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Thursday, 17 October 2013

Elders and Their Money

So as of late last night the U.S. government is back in business - at least until 15 January 2014 and a world economic crisis has been pushed forward to 7 February. Apparently we are supposed to cheer the Democrats for standing fast but all it means is that there will be an identical crisis right after the end-of-year holidays.

This is the new normal. It will happen again and again due to a few deeply stupid members of Congress – all Republicans.

Because I spent a large part of my time advocating for old people, what worried me these past three weeks and worries me still for early next year, is how awful this is for elders – whether retired or near retirement.

Certainly you recall the crash of 2008. I lost more than 30 percent of my already small savings and I heard from readers who lost up to 60 percent of everything they had.

I've earned back just 25 percent of what I lost mainly because I now have no stomach for the slightest amount of risk and have as-safe-as-possible investments that earn hardly anything more than bank interest (.01%). I'm probably not the only old person too terrified still, five years later, to try for anything more.

Two readers emailed this week about financial issues. One asked if I might write about an online class from a well-known professor at a renowned university about retirement financing – pensions, savings, investments, etc.

Another, Lia who blogs at Yum Yum Cafe, in responding to an email from me, agreed with my less-than-unique assessment that life seems to be getting progressively worse for all but the richest people in the world. This set her off on an epic rant.

Since I believe Lia speaks for many, it's worth quoting her at length:

”Like you,” she wrote, “I lost a major portion of my meagre savings. A few years later I lost my employment and was more or less forced to become self-employed since there were no other alternatives.

“It has made for many bleak hours of worry. On the outside, I would say I am optimistic about the future, but the endless nights of sleeplessness attest to some deep rooted fears...

“There is a whole horse's tail of citizens from 40 upwards whose savings and retirement plans were shattered...

“We have to figure out short term how to put food on the table and how to keep a roof over our heads. On top of that, it is not just this month or this year, but for the rest of our lives...

“In some ways I was fortunate to have a few very good conversations 20 years ago with a friend of mine who is an economist.

“She did not predict the particulars and extent of the economic madness. Yet, she did say the numbers, even then, did not add up and our generation (we are both now in our mid-50s) might be the first generation since WWII that will not have the option to retire.

“She suggested finding work in a matter where, if we were granted relatively good health, we could continue working a long, long time.

“This is what I am striving to do. Find business customers I can work with a long time. It would be interesting to know what some of your readers who are working are doing in this way.”

I strive here at Time Goes By to increase useful knowledge about what being old is like. I want this blog to be a storehouse of experience, thought and ideas about honest, real, everyday aging – not what the culture and age deniers prefer old people to be.

That means nothing, no topic is, as Washington politicians say, off the table.

Nevertheless, from the first I have avoided discussion of financial information, advice, websites or “experts.” As I explained via email to the first reader I mentioned above, a large majority of retirees and near-retirees have no investments nor will they ever have money for investing.

Investing a rich person's game – for people who can afford to lose. What everyone else has is savings, very little of it, and the rich already have plenty of resources for manipulating their money. Nothing this blog can say would have any meaning for them.

An equally important reason to refrain from financial talk is that all – make that ALL in capital letters - financial consultants, teachers, advisors, etc. contradict one another so there is no way to know whose advice is good or useful.

(Preparing this post, I visited three online retirement finance experts - a large institution, an academic, a self-appointed well-known guru - each of whom has a calculator for determining how much savings one needs to retire. I input my numbers as they were when I stopped working in 2004 and got three different answers ranging from $550,000 to $1,895,000. That's a big spread - who should I trust?)

For as many readers as I heard from after the 2008 crash who lost 30, 40, 50 even 60 percent of their savings and small investments, not a single person wrote to say their advisor/banker/etc. saved them from loss.

So because money is too important and too personal (far more personal than sex) and because, inevitably, some readers take what I say as advice, I never discuss personal finance at TGB. I'm obviously not qualified and further, I'm not qualified to decide which of the gazillion people who call themselves financial experts is qualified (if any are).

Here we are, then, most of us at this blog who – even if we don't literally count pennies - need to be careful with the money we have while bankers, Wall Street, Congress members and their counterparts in other countries continue to manipulate the economies of the world to the benefit only of the already rich.

So we - for today let's call ourselves elders of the 99 percent - are mostly on our own and given how the U.S. government behaves, are in for a bumpy ride to the grave. Lia again from the end of her email rant:

”What options do we have when the financially structures crumble? If corporate practices, responsibilities and ethics are thrown to the wayside, it really is every man for them self. I can't even stand to read about follies going on in Washington.”

I know just how she feels. Your thoughts?


At The Elder Storytelling Place today, Janet Thompson: Kaleidoscopes, Penny Candy and Dancing with the Dishtowel


Posted by Ronni Bennett at 05:30 AM | Permalink | Email this post

Comments

I don't have much but I'm seriously considering getting a lock box and keeping it stashed under my bed. The banks don't pay much interest anyway.

That's exactly it--who can you trust for advice. When I retired 15 years ago, I converted my 401(k) into an IRA, whereupon an advisor at my bank suggested I put it in a tax-deferred annuity. I finally declined the offer and was happy later. It turned out he would have received a nice commission from that particular transaction, plus putting a tax-deferred annuity into a tax-deferred account, I've since learned, is dumb. Since then I've just stayed with the low interest accounts due to fear of losing what savings I have.I hear people say that "everybody has made money the last few years," but I just nod and say nothing.

We are flotsam, bobbing about with almost no influence over the forces that are tossing us around. Individual prudence is not enough to save us.

Collectively, we still can have some influence -- for example threatening to tear any politician limb from limb who cuts Social Security. It's not exactly that they listen, but they can be encouraged to develop inhibitions.

I don't know whether experiencing random powerlessness at the mercy of large forces is harder or easier as we age. It is obviously misery for a large segment of ordinary people in the middle brackets as well -- hence the Tea Party. And then they want all of us to share their rage and pain. No thanks. I got better things to do.

I am more fortunate than many through luck, extensive work at saving and a good retirement plan. That does not make me any less worried about the manufactured crises and the manipulation of the market. I lost 30% as well, I am finally back at a 33% increase and I do invest in the market and in bonds as the mattress or bank are not safe if the entire economy collapses. Already food is costing more and more.

I'm taking a guided trip to Costa Rica in January to see if I might want to move there. It's far from my kids, but I can't afford to live anywhere in the US on my Social Security.

I was going to make the same point that Janinsanfran did, but not nearly as well.

I have come to the conclusion that life is a crap-shoot. No matter how well we plan circumstances beyond our control often shape our destiny. Some are lucky and some are not. All we can do is try to navigate through the rocky shoals as best we can.

Funnily enough, on my to-do list for today was to call my
stocks investment agent and take out what little I have left, except for the IRA (to avoid income taxes). I have good uses for much of it, but the rest I plan to put into my checking (or savings) account that I have with a small local bank. I am nervous about leaving it in stocks, and although it's a small amount (less than a year's social security draw for me), I'd feel better with it under the mattress than where it is.

All these monetary problems are compounded by my learning disabilities. Some days I cannot even see numbers; every day I cannot do math. I have to have blind faith in the person I hired to take care of my money.

My SS is in the 400 a month level as I chose to live an alternative life in the art world. Yes, I sold some things well. In the end I got a job as a security guard and the art got put aside.

These days, lack of money is a constant background worry. My husband still works at a job he loves, but his retirement is still 10% below its top after two crashes.

I still remember being homeless. I still remember having instant mashed potatoes with cream of chicken soup over them as a Thanksgiving dinner one year. I still worry.

As a former financial professional, I found too many people uneducated about finance and basic monetary/financial matters. Learning investment basics results in knowing the questions to ask, the ability to assess risks on a personal level and making educated decisions - not blindly agreeing to anyone's suggestions.

I remember chuckling inwardly many times over the years as I read article after article aimed at middle class people about "planning" your retirement. These "plans" included saving incredible amounts of money and "deciding" when to end your "career." As if.

I am not happy to have been right about this, believe me, as that intuition only helped me a limited amount. As time went by, I've experienced many of the dislocations readers here already know too well.

For most elders of the 99%, our "careers" ended without our consent when our companies downsized or collapsed, our spouse insisted on a move, or our parents needed care. As for the mind-boggling seven figure savings--why, that could be gone in a single visit to the emergency room, assuming you managed to save it in the first place!

The real questions are, and has always been, what parts do we REALLY control (propaganda aside), what parts are out of our hands, and what can we do about the parts that we have left?

These dilemmas make the last third the most "interesting"--in a terrifying sort of way--part of life. Old age, for our cohort, is anything but dull.

I bet very few of us pay to see scary movies, even if we could afford to, since we're living one in real life.

I begin to understand why European peasants were supposed to have kept their "gold" in a sock underneath the hearth. It might have been the only place safe from the ravening hordes.

I think things are likely to get worse before they get better (if they ever do get better in our lifetimes).

Last night watching the excruciating news about ending the government shutdown, I heard more than one Congressman raise the matter of "entitlements" or "social insurance"-- referring, I assume, to Social Security, Medicare, and related payments.

At the same time the bill that passed contained funding for various local "pork barrel" projects which may or may not be necessary or reasonable expenditures.

"Apparently we are supposed to cheer the Democrats for standing fast but all it means is that there will be an identical crisis right after the end-of-year holidays."

The democrats say the republicans lost this battle but not really-- they did get a small win with medical devices and that is enough to inch the way to victory. A nip here, a tuck there and pretty soon we are surprised at how we have lost the war.

That is their game plan ---they make a big noise about everything and to shut them up, the democrats give something up.

This may be tangential, but perhaps a few folk will chuckle. One of the investment funds where I have some retirment monies called for a survey. One of the questions was, "How committed are you to your relationship with Institution X, on a scale of 1 to 10 with 10 being the most committed." After I stopped laughing, I explained that I do not have a relationship with a corporation; they provide a service, I use it. In view of recent court decisions giving corporate entities the same legal significance as human individuals, I wonder if Institution X is going to ask me out on a date soon -- if we've got such a great relationships going, I mean.

I am definitely not cheering those overpaid idiots. But like you I get the very unsettling feeling that the past couple of month (or years) will be the new normal. I laughed at one of the commentators who said that government by crisis is going to become like the weather.

I didn't have any investments when things went south in 2008. But I lost 50-60+% of my income from various jobs. At one point I actually had three part time jobs and still did not make enough to reach the income level before the crash--and that wasn't anything to write about with glowing pride. I did not meet or exceed what I made before the crash until I went on Social Security. That is no great endorsement of this economy.

A few months before the crash a banker told us how ridiculous we were to play it safe instead of investing in the portfolio of stocks he was pushing. We did not take the bait.
We lost some of our money but not much.
I am hearing a lot of heartbreaking horror stories from less lucky elders. The lack of income. The huge medical bills they will never be able to pay.
And it is not just them; their families are being impacted. We never, as young people, had to worry about the financial well being of our parents. But that is a common problem now.
Our neighbors just had to rush to the Mainland, because her grandmother had been unceremoniously dumped into a horror of a nursing home and was dying for lack of good care. And yet they can't afford to help her financially, because they have two little kids and are just getting by.
They are going mad from worry. So younger generations are affected, too, and we should not forget that.

Ronni, I think that's a wise decision not to offer financial advice or even link to other people offering it. That is about investments. I'd like to hear advice on cutting costs, living cheap, enjoying free stuff, and making do with what we got. I start my retired life next Wednesday.

No one's forgetting that, Hattie. We all know that times are bad for everyone.

But this blog is for and about elders. Lots of people speak for younger generations; hardly anyone speaks for old people. I try to make up for that a little bit.

I have both worked hard and been lucky to amass enough savings and social security to have a nice retirement. But, if I had not made it an obsession to read and learn everything I could about investing and money management, I possibly could have blown it. I believe that no matter how much or how little money you have, you can maximize it's effect and impact on your life, you can magnify it through wise decisions and planning, long range and short range. And, after you do all of this, you have to learn to live with reasonable risk and have discipline to avoid reacting to the daily headlines. The people that took their money out of the stock market in 2001 and did not quickly put it back in missed out on recovery of their loses and the huge gains that have and continue to be had in this, what appears to be, secular bull market. But, some folks can't live with risk, and I respect that, but there is a price to be paid. Like I said in the past, I got lucky but sobered up in time to come out just fine. I'm neither rich nor poor, just middle class, but I have made certain that I stay this way.

Like John above, we're trying our best to stay afloat in the middle class. The fact that my husband, now 84, worked until age 76 and I'm still working at 77 has helped. So has having a highly qualified, independent, fee-only financial advisor. We lost some of our savings but not nearly as much as we would have on our own. We're far from wealthy but we'll have enough to live on, barring total catastrophe, IF we don't linger too long!

Our nation has lost much more than its financial footing. It has lost any sense of community or "noblesse oblige" on the part of the 1% who have benefited the most from the system. We no longer seem to care as a nation about what happens to those who cannot fend for themselves--even young, gravely wounded veterans of Iraq and Afghanistan.

The so-called tea party--a national disgrace in my view--has managed to convince a significant percentage of Americans that there are "makers" and takers" (of course, the tea partyers are all "makers"--just ask them). What strikes me as utterly ironic is the large number of TPs that are 65+ and obviously partaking of those two abhorrent (to them) government programs known as Social Security and Medicare!

This is why we need Social Security beginning at birth. A defined sum every month.

Along with some basic information about the market (easily available in a few books and magazines) over time you can make your money grow. Over a 200-year history the trend of the market is always up.

But now, with little or no training about money and economics, we're at the mercy of "professional investment counselors." They scare us to death with their advice. No wonder we don't know where to turn.

I'm lucky. Living frugally but well on S.S. and a small pension. A small inheritance 25 years ago has tracked the market in index funds. Mostly stocks. Went way down but is now back up now and doing well.

Vanilla index funds. That's my way. Don't fool around with individual stocks or expensive investing advice.

I posted and then doubled back and read all the comments. All very interesting and all seem to be making their ways through the financial morass and/or struggle in their own ways. All of you are doing well from what I read. Nice topic today and comments. Thanks Ronni.

Whatevs. Guess I won't comment over here any more.

I am only six months from a voluntary retirement at age 70 + Very scary - I am in the process of whittling all my necessary bills as low as possible - including cell phone, internet, etc. I am lucky to have a very very small six figure annuity and social security but still will be in the 15% bracket when I retire. Still, I think there is something to finally enjoying my last years. Pulling the plug is terrifying though, since I am a widow and live alone. Hopefully, cat food for dinner is not in my future!

I'm one of the lucky ones who grew up poor among hard-working people in the West Virginia mountains. I came from a large family of equally poor relatives. And none of us seemed to realize we were "poor" -- so was everyone around us. We were just brought up to make-do, conserve everything possible and grow or make anything else that we needed. This upbringing has sure served me well in both good and bad times -- neither of which condition has upset me much. I had been taught that I could manage through thick and thin just like all the generations that came before me had done.

I didn't lose a thing in the Great Recession as I had nothing to lose -- no savings and a small reserve in a piece of property that mostly the bank owned.

I think growing up poor was the best thing that ever happened to me, along with coming from a long line of very stubborn and strong willed Scottish mountain people, of course.

I went through a really rough time in the late 1990s, between ageism in the job market and the loss of a small business. Growing up poor had given me tools, as Miki Davis noted. I lucked into a job teaching English in Korea, so was able to work until I started collecting Social Security at age 70. I found I could live cheaper and better here than in the U.S., so I'm staying. Excellent health care is available, and convenient public transit makes it possible to live without owning a car. I miss my family, but we have phone and internet connections. I still teach 2 days a week at the welfare center where I started working 11 years ago. I hope I can keep on living here, surrounded by former students who have become friends.

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