Getting it right the second time around: early retirement proved costly for Shirley Malone.

Early retirement sounded like a good idea to Shirley Malone two years ago. She was 50 and suffering from professional burnout, having spent nearly 23 years at telecommunications giant SBC Communications in Torrance, California.

Malone saw a way out and took it in June 2002, when SBC offered early retirement packages. The company eliminated jobs to offset weak growth and increased competition.

As an added incentive, SBC added an extra four years of service to the packages, making Malone's payout equal to that of someone who had worked there 26 and a half years. Malone walked away with a lump sum of $315,000. including her 401(k). But it wasn't long before the absence of a regular paycheck started making her feel vulnerable.

Malone enjoyed her first year in retirement: exercising with a personal trainer, redoing her backyard, and traveling. She had more quality time for her son, Jeffrey, then 11, whom she adopted when he was 4, and her 79-year-old mother, who lives with them.

But unexpected expenses started to take their toll. Malone had to put about $4,000 on her credit card to repair two of her three ears. She owns a 1995 Ford Winstar minivan, a 1987 Mercedes 190, and a 1988 Mercedes 190. She had the foresight to close out 18 credit card accounts that had zero balances when she lea SBC. but between everyday living and extras such as $1,500 for Jeffrey's class trip, she soon had $15,000 in credit card debt. Malone had also taken $30,000 out of her 401(k) to have cash on hand.

"It takes a whole lot more than you think to live the way you want. Everything is expensive when there are no checks coming in," says Malone, who became more resourceful with her money, doing things such as paying Jeffrey's private school tuition up front to receive a discount. She also reduced her cable television bill and made fewer trips to the mall.

By August 2003, Malone had begun working part time as a customer service representative for Globe Aviation Services. Eventually, she contacted her former employer. SBC had a history of rehiring its employees, and Malone had departed a year prior knowing that she may one day return. The company, rehired her, and since April, she's been content to work for both SBC and Globe Aviation Services. She's currently earning around $55,000 a year. (She receives $546 a month from the state for adoption assistance.)

But it wasn't just day-to-day expenses or a sudden financial crisis that made Malone return to work. She now has new goals, which include saving more for retirement; investing in real estate for income; and remodeling her three-bedroom, two-bathroom home. She purchased her home 30 years ago for $30,000 and it is worth about $500,000 today. More importantly, Malone needs to save more money for Jeffrey's college education. She's saved $3,000 thus far.

If Malone has her way, she will say goodbye to the working world for good in 10 years. "I want to be that 62-year-old lady who takes a cruise twice a year and ... my dream trip to Africa."

THE ADVICE

BLACK ENTERPRISE had Michael Smith, a certified financial planner with ProFocus Inc. in Phoenix, assess the financial standing of our 50th financial fitness contest winner in order to determine if she could realistically retire in 2014. Smith says the good news is that Malone is "no longer depleting her savings to maintain her lifestyle," but her challenge now is to get more aggressive about saving for retirement and her son's college education. Moreover, Malone's mother has had knee and hip surgeries. "Should she require long-term care, [Malone] will have to decide whether to place her in state care or provide in-home care," says Smith.

Much hinges on Malone's fortitude: how long she can work two jobs without burning out again. "Having to care for her mom and the cost of living in Southern California may prolong [the number of years she has to work], but her financial future is above average--she's a saver."

Malone still has around $300,000 earmarked for retirement and roughly $25,000 in a variety of savings vehicles and checking accounts. But retiring in 10 years, while possible, won't be easy. Smith says she'll need at least $700,000 in retirement assets by the time she's 62. Based on a 6% return and a 4.5% payout, she could receive $31,000 annually from her retirement funds and an estimated $14,000 per year from Social Security, giving her $45,000 in future income.

How can she achieve that? She needs to save $1,050 per month for the next 10 year. "It's a stretch, but with her employer matching contributions in her 401(k) and tax breaks, it's worth shooting for," Smith says. Smith also recommends the following strategies:

Get a home equity line of credit. Smith would like Malone to "take out a home equity line of credit of $25,000, pay off credit card debt, and use the remainder to assist in the purchase of a new vehicle." Doing so would lower her debt repayment obligation, and the interest is tax deductible. She has two late 80s model Mercedes that are high maintenance and low in value. And her van is more than 9 years old. "Sell the van and one of the Mercedes," says Smith.

Max out on her 401(k). Once Malone becomes eligible for SBC's 401(k) again, "she should invest both her contribution and the employer match into mid-cap value and moderate allocation mutual funds. She needs diversity; a good share of her retirement assets are in fixed annuities and annuity contracts," says Smith.

Establish a living trust to mom's affairs. Malone's mother needs a durable power of attorney for health, one for property, and a living will (or directive of physicians). And Malone needs to take inventory of all her mother's assets, says Smith. This would help avoid probate if her mother becomes incapacitated and allow Malone to ensure that her mother's wishes are granted.

Set up a 529 plan for Jeffrey. Malone should put away at least $150 a month toward her son's college education, even if she has to use a portion of the adoption assistance check she receives. Smith recommends small-cap value mutual fund holdings for the account.

Open a Roth IRA. Smith recommends that Malone invest her $2,000 in contest winnings in a Roth IRA and do more to offset her tax liability. He suggests putting the money in the Meridian Growth fund (MERDX).

Acquire more insurance. As the household breadwinner, all the pressure is un Malone. She has disability insurance (her salary's worth) and more than $400,000 worth of life insurance coverage, but Smith says Malone needs twice that amount and recommends that she pick up as much inexpensive group life insurance as possible. And Malone should at least research long-term care insurance, which covers the expense of nursing homes and other types of elder care.

Financial Snapshot:
Shirley Malone

HOUSEHOLD INCOME

Gross Income                         $55,000
Adoption Assistance                    6,552
Total                                $61,552

ASSETS

Checking Account                      $2,000
Savings Account                       15,000
Brokerage Account                    312,140
Prudential IRA                         1,800
Coverdale Education IRA                3,000
Savings Bond                           6,000
Market Value of Home                 500,000
Value of Three Cars *                 11,000
Total                               $850,940

LIABILITIES

Mortgage                            $192,000
Credit cards                          15,000
Personal Loan                          5,000
Total                               $212,000

NET WORTH                           $638,940

* ACCORDING TO KELLEY BLUE BOOK