grossly unprepared for how expensive kids are," Scott said. "We stopped counting [the expenses] because you cry if you start adding them up."

Given the uncertainties surrounding Social Security, including the rising age mandates and solvency, the Watsons aren't counting on it being a big factor in their retirement incomes.

It all adds up to a change in plans for the Watsons.

"We're not focusing on early retirement anymore," Scott said. "That's out the window. We have to tackle college between now and then."

Now, the Darcys hope to retire in their late 60s, well after their kids finish their educations.

The Fischers

Ted Fischer, 62, plans to retire in less than a year, after selling his financial-advisory and estate-planning practice in Lewes, Del., to his partner.

Why now? For one thing, he is old enough to apply early for Social Security, if he wishes to do that. Second, Fischer and his wife, who live in Lewes, sat down and performed a cash-flow analysis, matching up different sources of income - her pension from 30 years at DuPont, his from a Fortune 50 company, including deferred compensation; an investment portfolio; their combined Social Security payments; and the proceeds from the sale of his practice.

Then they matched that with what they plan to spend in retirement on annual expenses.

Lifestyles vary, but the Fischers own their home and don't have a second mortgage. Their financial situation is solid.

"A lot of people I've counseled, especially the affluent, think that in retirement they can get by on $60,000 a year, $70,000 tops," Fischer said. "They always underestimate because they don't stop spending the way they did when they were working."

Fischer and his partner, Burt Hutchinson, work with clients and break down how much they save on an after-tax basis - "which is usually a lot lower than they realize," Fischer added.

Ted's wife, Pat, keeps a spreadsheet with a 12-month rolling expense tally, counting up everything they have spent their money on for the last few years.

"She's a systems analyst, so she's good at it," Fischer said. "That's the most important thing, the monitoring step, the key to knowing what we're spending."

They charge certain expenses on certain credit cards - travel on a Visa card, dining on a MasterCard, etc. - for better accounting.

Ted says about half of their cash flow in retirement will come from his corporate pension and his wife's pension. An additional 45 percent will be from his deferred compensation. The remainder will be provided by Social Security payments.

He points out that because he is retiring at 62, he could draw early on Social Security and get a lower, but still guaranteed, inflation-adjusted income, versus starting Social Security payments at 70 and getting a higher amount.

Fischer has now decided to hold off on applying for Social Security until age 66, in four years. At that point, his wife will retire at 62, making her eligible to take Social Security earlier and absorb the 25 percent reduction in her benefit payment.

What do the Fischers see as the benefits of retirement? "Peace of mind," Ted Fischer answers. "We'll have complete freedom."

Emma DeVita

Emma DeVita and her husband, Michael, had very reasonable plans for a shared retirement. Both worked well into their 70s. They would have pensions and Social Security payments, and they had been contributing to an investment fund.

Then, two things happened: Her husband became ill, and, after a four-year battle, died from multiple myeloma. Just one month later, Emma DeVita learned that her investments were tied up in Bernard Madoff's unraveling billion-dollar Ponzi scam.

The steps the DeVitas had taken on behalf of retirement even had a name. They called it: "The Plan." They initiated it in 2002, when her husband retired from his job as superintendent of a YMCA building. About a decade earlier, and after 22 years of service, she left her position at Sears.

"I quit and went to work in my son's business" of computer consulting, the 83-year-old Chalfont resident said.

It was her son, also named Michael, who told her in the early 1990s about an investment opportunity. Both she and her son opened accounts. By 2005, DeVita and her husband were ready to take advantage of all of the assets they had assembled on behalf of the shared retirement. But her husband had become ill, so they did not start tapping the investment account.

In 2008, Michael DeVita lost his battle with multiple myeloma.

The time had come to implement all aspects of "The Plan," including the most critical element, the investment fund. The managers of that fund had gotten into trouble, and in the 1990s the account was moved to a feeder fund for Bernard Madoff Investment Securities. At this point, Madoff was known only as a successful investment manager.

Over the next few months, Emma DeVita finalized her husband's estate. That included taking her funds from the retirement account and using them to finance her retirement.

On Dec. 8, 2008, "I was at the local bank arranging to close the Madoff account and begin living on the income from a two-decade investment," she recalled. "Our goal was that this investment account would be used to replace the income from Social Security and pension for the one who passed first. I thought that would be me."

On Dec. 11, 2008, Madoff was arrested. The DeVitas' investments were gone.

Now, Emma DeVita says, "I live a dramatically different lifestyle, with very different objectives and expectations. I'm thinking of taking a telephone job, a marketing job." She explains all of this as she works a rosary as she watches a Phillies game.

She's also an activist.

"My new job is communicating with others who were victimized by Madoff, to attempt to recover some small portion of my investment," she said. "I want my fellow Americans to gain a better understanding of what the real Madoff investor looks like.

"You need to understand that we did nothing wrong other than listening to the agency that is tasked by Congress with protecting me against this type of fraud. So far, my country and the [Security and Exchange Commission] have failed me."

Still, she has two grandchildren and two great-grandchildren and lives in hope.

"I may have lost my money, but I am still rich," DeVita said.