Here's plan for saving at age 50

Q: I am contemplating marrying a man. My biggest concern is his financial situation. He is 50 and in good health. He has $60,000 in a retirement program at the company where he works. He has an additional $20,000 in IRAs. He has about $30,000 equity in a home worth about $85,000. He has no savings; they were lost to his ex-wife. He earns $45,000 to $60,000 a year and has medical insurance through his company.

He does not worry about money, as I do. How much money will he need to save for retirement between now and the time he is 65 or 67?

A: Let's start with a really important fact: There are few things that have more power than a two-earner couple. If you are both similar in age and have no children to educate, you are in the sweet spot of your work life, with maximum earnings and receding commitments. You could be nearly broke at 50 and build enough assets and security to retire comfortably at 67 by making it an important project.

The largest single lever in his retirement (and yours) is shelter. Paying off mortgage debt is a concrete project; it's a lot easier to understand than building a portfolio of financial assets. So your first common project should be to pay off the mortgage in 15 years or less. You can pay off a $55,000 mortgage in 15 years with a monthly payment of $464 (assuming a 6 percent interest rate). Increasing the mortgage payment to that amount would eliminate that debt and payment from your need for retirement income.

He will need about 70 percent of his earning power in retirement to maintain his current standard of living. Since Social Security will replace about 30 percent of his earning power, he will need to replace about 40 percent from personal savings.

If his mortgage payment takes about 10 percent of his income, he needs to replace only 30 percent of his earning power. Assuming his income is $50,000, that's $15,000 a year. It would require a nest egg of at least $300,000.

Bottom line: With 17 years to retirement, he can be in good condition without radical action. A modest savings plan — perhaps 5 percent of his income through an employer-provided plan — should do the trick, along with an accelerated mortgage payoff.

You can extend the "simple project" further by having a plan to have relatively new cars when you retire. That means saving enough in the five years before retirement to be able to buy at least one new car at retirement. So create a "car account" and save a payment a month.

The most important thing is that you find a way for the two of you to be on the same page about your future.

Q: My son is recently divorced with five children. He has about $18,000 for reserve and investment. How much should he save for a rainy day? He mentioned investing about $2,000 in gold. He thinks this would be a good investment if we have another 9/11. I think the gold investment is too risky.

— J.H., by e-mail

A: Yes, if he put all of his money into gold, that would be too risky. It would be just as risky to put all of his money into domestic or international stocks, bonds, cash or real estate. In an uncertain world, we reduce risk by holding a variety of assets.

Your son is proposing to invest $2,000 of his $18,000 in gold. That's about 11 percent of his financial assets. It's more than I would commit but a long way from being too risky or crazy. The responsibility of five children is gigantic. He should hold more cash than most people.