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Retirement

How to Age in Place…

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As you know, my dear friends from church have moved into the Beatitudes, one of those old-folkeries presently dubbed “life-care communities,” where you take up residence in an apartment, eat in the institution’s chow line, get first dibs on space in the nursing home should you need it, and are generally watched and entertained 24/7. Sorta like a prison for old people. Or a rabbit warren.

It looks like Nirvana – just think! Never have to change your own sheets again! Never have to mow another lawn! Never have to wrangle a repairman to fix the plumbing! Never have to cook another meal! Wooohoooo!

Yeah. Freedom’s just another word for….

Not that I don’t understand where Mrs. Friend was coming from in deciding that they would make this move: they’re both in their mid-90s, Mr. F has fallen three times, he has glaucoma that soon will render him pretty much blind, and he has serious heart problems. She has a bad hip and is now too old to get it replaced, meaning she’s in pain all the time. And they had a bat-sh!t crazy neighbor who was bound and determined that they would not use the common walkway between their houses to roll out the weekly trash pickup. Even though most of the exterior work was covered by the HOA and most of the housekeeping was done by a cleaning lady, taking care of the house was getting to be a bit much.

But…hmmmmm….

Yesterday we all went out for lunch with Connie the Long-Haul Trucker. Mr. F ordered a bowl of chili, apparently something he orders with some frequency at the Institute. Along it comes. When he sees it, he remarks, “This bowl contains three times as much chili as we get at the Bistro” — which is what the old-folkerie calls one of its three chow lines. We eat and yak and carry on. Some time later, we’re about to settle up for the lunch, and he remarks again, “I got a lot more chili, and the quality is far better than the Bistro’s. And the meal was cheaper than what we’re paying.”

Mr. F is not a whiny guy…he’s a retired nuclear engineer with a lot of common sense. I’ll tell you, I was unimpressed with the quality of the Bistro’s food, myself. They had me over for breakfast…not my favorite restaurant meal, since I can’t eat eggs and I don’t care for cereal and I detest pancakes with sweet gooey gunk slopped over them. So I order an alleged “Belgian waffle.” Out comes a little waffle-shaped thing, about four or five inches in diameter, no powdered sugar on it. Looks like one of those things that you take out of a box and pop into a toaster.

I asked for extra butter (because lots of butter is the only way to gag down pancakes and waffles made from a mix, if you dislike syrup), and they brought me four or five tiny individually wrapped packets. The waffle thing wasn’t hot enough to melt the butter — would’ve done better to have ordered a couple pieces of toast. But more to the point: on the way out I realized my mouth was puckered-up parched, so salty was this fake waffle.

Ugh. Four years of bad student union food at the University of Arizona was enough for me. I sure don’t want to spend my dotage eating that junk.

This is the trouble with institutional life: it’s not life.

For three to seven grand a month, they could provide you with decent food. REALLY decent food. And more to the point, what the hell are they doing, serving up packaged foodoid that is so oversalted it leaves your mouth puckered up half the day to freaking old folks, most of whom presumably have cardiac issues?

So….

Yesterday afternoon I started calculating how on earth I can stay in my house until I croak over… Checking out a price comparison, it seems to me that even if you have to hire a 24-hour caregiver, it may be cheaper to stay in your home than to move into a storage bin for the elderly.

One person told me the Friends are paying 7 grand a month to stay in the cramped two-bedroom apartment they’ve landed in. The house wasn’t large, but it was one helluva lot more comfortable than four small rooms and a kitchenette. Actually three rooms: the dining and living rooms are separated by a sort of partition that doesn’t quite make them separate spaces.

The Beatitudes works hard to keep its rates off the Internet. One site says the place charges 5 grand a month…but that’s for a studio or one-bedroom apartment. For one person. So $7,000 for the two of them in a two-bedroom suite is probably about right.

Even hiring someone to come in and take care of them 24/7 in their house would not have cost $7,000/month. Even if it did, they’d still be in their home.

The Institute gave them each one of those electronic dog tags to wear around the neck, to summon help if they fall or have a heart attack. But forgodsake! You can get those for free at Amazon. The best of them, which summon the EMTs or police as needed and come with a lockbox for emergency workers to retrieve the house keys, have a subscription rate that’s only about $20 or $30 a month…again, a far cry from 7 grand.

That’s 7 grand a month plus all the return on the sale of your house: they had to pay ALL that they netted on the house sale to buy into the place. They got about 360 thou, from what I can tell.

Uhm…let’s think on that….

I figure that if, like me, you have nursing home insurance (one reason to buy into the place is that you’re guaranteed a bed in the nursing home, when the time comes), all of your living expenses and all the services they’re getting would run you around $2292 to $2323 a month if you stayed in your home:

They didn’t have a pool at their house…nor did they care to use one. So knock $240 a month off those totals for a person who lives pool-free.

As for transportation: they’ve kept the car, even though driving has become a challenge for them. But let’s say you used taxis or Uber to get around. Everything they needed was very close to where they lived. If they were like me, they could keep the driving junkets to one every two or three days.

Take the cost of your vehicle (about 28 grand. paid in cash) and prorate it plus the taxes, insurance, and routine care over 12 or 15 years: you get a monthly cost of $797 to $836. With that bracing calculation in mind (it doesn’t even include gas!), judicious use of taxicabs would be significantly cheaper. Let us say that on the low end they actually are paying $5,000/month to live in the warehouse. Five grand would buy you one helluva lot of taxi rides!

If a typical taxi trip cost you $50, that would be a hundred rides per month! If you went out twice a day (!!), the junketing would run you $3,000/month, significantly less than the rent at the old-folkerie; if you even went out once a day (which would be about three times more often, on average, than I drive anywhere), at $50 a trip it would cost you $1500 a month. While that’s more than owning and driving your own car, it’s a far cry from living in that place, where the transportation is a shuttle-style jitney ride to the doctor’s office or a grocery store. A-n-n-d…$827 a month to own and operate your own car — which doesn’t include gasoline) — is not that much less than $1500 a month for chauffeured rides…I spend about $60 a month on gasoline, which would bring the total to around $887 a month. And I think that’s pretty conservative. It assumes you paid for the car in cash — if you didn’t, your monthly cost would be a great deal more than the proposed taxi rides.

With grocery stores and Amazon now delivering orders, including whole ready-too-cook meals of fresh food, I think you could stay in your home and live better — and no less safely — for a lot less than it would cost to institutionalize yourself.

Got a thought? Am I nuts?

Stay? Or Move While You Can? The Old Lady’s Dilemma

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Had a 1 p.m. appointment with the skin doc yesterday, to get another sun-induced precancerous lesion removed. Normally I drive 9 miles north on the I-17 to the Loop 101, which will carry me 21.3 miles west and south to Indian School Road. From there it’s only a couple miles to the doctor’s office. (Think of that: 30 miles to find a decent doctor’s office! In the fifth-largest city in the nation!)

Well, stupidly when I go to turn off the surface street onto the 17, I go south instead of north (focusing what remains of my mind on getting to Indian School, eh?) Rather than get off the freeway a mile or two down the road, turn around, and drive back up to the 101, I decide to just drive down to Indian School and then proceed west the 10 miles across the surface street to 103rd Avenue. Said route is shorter, but more hectic.

Garden spot, west…

Surprisingly, this works exceptionally well! Everyone else is on the freeways wrestling with gawdawful traffic, and Indian School, now an eight-lane thoroughfare, is basically empty. I fly low through the westside blight and, to my astonishment, arrive at the doctor’s office a half-hour early. It’s only taken about 30 minutes, in spite of driving almost half the way on a surface street. This is a drive that can easily absorb almost an hour. On the effing freeways.

Huh. That was innaresting. So when I get out, I decide that instead of taking on the nasty freeway, I’ll drive all the way across the city on Indian School to Conduit of Blight Boulevard, and thence northward to the ’hood. Unless I get in a wreck, it’s unlikely the Venza will crap out in the (dangerous!) slums this route traverses. And anyway, being stuck in among lovely Maryvale’s title loan companies, marijuana dispensaries, warehouses, and corroding trailer parks surely would be no worse than being stuck by the side of the Interstate.

So I start driving driving driving, and once again I literally fly across the city. Hit every light green, and only one or two morons get in front of me or threaten to side-swipe me.

Now I arrive at Conduit of Blight.

You, too, can live in a fine shack like this…

SDXB and I used to live right down the road from this intersection. He, I, his mother, and his daughter & grand-daughter occupied four dwellings in a pretty, retro (read “agèd”) garden apartment complex that had been condominiumized. It actually was a very pleasant place to live, with irrigated lawns and huge, mature shade trees. Right behind it, to the east, stood a 1950s middle-class neighborhood that was in the process of gentrifying — it was sandwiched between our complex and the Phoenix College campus, and being just north of the VERY hot Encanto district was a target of the young and the upwardly mobile.

When I started to think about buying a house, I looked at a place in that neighborhood. It was very charming, and I almost bought it. SDXB talked me out of it, because it had an enclosed addition, and they’d kind of jury-rigged the air-conditioning ductwork into it. He thought the system would not cool or heat it efficiently, the power bills would be astronomical, and the room would never be especially usable.

Well. HOLY mackerel, did that man save my petootie!

I get to Conduit of Blight and start to drive north…and that whole area is a freakin’ slum! My god, what a wreck. The bank branch where Tootsie (his mom) used to do business: gone. The Greek/Italian restaurant where the local cops would hang out when they were off-duty: closed, and replaced by some bizarre…shady-looking…something. Stores where we used to shop: replaced with schlock, or empty and boarded up. Formerly solid middle-class to lower-middle-class housing: rotting away.

When I call this road “Conduit of Blight” on Funny about Money, I ain’t kiddin’.

Move to Phoenix and live next to this lovely train!

Drivin’ drivin’ drivin’… Arrive at the intersection where you turn east to get into the Costco parking lot. That area, which houses low-rise office buildings (three or four stories): blighted. No wonder Costco plans to close that store when the lease runs out! The office building where my son’s pediatrician used to practice: taken over by some kind of low-end social service thing, billing itself as a “school” but clearly…ghetto.

Not until you get almost to the southern border of the ’Hood do you start to pass beyond clear and present blight, and even then the apartments on the west side of Conduit of Blight are…well…shall we say, “low-end.” They’re Section 8 housing, a vast tract of alarming seediness.

SDXB may have been right to have moved to Sun City when he did. Amazingly enough, that was 16 years ago(!!!). I moved further into the ’hood at the same time he moved out to Sun City, getting myself as far from the obnoxious light-rail project (which runs up CofB Blvd, carrying the blight with it along with the drug addicts) as it was possible to move and still be in the marginally affordable part of the neighborhood. If you call $350,000 houses affordable…

I guess they do, nowadays.

What. A. Mess!!!

Which brings us back to the now-perennial question: Much as I love my house and love my neighbors and like living in a centrally located district, how wise is it to stay here into my dotage? In just another five years or so, moving house will be so difficult for me (given my age) that it may be impossible. And if this area goes to blight…one would not want to have to live in anything like the sh!t I drove through to get up here from mid-town.

The ’Hood has much in common with the historic Encanto District, which gentrified in our generation and which has remained gentrified — our house, for which we paid $33,000, recently sold for a million bucks. It’s a VERY hot area, because it’s centrally located (how do I hate driving on the homicidal streets of Phoenix? Imagine having to make a 30-mile commute to work through that stuff every goddamn day of your life! And back home: 60 miles a day!!) and because local people think older construction is better built than the new stick-and-styrofoam ticky-tacky. Lots are larger — my lot is about a quarter of an acre — and structures are built of block. Not necessarily a good thing, but people imagine it is. Which is what matters, I guess. And they think these 1950s, ’60s, and ’70s houses are — ohhhh! — “mid-century modern!”

Home, sweet (former) home

Well, we thought those old 1920s, ’30s, and ’40s houses were quaint as could be, too…so it seems to me that what we have here in the ’Hood is exactly the same thing. Encanto was surrounded by blight. The fanciest section — Palmcroft — was bordered by slum on the West, and the rest of the district had tired, run-down tracts to the south and east, with commercial stuff to the north. Not bad commercial stuff, but still…

You couldn’t put your child in the public schools there, because middle-class kids by and large don’t know how to use a knife or a club. One of our neighbors tried it and found their son, at the end of first grade, unable to read at all — the teacher had been reading their little kiddie books aloud in class and sending the kids to “read” them to their parents as homework…and this kid had simply memorized the teacher’s performance! One day they realized he couldn’t read street signs and billboards, and so asked him to read some other kiddie book. That’s when they discovered he couldn’t parse out a word! 😀

Ah, Arizona.

Same is true here: you’d be batsh!t crazy to put your kid in the public school that serves this area. Now, however, the city has capitulated and allows people to send their kids to any public school they choose, and so that gives young parents the option to live in a centrally located area without having to earn a king’s ransom to put the kids in private school.

If the ’Hood stays Encantoized — that is, if the present wave of gentrification sticks — it should be safe enough to stay in my home up to the end. But if it doesn’t? Holy sh!t. Moving out of here 10, 15, or 20 years from now — even if it’s possible for me to do so at all — would be quite a challenge.

So I agonize: whether to stay here, where I like it, or whether to get out now while I still can. We’re pushing the point where “still can” will no longer be operative.

Well, speaking of agonizing, gotta get up and work on the yard. And so, away!

Toward Freedom in Old Age

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So the dog and I are trotting along our appointed rounds early this morning. The route is now up to about two miles, and I’m figuring (smugly) that if we can keep up this brisk stroll every single day from now into the foreseeable future, I should be able to stay healthy enough to remain in my home until I croak over. That is: to dodge having to move into one of those old-folks’ warehouses.

It’s not that those places are SO bad. They’re not. I guess. It’s just not a lifestyle I would choose.

To start with, they’re apartments.

I hate apartment living. Very few things do I dislike more than living right on top (often literally!) of my neighbors. And I’ve lived in a whole lot of apartments over the years. Some were nice places. But they all were…apartments: crowded, noisy, and faceless.

To end with, they’re custodial. I do not want someone taking me by the hand and guiding me through what remains of my life, thankyouverymuch — any day I’d rather reside in the next world.

And in between? It’s institutional living, fraught with rules that you must obey and unspoken customs that you flout at your peril.

Where my father lived — a life-care community run by the Baptist church — residents were required to show up at one of the two daily meals, breakfast or the mid-day “big meal,” so that staff could keep tabs on them. What did the chow line serve up? Right: restaurant food, and not very good restaurant food at that. Processed steam-table gunk that came out of cans and packages.

And what did I have for lunch today? Four big sea scallops sautéed in garlic and olive oil, zinged with a squirt of fresh Meyer lemon from the backyard tree and served up with Italian pasta (grain grown in Italy), fresh chard, and Italian tomatoes, topped with Parmesan. With a side of red wine. I can guarantee you: no one got that today at the place where my friends have moved in. And the food there is a whole lot better than what they served up at the palace my father lived in.

I really dislike restaurant food. The more I cook for myself, the less I like assembly-line chow. And I certainly don’t want to be trapped in a place where I have little or no choice but to eat that stuff. Newer retirement homes in this vein have better kitchens than the one where my father and his wife lived — there, they had a counter with a sink and an under-the-counter beverage fridge, the sort of thing you see in motels. My friends at the Beatitudes have a full kitchen — small, with no room for a freestanding freezer, but still it has a real refrigerator, a microwave, a stove with an oven, and a dishwasher. So in theory (if you didn’t mind running to the grocery store every time you turn around), you could fix most or all of your meals in your apartment.

But I believe you’re required to purchase a certain number of meals, even though you’re not required to show up at any of the three eateries. If you don’t eat them, you still get charged. And they’re pretty expensive, certainly compared to what it costs to make a (much better) meal yourself.

Hm. I love my home and my yard and my pool (my being a highly operative term) and I surely don’t want to find myself in a rabbit warren for old folks. So the question is…how long can you hold off having to move into one of those places? Indeed, can you hold out until the very end?

Unclear. It would depend on what happens to you…what health problems do you encounter, and to what degree are they disabling? Even if you manage to hang onto your marbles, taking care of a house, buying food, getting to stores and church and doctors can be quite a challenge in advanced old age.

My friends are in their 90s and both have some uncomfortable health issues. Mrs. Friend worries about falls — Mr. F had fallen three times before she talked him into moving into the Beatitudes, and once she needed the help of a neighbor to get him back on his feet. In that case, the move begins to look reasonable. Especially if you’re in your 90s: you don’t have that many years to have to put up with living in an environment that…shall we say, you don’t love.

My father, however, was much younger — about 67 — and he explicitly stated that he didn’t want to have to take care of a house and yard. And also, of course, he was concerned about how he would care for himself, alone, as he advanced into old age. I suspect that was a major concern, aloneness: having gone to sea all his life, he had never lived alone. He always lived in a kind of institution: onboard ships. Or in a marriage. I, however, have lived alone most of my adult life. And the truth is, I much prefer to live alone.

Why couldn’t he simply have sold the house and rented an apartment? Voilà: maintenance problems erased.

As for taking care of yourself as you get older and feebler…jayzus! Surely there must be ways to handle these issues.

In the first place, my house is very easy to take care of. With no lawn, all that’s needed to maintain the exterior is a guy to come once a month, spray the weeds, blower up stray leaves, and rake the gravel. A good cleaning lady can keep the interior under control by coming in once every two weeks. The pool can be maintained adequately by a pool service.

Those services represent a tiny fraction of what one of those life-care communities costs. The amount my friends paid to move in there…holy mackerel! She told me they had to use the entire proceeds of the sale of their house right off North Central(!) to cover the move-in charges. And the cost of keeping the two of them in a two-bedroom apartment (the second bedroom is more like an alcove, IMHO) is something like 7 grand. A month.

I budget about $3,500 a month to cover all costs: food, medical, insurance, taxes, transportation, housing, utilities, and on and endlessly on. But in fact, I usually don’t spend that much.

For $7,000 a month, you could buy a hell of a lot of services. Not only people to maintain the shack, but ride-hailing to drive you around, grocery delivery, mountains of prepared foods that need only be heated in the microwave.

What, really, would you need to stay in a house like this until you croaked over?

  • An iPhone or similar smartphone that you could carry around in a pocket to call for help if need be.
  • Possibly a smart speaker that would dial 911 if you hollered at it.
  • Household cleaning help
  • Yard care help
  • Pool maintenance help
  • Transportation
  • Someone to help with errands and tasks that are beyond your physical ability, and to keep an eye on you to be sure you’re all right on a day-to-day basis
  • Someone to run interference for you when the inevitable little crises come up

Okay. Think about that. And about how that would compare, cost-wise…

  • You need the phone anyway. If you canceled the land line, the cost would be nothing out of the ordinary. A smart speaker is a one-time hit, assuming you keep your wireless service for your computer.
  • The Beatitudes requires the inmates to wear one of those call buttons around their necks, everywhere they go. You can hire a service that provides those things, if you want to wear a leash around your neck all the time. At some point, that might be a wise thing to do.
  • A housecleaner: Even to have her come in once a week would be as nothing compared to what my friends are paying at the Beatitudes.
  • Yard care: Ditto
  • Pool care: very nominal
  • Transportation: that’s a problem. You could use taxis and ride-hailing services, which would be expensive. But again: compared to $7,000 a month plus the entire net sale price of your home? You could hire a lot of taxis for that.
  • Food: Been in a grocery store lately? They now have pre-assembled meals (not frozen TV dinners, but real food) that you can microwave or bake. And lots of restaurants in these parts deliver. Expensive? Yeah. But not compared to what it costs to live in one of those places.
  • Human interaction and someone to keep an eye on you: another problem on the order of transportation. But there’s a group of volunteers in town who do exactly that: check in on old folks, be sure they’re OK, drive them around if need be. Plus the county has the largest community college system in the country, and healthcare training is among their many offerings. You could hire a student to help you with these issues. It would look good on the kid’s resumé and give the kid a chance to earn some spending or tuition money. And once again: this would be vastly cheaper than moving into a rabbit warren for old folks.
  • Run interference with crises? Can you spell l-a-w-y-e-r?

I think I can afford all of those things. In fact, I think I can afford them a helluva lot better than I can afford to pony up all my assets to move into a place where I would be essentially trapped, like it or not.

One Don’t-Wanna DONE!

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Admitted: I’ve let the Don’t-Wanna tasks pile up. You know: those little nagging chores that need to be done but can be put off. And put off. And put off some more…

The present case in point: a mound of Mexican primrose that has grown in the backyard for several years. Some there are who regard this plant as invasive, but in my experience it stays where you put it. Assuming, of course, that you put it in a flowerbed, not broadcast seeds over a hillside… 😀

Well, the primrose around the pool is very happy, but over the past year some kind of bug got into the backyard mound.  Because gardening is a laissez-faire proposition here at the Funny Farm, I never got around to doing battle with the critters. Think I sprayed them a couple times with dilute Dawn detergent — an effective insecticide, but you have to get it on the little beasts. And because the mound is kind of out of sight from the back porch and the pool area, it’s been out of mind, too.

Result: as spring is sproinging, those plants are nothing but sticks. Green sticks, promising a possible resurrection. But sticks. Meanwhile, the pool is alive with beautiful pink flowers, and some are even growing in the crevices between the flagstones. So it doesn’t look like the mound is going to come back this year.

So this morning being unduly cool, I trotted out there and pulled up or broke off all the denuded sticks. Presumably it will soon grow back — it’s hard to kill this stuff. And when it does revive, I’ll have to remember to mist it with Dawn every week or two.

A-n-n-n-n-d…what else remains to be done, having been put off interminably through all the tolerably cool winter months?

  • Trim back the plants along the east and west ends of the pool, which now block passage to all but the most intrepid of sherpas.
  • Pull out the primrose that’s gone a bit wild in its adopted home between the flagstones
  • Replace the now very agèd chard (it’s lasted a good four years!!) with new grown-from-seed babes
  • Clean out the flowerbed around the olive in front. That’ll take half a day.
  • Pull out dead plants in pots on west side; replant or else haul the pots away. Figure out why they’re not getting watered adequately.
  • Put Luis up to removing the overgrown Texas ranger in front. Get him to thin the trees.
  • Fertilize and deep-water the roses
  • Treat paloverde, Texas ebony, and desert willow with borer killer

None of these is very difficult. And in fact, despite a year of neglect and the rainiest winter on recent record, there just isn’t all that much that needs to be done.

This house is absurdly easy to take care of. But of course…I planned it that way.

It’s such a pretty little house now, I really don’t want to move: bum invasion, Conduit of Blight, Gangbanger’s Way, and outsized property taxes notwithstanding.

My friends who moved to the Beatitudes retirement home sicced that place’s marketing department on me. This morning a woman from their sales office called and asked if I wouldn’t like to take the grand tour and listen to her pitch.

Well. Sure. I’m willing to do that. They’re building a whole sub-campus of patio homes that look to me one helluva lot better than an apartment in a vertical hive. So yeah: I’m curious.

But…the fact still remains: I don’t wanna move out of here.

What I really would like is to live here until I die. Which is not at all out of the question, given how minimalist the maintenance tasks are. All that would be needed to keep me here into my full dotage will be a competent cleaning lady and a good yard dude. A decent handyman would be nice, too. And no matter how many people I have to hire to keep this place up and myself in food and clean clothes, the cost would be nothing compared to the cost of living in one of those old-folkeries.

And despite the Bum Express delivering drug-addicted derelicts to our front doorsteps, the fact is that this is one of the few even vaguely affordable in-town neighborhoods — if you think of $350,000+++ as “affordable.” Young people have discovered it. And they’re gentrifying in swarms. Just on Ruby’s short doggy-walk circuit, four houses are being renovated, big-time. One fix-&-flipper just sold for $729,000 — an outrageous amount that represented a shameless rip-off of an elderly single man, that’s true: but there it is. It still goes on the record as what these houses are “worth.” Even though that price is ridiculous, it nevertheless will push our values inexorably upward.

At this point, I could afford to move to Prescott, a sweet and scenic little burg where property values are inflated by incoming Californians. If my son didn’t live here, I probably would. But as long as he’s in these parts, I expect I will be, too.

American Retirement: Be scared, be VERY scared???

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So, as on cue, we get another nervous-making rant to the effect that ô God! dear God! Americans are JUST NOT SAVING ENOUGH for their dotage. If you look at NerdWallet’s latest terrifying reprise of Americans’ average 401(k) balance, by age, you’ll be ready to shoot yourself so as to will your savings to your adult kids before you use the money all up. Yea, verily: if you have a kid between 20 and 29 who manages the average savings level, the brat has  set aside only $11,600; but the median for that bracket is a piddling $4,000. If your kids have stumbled into their 40s without undue catastrophe, they’ll have stashed all of $106,200 on average (maybe three years’ worth of living expenses, if they’re lucky), rather more than the median figure of $36,900. And if you — not your kid — have accrued the average US savings for your age bracket, at 65 you have a grandiose $198,6700, but the median among your contemporaries is an even more spectacularly inadequate $63,000.

Horrors. Clearly we’re DOOOOOMED.

Why do I doubt it?

Well, here’s why. A 401K does not one’s only retirement instrument make.

In fact, Americans have a variety of devices that help them prepare for retirement. Not the least is real estate: paying down that mortgage.

Once you’ve paid off a mortgage, your house effectively returns to you the amount you were paying monthly toward the mortgage. It gives you that much money that you don’t have to pay out to keep the roof over your head. So, let’s say (for simplicity’s sake), you pay off your mortgage on your 65th birthday; your payments were $1,000 a month. From then on, that house represents $1,000 a month of retirement savings for you: $12,000 a year that you don’t have to earn and you don’t have to take out of your IRAs or 401(k). If you live to, say, age 85, it returns 12 months x 20 x $1,000: $240,000.

So, let’s say sure, you only have $106,200 in your 401(k). But with that plus the return on your paid-off house, you have the equivalent of $346,200 to live on. Not awesome. But not bad.

Okay, now let’s bear in mind that the 401(k) is not the only savings instrument you might have. For example, some of us know about Roth IRAs. In many ways, it’s better to pay taxes upfront and then stash the balance in a Roth than it is to use a 401(k) and bet that you won’t be earning enough in your dotage to put you in the taxman’s headlights. Lemme tellya from experience: It ain’t necessarily so that you’ll be free of income tax in your poverty-stricken old age.

Uncle Sam requires you to take a percentage of your 401(k) in each year of retirement, forcing you to choke up a chunk of taxes. If you’re not earning any more than Social Security and an annual savings drawdown, that tax bite can be a hardship.

If at the age of 45 you started racking up post-tax savings in a Roth IRA at the maximum amount allowed per year, presently $6,000, in 20 years you would have $120,000. Now let’s continue to assume you pay off the mortgage on your 65th birthday, meaning it starts to “return” the equivalent of the monthly payment, about $240,000 over the next 20 years. At 65, then, you have the practical equivalent of $120,000 + $240,000: that is, $360,000. Now let’s add up the average 65-year-old’s savings: we get $120,000 (Roth IRA) + $240,000 (amount you don’t have to earn to stay in your paid-off home) + $106,200 (average agèd American’s 401(k) savings): $466,200.

Not so bad. But now you not only have the roof over your head more or less free (except for taxes and maintenance), but the house also represents a monetary asset. You can sell it, or you can borrow against it. Let’s say it’s worth $188,900, the median home value of a U.S. house: that gives you a pre-Social Security retirement net worth of $655,100. If we take as the house’s value the average third-quarter 2018 sales price ($390,200), we come up with $866,400. That’s before Social Security income.

So. Yeah: it would be good if you maxed out your 401(k). But its balance doesn’t tell the whole story.

The whole story is represented by the total of all your assets, your Social Security, and the extent to which a paid-off house reduces the amount of cash flow you need to live adequately.

Discoveries: A couple of life lessons learned

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Yesterday my agèd friends who just moved into the Barbizon Plaza the Beatitudes, a very fancy life-care community where business is booming, invited me join them at the institute’s fanciest dining room (it has three!) for lunch/dinner. The Beatitudes, in its current incarnation, is very nice indeed: much like living in a first-class hotel or on the Queen Mary.

(Yes, I once did cross the Atlantic on the Queen Mary. That ship personified luxury accommodation.)

And in that visit, I gained several valuable insights.

First off, after much worried clucking about how far the eateries are from their apartment (in their 90s, they both have their share of infirmities), they both said — out of the blue — that after having to walk around for just a few days, they’re each feeling a lot better. J. said her back and joints are actually improving, and she’s experiencing noticeably less pain. L. said he also was feeling, overall, better than he had in a long time.

So (said she, while loafing in front of her computer): those daily walks are not an option! If you want to feel as well as you can feel, get off your duff and walk around the neighborhood. Or the park. Or the indoor mall, if that’s what it takes. Apparently, the more you move, the longer you’re likely to keep moving.

Next: as to the long-term care insurance conundrum:  A lady came up and said hello to us, then disappeared into the scenery. In passing, my friends remarked that she had not bought into that place…that she rented an apartment instead.

Whoa! Hold the phone. That puts a whole new complexion on the long-term care insurance issue. Now that they mentioned it, I recalled that my father once rented an apartment at an old-folkerie associated with a nearby hospital (it’s quite a story…one day I’ll have to write it up for your delectation!). And it was possible to rent an apartment at the old-folkerie where he had used the entire proceeds of the sale of his home to buy in, though at his LTC commnity  renting was a short-term arrangement.

If you could live at the Beatitudes, on a long-term basis, as a renter rather than as a member of their buy-in “community,” and if renting there would give you dibs on a bed in their nursing home, then it might make sense to keep up the LTC insurance. Here’s why:

If you’re living in one of those life-care communities, you’ve got access to its nursing home (in these parts, a VERY big deal, because decent nursing homes are few and far between here). You’ve got twice-monthly housecleaning. You’ve got daily access to prepared meals as part of the deal. You’ve got a secure environment that’s safe and free from bums and burglars. You’ve got a whole staff keeping an eye on you and likely to notice when you don’t show up because you fell in the shower and broke your hip. You’ve got staff who fix things that break.

But these outfits charge a huge entry fee, basically about what you would clear on sale of an upper-middle-class home. That entry fee effectively serves as nursing-home insurance: by getting you into the life-care community, it pays for access to the institution’s on-campus nursing home: if and when you need it, for however long you need it.

But what if they let you just live there as a renter, with no pre-paid nursing home care? (Pre-paid, we might say, on the come….)

If you did not have to fork over your entire damn life savings to put a roof over your head with guaranteed access to competent nursing care — if instead you could be pretty sure you would end up in a specific nursing home for a period that could range from a number of days to a number of years, as long as you paid for it as needed —  then it would make sense to keep the MetLife LTC policy.

It would, of course, depend on what the institute charges for rent. And whether it gives renters the same preferential access to its nursing home that it gives to residents who give them a giant buy-in fee. (These outfits generally guarantee residents access to the on-campus nursing home or, if the place is full when you need it, to a nursing home of comparable quality.)

For people who buy in, in addition to its stiff entry fee the Beatitudes charges around $3000 a month per person. Together, these charges act as de-facto nursing home insurance. The money buys you a bed in the nursing home should you need it, without an increase in your monthly ding. Of course…if you never need it, then that’s money down the drain. If you do need it, the arrangement could in fact save your heirs most of their inheritance.

But if you could rent to live there, without having to cough up a buy-in fee, it would make sense to keep the nursing-home insurance — that is, assuming a rental agreement includes access to the on-campus nursing home. The Beatitudes supposedly charges people who live in the wild something in the range of $10,000 a month for nursing-home care. This would quickly drain your assets.

It costs me $2,000 a month to live in my home, and I don’t get anyone else cooking my meals. Another thousand bucks to feed me, clean the house, change the sheets, and guarantee availability of nursing care is within reason, more or less….but only if I don’t have to give up whatever I would make on the sale of my home! If renting made that possible, with the understanding that I’d have to pay out of pocket for any nursing home care required, then…

a) Living there would be do-able; and
b) It would make sense to keep the MetLife LTC insurance, because $130 a month, even if I live into my 90s, is one hell of a lot less than the $350,000± that I’d have to fork over from sale of my house.

I’d really like this house go to my son so that he can either sell it and bank the proceeds, rent it out to generate some cash flow, or move into it if he pleases. That means I do not want to have to sell it and spend the proceeds to get myself into an old-folkerie when I can no longer manage the place. Next week I’ll call over there and arrange to listen to their sales pitch. And be sure to ask them whether you really can rent without having to buy in, and if so, what you get for the rent.