A tale of two retirements
Not in the sense of “It was the best of retirements, it was the worst of retirements.” This post follows two couples in my family and their retirement experiences, plus how they arrived at their current state.
One couple was always fiscally responsible. However, the husband was in a partnership that hit an extremely rough patch. The partners ended up selling the company for a fraction of its prior worth. The husband goes from being a paper millionaire to needing to find another job as he is turning 60. Fortunately he was able to find a company that valued what he did and could use his expertise and contacts. He was able to work for them for over 15 years before he “was retired” by them. He loved what he did and the work is probably a big factor in his continued mental alertness.
So while not abundantly rich, the couple was doing OK. Their house had long been paid for, and they had some money set aside in retirement plans and investments. Because the husband worked as long as he did he was able to defer receiving Social Security payments and refrain from drawing down his IRAs until he was required to do both. When the payments/draws started, they were at the maximum amounts because of the deferral. They were able to get by OK as long as they monitored their spending.
This couple found a retirement community that they loved. There were two possible entrance payments: the first one had an exorbitant upfront payment, of which their heirs would receive 80% at their passing; the second option was merely a very steep fee which would be refunded (in part, based on an amortization schedule) if they left or died in the first five years. They tried to qualify for the ‘exorbitant’ method and did not meet the requirements. To explain why there are high financial hurdles to gain entrance, once you move into the community you can stay there for life. They have medical staff on site, and you will receive the assistance you require—and your monthly payments will never change. A great place, if only the couple could qualify.
The couple’s children each put up a proportionate share of the lower (but still steep) second option entrance fee. The couple could sell their house and use the proceeds, plus Social Security and retirement funds to live comfortably.
The second couple always seemed to make the wrong financial decision, and it got worse as they aged. They didn’t save much, relying on his pension and Social Security for their retirement years. This couple squandered money on scams and schemes. As they get to the point that they are requiring more assistance for everyday living, they decide on a lark to buy a mobile home of less than 400 sq. ft. to live in. Unfortunately, no one else in the family found about this until after the three day revocation period had expired. To pay for this lark they have to dump their house on the market under less than ideal conditions.
This started a chain of events that ate up what little savings they had and taxed their family. They quickly realized that moving into a mobile home was a horrible mistake. Having bounced around between their children’s houses, senior apartments, and a trailer their children helped them get into, they now reside in a senior community. While the place is nice, it does not provide the level of assisted living they now require. (To the facility’s credit, it does not bill itself as providing assistance but the owners do provide some help) The children have had to close their parents’ bank accounts, invoke powers of attorney, get the couple an unlisted number, monitor their mail—apparently you get a reputation in the scam community as an easy mark. The couple’s limited income is completely eaten up by the monthly payment due to the senior community. And there are no savings left after the number of moves they have made.
Money is only one piece of the retirement puzzle, but its importance is highlighted in the comparison between couples. Other factors, like recognizing and accepting required levels of assistance are extremely important. How do I want my retirement to unfold? If I don’t plan and provide for it, I could be a burden on family or live in less than adequate conditions. Or as seen above, both can happen. To paraphrase the end of another tale, it is a far, far better thing that I do, by saving and providing for a far better rest.
One couple was always fiscally responsible. However, the husband was in a partnership that hit an extremely rough patch. The partners ended up selling the company for a fraction of its prior worth. The husband goes from being a paper millionaire to needing to find another job as he is turning 60. Fortunately he was able to find a company that valued what he did and could use his expertise and contacts. He was able to work for them for over 15 years before he “was retired” by them. He loved what he did and the work is probably a big factor in his continued mental alertness.
So while not abundantly rich, the couple was doing OK. Their house had long been paid for, and they had some money set aside in retirement plans and investments. Because the husband worked as long as he did he was able to defer receiving Social Security payments and refrain from drawing down his IRAs until he was required to do both. When the payments/draws started, they were at the maximum amounts because of the deferral. They were able to get by OK as long as they monitored their spending.
This couple found a retirement community that they loved. There were two possible entrance payments: the first one had an exorbitant upfront payment, of which their heirs would receive 80% at their passing; the second option was merely a very steep fee which would be refunded (in part, based on an amortization schedule) if they left or died in the first five years. They tried to qualify for the ‘exorbitant’ method and did not meet the requirements. To explain why there are high financial hurdles to gain entrance, once you move into the community you can stay there for life. They have medical staff on site, and you will receive the assistance you require—and your monthly payments will never change. A great place, if only the couple could qualify.
The couple’s children each put up a proportionate share of the lower (but still steep) second option entrance fee. The couple could sell their house and use the proceeds, plus Social Security and retirement funds to live comfortably.
The second couple always seemed to make the wrong financial decision, and it got worse as they aged. They didn’t save much, relying on his pension and Social Security for their retirement years. This couple squandered money on scams and schemes. As they get to the point that they are requiring more assistance for everyday living, they decide on a lark to buy a mobile home of less than 400 sq. ft. to live in. Unfortunately, no one else in the family found about this until after the three day revocation period had expired. To pay for this lark they have to dump their house on the market under less than ideal conditions.
This started a chain of events that ate up what little savings they had and taxed their family. They quickly realized that moving into a mobile home was a horrible mistake. Having bounced around between their children’s houses, senior apartments, and a trailer their children helped them get into, they now reside in a senior community. While the place is nice, it does not provide the level of assisted living they now require. (To the facility’s credit, it does not bill itself as providing assistance but the owners do provide some help) The children have had to close their parents’ bank accounts, invoke powers of attorney, get the couple an unlisted number, monitor their mail—apparently you get a reputation in the scam community as an easy mark. The couple’s limited income is completely eaten up by the monthly payment due to the senior community. And there are no savings left after the number of moves they have made.
Money is only one piece of the retirement puzzle, but its importance is highlighted in the comparison between couples. Other factors, like recognizing and accepting required levels of assistance are extremely important. How do I want my retirement to unfold? If I don’t plan and provide for it, I could be a burden on family or live in less than adequate conditions. Or as seen above, both can happen. To paraphrase the end of another tale, it is a far, far better thing that I do, by saving and providing for a far better rest.
posted by Dwight at
9:52 AM
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