If you are like many busy working people with many responsibilities and stresses, you probably have little time to think about retirement. But as the wise Ben Franklin once said, “If you fail to plan, you are planning to fail.” Here, Gail Buckner, CFP, our personal retirement and financial planning strategist, presents a case study of a fictional couple that represents the real challenges many people face in financing their retirement—and the planning strategies that can help solve them.

When thinking about how to convey the importance of retirement planning, rather than simply crunching the numbers or providing you with an elaborate presentation, I thought it might be worth offering a personal case study I think many individuals can relate to. While this example is purely fictional, the challenges are very real, as are the figures presented and assumptions based on the current Social Security program.

Mitch and Karen: A Case Study in Retirement Planning

Mitch and Karen are 58 and 55 years old, respectively. They are a happy and hardworking couple who have raised two responsible, smart and loving children, Lisa and Mark. Lisa is in her first year of graduate school; Mark is a college senior. Thanks to summer jobs and significant financial help from mom and dad, both children should be able to keep their student loans at manageable levels.

Mitch has been the primary earner of the family. Karen quit her job when Lisa was born. Once both children were in school, she returned to work as a teacher’s assistant at their elementary school. The job didn’t pay much, but it allowed Karen to be home at the same time as the children. When Lisa and Mark started high school, Karen also resumed working in retail.

Karen and Mitch consider themselves to be relatively frugal. Mitch is quite handy. Over the years, home improvement projects often took up his weekends. He has always mowed his own lawn, while Karen and the kids pitched in with the yard work.

Mitch and Karen are rightfully proud of the children they have raised. They are also glad their kids are not going to be saddled with tens of thousands of dollars in student loan debt.

But as they approach their 60s, Mitch and Karen have realized they have paid a price for the choices they have made: while they have little debt, they have relatively little saved for their retirement. Mitch has worked for his current employer for 10 years, but since the kids started college, he could only afford to contribute the minimum needed to receive the company match in his 401(k). His account is worth about $132,000.1 Savings from previous employer plans were rolled into an individual retirement account (IRA). However, on more than one occasion, money was withdrawn to cover some college expenses for Lisa and Mark. The rollover IRA currently has a balance of $65,000.2

Karen has never worked in a job that offered a retirement plan. In retrospect, she and Mitch recognize they should have at least funded an IRA for her, but there always seemed to be a more pressing need for the money—the mortgage, braces, medical bills, school supplies, clothes, home repairs and modest vacations, mostly to visit family. Currently, whatever Karen earns from her two part-time jobs goes to help Lisa and Mark with college expenses.

Once the kids are living on their own in a couple of years, Mitch and Karen plan to ramp up their retirement savings. However, time is running out. They have already foregone decades of potential investment gains and compounding. At this point, they have a combined $197,000 earmarked for a retirement that is roughly a decade away.

Thank goodness for Social Security! Mitch’s most recent estimated benefit statement projects that he will receive a benefit of $2,000/month if he waits until his Full Retirement Age (or FRA for short) at 66 & 8 months to file. Karen has an FRA of 67. Due to time spent out of the paid workforce, she has only contributed to Social Security for 29 years. In addition, because she needed a flexible work schedule, she accepted lower-paying jobs when she returned to the workforce. Therefore, her benefit is smaller, estimated to be $800/month.

However, if both Mitch and Karen continue to work, their monthly benefit can increase. This is of particular importance to Karen because Social Security bases your benefit on your 35 highest years of income, adjusted for inflation. As a result, for each year that Karen continues to work, an earlier year where she earned $0 will drop out of the equation. This will result in a larger benefit.