JOYCE ALLEN is a departmental administrator at the London School of Economics. Her salary is a touch above the average for London. She is an American citizen and will receive a pension in the US when she retires. If she works for her present employer until she is 65, she will be entitled to an occupational pension based on 11 years service. She has no significant savings and a number of debts including a five-year, fixed-rate mortgage at 6.79 per cent which costs pounds 450 a month and has another 15 years to run.

The Adviser:

Tyrone Silcott is a senior financial planner at City Independent Financial Planning, 35, Paul St, London EC2A 4NQ (0171-628 0857)

The Assessment:

Joyce finds herself in a very difficult situation but hers is typical of many that I see. Her income over the last 10 years has gradually declined, while her expenses over that period have gradually increased. At 54, she faces retirement with the dread of someone suspecting that they have not made sufficient arrangements. A particularly worrying feature is that her mortgage is set to run beyond her retirement age. Although she is prepared to work beyond the age of 65, she might not get that choice.

Her debt is made up of mortgage, personal loan, bank overdraft and credit cards. Almost 80 per cent of her disposable income is going to service her current debts, if you include her mortgage payments. This makes it very difficult to invest and accumulate capital while also maintaining a reasonable standard of living in what is one of the most expensive cities in the world, London.

Unlike many of her generation, she has no substantial inheritance likely so there is no chance of that taking the pressure off. Financially, she is alone.

Experience has shown that there are a number of steps that Miss Allen can take that will improve her lot. The first is the biggest. She must decide emphatically to change her financial position and that she is willing to make that happen. Second, she needs to go on an information-gathering exercise to discover what her situation will be when she retires. Simply knowing the facts can relieve the pressure.

Before moving to the UK 10 years ago, Ms Allen paid into the American social security system for a period of 30 years. There are procedures for obtaining a forecast of her benefits from those contributions and she should investigate these.

She is a member of her employer's superannuation scheme. It is a good scheme that offers guaranteed benefits as well as a range of sickness and death benefits. Unfortunately, she only joined her current employer in October 1997 and if she contributes to this scheme through to the age of 65, at current levels of income (benefits are paid as a fraction of salary) she is looking at retirement benefits from that scheme of only pounds 3,150 a year indexed and a tax-free lump sum of pounds 9,500.

She has a personal pension into which she no longer contributes. It has value of just pounds 6,500 as contributions were only made for five years. As a member of her employer's scheme, no further contributions can be made.

We can request a quotation from the provider based on standard growth rates, but I would expect that even if funds performed well above standard growth rates, this small amount will not add significantly to her income in retirement. For example, today a pounds 10,000 fund with Norwich Union for a woman at the age of 65 would provide a level annual income without guarantees of only pounds 710.

It is clear that Ms Allen needs to bolster her savings and investments. It is equally clear, looking at her budget, that she cannot afford, in her current situation, to pay more money monthly into topping up her pension via AVCs or ISAs and it doesn't take an economics professor to work out that in order to do so, either her outgoings have to go down or her income will have to go up.

The most typical way to reduce her outgoings would be to re-finance her debt including her mortgage. However, there are some problems. In May, she took a new mortgage with the Yorkshire at a fixed rate of 6.79 per cent for five years. Rates are likely to fall below this but if she were to remortgage again, she would pay penalties of up to 6 per cent of the amount borrowed.

Other options include selling her home to release equity. However, the level of equity would be small, she would still need somewhere to live, and she would probably have to move well out of London to reduce costs.

The light at the end of the tunnel is that one of her personal loans, which is currently costing her pounds 322.70 per month, ends in October 2000. Her goal must be to maintain her current financial position and not to build up any further debt within the next two years. This is paramount. If she has to take extreme measures to achieve this - cut up credit cards, go without a holiday for a year, draw up a strict spending budget - it has to be done. Her income cannot bear a further build-up of debt.

In order to do anything in the shorter term, the other option is that she increases her income. I understand that she is able to do some freelance typing and has 100wpm. She could perhaps look to do some freelance work in order to build up extra income that way. Ms Allen has said she is willing to do extra work in the evenings. I would then suggest any freelance or extra earnings were used immediately to build up a short-term savings fund equal to at least three months' outgoings. This money is not to be spent on anything other than dire emergencies. Holidays do not qualify on this basis.

You will be amazed by the psychological boost this will give once you can see that money in the account.