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Retirement

Got Parents? Keep an Eye on Them!

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It is freaking amazing how vulnerable we old folks get to scams and sales pitches as we descend the steps toward the grave. Lissen up,  you young pups: if you have parents, it is sooo incumbent upon you to quietly keep an eye on whatever financial mischief they’re getting up to. If not to protect them (as most of them did for you when you were too dumb to know better), then to protect whatever assets you might inherit or to delay the day, as long as possible, that the old folks become dependent on you.

Here’s what brought on that outburst: Semi-Demi-Ex-Boyfriend called, all hepped up about having dropped something in excess of five grand on an improvement to his 35-year-old tract house in Sun City, a venue that most Boomers avoid like it was radioactive. While the house is ideal for a single person who doesn’t live there year-round, Zillow believes it to be worth $6500 less than he paid for it in 2004.

Here and there around Sun City, you’ll see old masonry houses that recently have been clad in stucco. Most of these get a layer of insulation under the new mud, which in theory should save on power bills.

Welp, one of SDXB’s neighbors decided to do this. Curious, SDXB stopped by to inquire, and that gave the contractor an opportunity to offer him a smokin’ deal if he would just sign on the dotted line before the guy moved his crew out of the area. So now he’s all excited because he expects this will increase the value of his hard tent (his term: a guy with terminal wanderlust, he wishes to spend his dotage in constant motion, using the place in Sun City as a place to camp out during the winter, when the weather’s livable). And it is true that the houses modernized with a layer of stucco do look a lot better than those with naked slumpblock walls.

So now he’s saying maybe he’ll sell the place, taking advantage of what he thinks will be spectacularly improved property value, and upgrade to a better place on the golf course.

Well. This sounds grand, until you think about it:

a) During the winter, it’s a rare day when you’ll turn on the heater. Today as we speak we’re in mid-November and it’s 73 degrees on my back porch. Last month my power bill was $66; this month it will be less. Ditto SDXB’s.

b) In addition to her house in Sun City, New Girlfriend owns a lovely home in Boulder, to which she repairs at the first sign of undue warmth. SDXB either goes up there with her or soon follows, every spring. She stays there until October. He spends most of the summer there, when he’s not hanging out with his relatives at the Hood River in Oregon or visiting boyhood friends in the Upper Peninsula of Michigan. Thus, when my  power bills run upward of $200, he has exactly no power bills. None. Nil. Zero. Zip.

c) The two of them have developed a love of ocean cruises. They are merrily squandering their kids’ inheritance on wonderful cruises, and having the time of their lives! In summers past, they’ve been all over the Caribbean, to say nothing of the trip to Italy. And just now he’s got NG persuaded that nothing will do but what they must head for the South Pacific. Thus, between the summer home in the high country and the constant peripatetic mode, they’re hardly ever there!

d) SDXB has taken his neighbor’s word for it. He’s done nothing to check this contractor out or to get competing bids. This is SO out of character that it defies belief.

Well. IMHO if you plan to spend the entire year in one of those hard tents and if you believe you’re going to live in it until you croak over, this stuccoing scheme may not be a bad idea. Although God only KNOWS how many years it will take to recover the cost if only utility bills are taken into consideration, SDXB’s slump-block home is fully painted. A new paint job, if it’s done with a decent grade of paint, will cost him two or three thousand bucks. Newer forms of stucco come dyed to the color you please and, in theory, never need to be painted. So assuming that’s true and assuming he lives, say, another 15 to 20 years, he could save as much in paint as he spends on mud. In that case, whatever savings he realizes on the air-conditioning (which could be non-negligible, should he ever break up with NG) would be gravy.

But as a practical matter, SDXB has no intention of EVER spending another summer here in the Valley of the We-D0-Mean Sun. So that leaves us with the question of

W

T

F

???

IMHO, this is a case where a competent family member — a son or a daughter, for example — needs to be on hand to keep an eye on big-ticket decisions for an aging parent.

Of course, none of us wants to give over our autonomy to the younger generation (or to anyone else, for that matter). And naturally, none of the young folk wants to have to take on the responsibility of riding herd on an increasing frail (and so increasingly annoying) parent. However…it must be recalled that, after all, those parents shouldered 18 years or so of responsibility for the pups. Or, less altruistically: our assets are their assets. Whatever we refrain from squandering will help to keep our kids in the middle class, to the extent that a middle class survives in this country.

So. Keep an eye on us old buzzards, you young thangs.

😉

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Sun City Poverty: Gettin’ Old and Gettin’ Poor

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Last night SDXB invited me over for dinner and an outdoor concert at the bandshell in Sun City, where he lives. Uhm, in Sun City, that is…not in the bandshell. 😉

His home is in one of the older sections of Sun City, a term that actually denotes three developments: the original Sun City proper, Sun City West, and the much more recent tracts of Sun City Grand. All of these occupy a vast segment of the West Valley and, as a tax bonanza, have largely been engrossed by a town called Surprise, once a migrant worker settlement but now a suburb of Phoenix.

The original Sun City tract, which Del Webb began to build in the early 1960s, has seen its better days. During the recession, most of the little businesses in the development’s strip malls closed, and to this day many storefronts are empty. Near the bandshell, one strip mall is filled exclusively by second-hand stores. Although I’d heard, some years ago, that poverty is far from unknown in the Sun Cities, I was surprised to see a large food bank as we drove into the more venerable part of town. It occupies a defunct Safeway site and serves 400 people a day. In addition, Sun City hosts five other food pantries.

In the original Sun City proper, 6.48% of residents live in poverty, up from 4.61% in 2000. In Sun City West, where the population is younger and more affluent to start with (houses cost significantly more in Sun City West), the poverty rate 2.7%.

The old section is poorer than the newer tracts in Sun City West and Sun City Grand. This is not surprising: many residents in the original Sun City have been there a long time and now are in advanced old age. As you age your way through retirement, you run out of money. Residents in the newer sections by and large are younger and less likely to have outlived their savings. And the tract houses in the original Sun City are relatively cheap. Some duplexes and garden apartments there are very cheap, indeed, and there’s even a trailer park. So, younger seniors who move into that part of the Sun Cities are probably less affluent to start with.

No doubt the biggest contributor to poverty in Sun City is uninsured infirmity. Medicare does not cover nursing home care. So if one member of a couple has a stroke or comes down with, say, Parkinson’s, MS, Alzheimer’s, or Lou Gehrig’s disease, obtaining care for the person will (not “may”) drain their savings to zero. In SC West the disability rate among poor males is 51.2% (as opposed to 25.9% among local residents not classed as poor and 16.0% among Arizonans in general); among poor women, 49.1% are disabled, vs 22.7 of female residents not “poor” and 19.1% of Arizonans in general. Clearly, with age comes illness; with illness comes poverty.

Only after your savings have been drained and you have divested yourself of most of your property to pay your medical bills are you eligible for Arizona’s version of Medicaid. While my mother was dying in a nursing home, my father met a woman whose husband had been in that dismal, cruel place for TWO YEARS, with no end in sight. He’d had a stroke, was a vegetable, but could not die. Keeping him there to rot away was costing everything they had. By the time he died, she expected, she would be utterly without assets.

Once you’re old, the only way to protect yourself from this fate is to divorce or, if you’re already single, divorced, or widowed, never to marry. If you want to be with a partner, live together in unwedded bliss and keep your assets separate.

To protect his mother’s few remaining dollars and keep her out of the most abject imaginable poverty, SDXB had to arrange to divorce his Roman Catholic parents as his father lay dying, ruinously, after 18 years of Parkinson’s disease. When his mom died, a couple of decades later, she was living in an aging trailer park and had $6,000 to her name — and no, she did not live high off the hog. Never did, during her entire life.

If you’re not approaching your dotage yet, there are a few ways you can protect yourself. But you’ll need to start planning ahead now. Bear in mind that about 40% of elders will spend some time in a nursing home before they die.

Number one is to get yourself some long-term care insurance. Companies are trying to phase out this kind of coverage, and so it probably would be wise to get at least some coverage now, even if you’re under the recommended age of about 50 or 55. The younger you are when you buy this kind of coverage, the lower the premiums are. Conventional wisdom has said you should wait until you reach your 50s to buy long-term care coverage, thereby saving on the costs that would accrue over a lifetime if you bought it at a younger age. However, obviously if long-term care insurance is going away, you would be wise to grab it while the grabbing’s still good.

This is really not an option. The median cost of nursing-home care is $207 a day. That’s upwards of $75,500 a year! At that rate, a long-term infirmity will drive you and your spouse into true penury in a brief period. Even if you die after, say, two years in a home, the cost could consume half or more of the savings intended to support you and your spouse to the end. And costs are rising swiftly.

Second, try to take care of your health. Keep your weight, blood pressure, and blood sugar levels under control as you enter and pass through old age. Don’t smoke, don’t do recreational drugs, and don’t drink to excess. Drive carefully and wear your seatbelts.

Third, have an exit plan. You need a way to finish your life when livable life is over. Actually, you need more than one way:

a) Be sure to have a living will — doesn’t matter how old or young you are — and that you have given powers of attorney to someone who can be trusted to carry out your wishes. Do not rely on a doctor to do this — after my father had a major stroke at the age of 84, his doctor refused to abide by the terms of his living will. Appoint someone who understands with and agrees with your wishes.

b) Quietly prepare yourself to provide your own exit, if need be and if opportunity arises. When there’s really no hope for survival and the future holds only suffering and prolonged infirmity, you may have to find your own way to the door. And you know, you should have those plans in place before the need arises.

It’s a sad thing when people have to contemplate suicide by way of protecting the future of a spouse or an infirm dependent. However, it’s a reality we have to deal with.

As Walter Cronkite used to say, “That’s the way it is…” Monday, October 7, 2013.

This post was included in the October 23 Carnival of Retirement at Mom and Dad Money.

Why Do You Want to Do That?

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Do you ever ask yourself…Why do you want to do that?

Bet you do.

This  afternoon that question crossed my my mind. It followed a twisting path to get there, but eventually it arrived, and I guess it brought a little enlightenment with it.

My friend and fellow editor, Tina, lives in a kind of extended family commune. Her relatives and SO think, often (from what I can tell) about how kewl it would be to acquire a good-sized chunk of land and build a compound on it, one with separate living a quarters for each individual or dyad or triad or whateverad, but with a community hall where people might meet and prepare meals together and party together and plan their shared trajectory together.

Meanwhile another pair of friends, La Maya and La Bethulia, occasionally voice the same thought: how amazing would it be to find a way to get a group of like-minded people together in a kind of shared housing?

And gazing into the past, some other old friends of mine — a couple and a single woman — came amazingly close to throwing in together with me to buy a gorgeously tricked-out triplex in Fountain Hills, a far suburb of Phoenix gifted with peace, quiet, gorgeous views, relatively cool temperatures, and proximity to the upscale environs of north Scottsdale. Fortunately, we couldn’t figure out the legalities of a tiny co-op — I say “fortunately” because we fell out and went our three different ways. But still…as ideas go, it was interesting.

So this thought proceeded to an e-mail to La Tina: why not look and see if those of us who can support ourselves remotely, through the various gigs and online businesses we exploit, could purchase some ash-covered acreage in Yarnell and build our own compound on it? The Yarnellites no longer welcome trailers, but…what about modular homes? I could, for example, live real happily in this little fella, especially if it had some room for a private garden or two around it.

And as I was shooting those links off to her, there it was, the thought occurring: Why do you want to do that?

Me?

Well, I don’t think I’m going to live all that much longer. And I suspect the time left to me is not going to lend itself to fully independent living.

I can’t take care of my house anymore. If this back pain doesn’t go away, and go away damned soon, I’m not going to be able to live here in my home. I can barely vacuum the floor, much less mop the grime off it. I haven’t dusted in weeks. It’s all I can do to drag myself out of bed in the morning, stumble around for a few hours, and then drag myself back into the bed, there to sleep all afternoon.

After I discovered that the blood pressure med is known to cause a) rashes like the nasty number that broke out on my face right after I started it, b) fatigue and listlessness, c) joint and muscular pain defining the excruciating agony that ramped up within three weeks after I started swallowing the stuff, and d) dizzy spells that make it dangerous (read “almost impossible”) for me to drive, I decided to experiment by quitting it. After all, I’ve had high blood pressure for several years and am not going to die in a month or two.

The rash went away within five days after I stopped taking the drug. So did the dizziness and light-headedness. Three weeks after quitting the damn stuff, the back pain is down to a .25 on a scale of one to ten. And the blood pressure is up to 130 to 140 on the home monitor, which means it’s over 150 on the higher quality units at a doctor’s office.

So I risk a stroke or I make myself so sick taking the damn stuff that I can’t take care of myself anymore and would just as soon shuffle off this mortal coil at the earliest possible moment.

That reduces the choices, de facto, to either

a) I get rid of Cassie, sell my home, and move into a life-care community where there’s someone to watch out for me, fix my food, and do the light housekeeping; or

b) I take my chances with death or permanent godawful disability.

But suppose the choices included c) I throw in with a bunch of other people who can more or less take care of themselves but can’t (or would prefer not to) go it completely alone? Now we have a whole new take on why do you want to do that…

Why would I want to live in a commune in Yarnell? Not just “it’s quiet,” “there are no effing cop and nooz helicopters buzzing the house every ten minutes,” “the air is clean(er),” “hawks and eagles and buzzards ride the cold columns of air overhead,” “the weather is never blinding effing hot,” “you can sleep with the windows open at night,” “you can hear the coyotes call in the middle of the night,” “there are no pawnshops for gangbangers and meth-heads to stick up,” “there are no cops to chase the gangbangers and meth-heads into your garage,” or any of that claptrap.

Put all the claptrap together and then add to it “my life might be shorter, but at least a fair amount of the last part of it will be better.”

Now you’ve got the picture. What is that you want to do, and why do you want to do that?

 

 

One More Year…Until the Year Arrives

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Frugal Scholar writes about the latest budgetary convulsions in her state, recurring politico-fiscal nightmares that have already had baleful effects on higher education there. With one kid fresh out of college and the other on the brink of (parent-assisted) homeownership, the sails of the Good Ship Retirement have appeared on  the horizon. Though she says she’d like to teach several more years, FS reports that she’s fallen into the habit, particularly where optional expenditures are concerned, of asking herself “what would I do about this if I had only one more year before retirement?”

Good question, isn’t it? She finds it deflects impulse buys. But it’s also an interesting mind-set — maybe one that anyone of any age should engage.

What if we all kept in the back of our minds that we had OMY — One More Year — before we chose to or had to quit working?  What would that do for us?

Well, obviously, it would make us think twice about the various extravagances and flings we’re inclined to when we know that a steady income will replenish savings or pay off the credit card within a month or two or three. It might lead us to plan for the future more carefully: what kind of housing would we like to have, once we’re retired? And where? How much, realistically, is it going to cost us to live in retirement? If the projected retirement date were accelerated by x or y years, how much should we be saving now to accommodate such a change in plans? What kind of vehicle will we drive? How will we fill the free hours…maybe with volunteering? travel? a new job or enterprise? hobbies?

My dean gave me nine months’ notice, although I realized well before then that the university was unlikely to continue to keep our expensive research support office, what with the president saying he would pare back operations that did not contribute directly to the institution’s primary mission, teaching.

So what was the OMY effect on me, a person who actually knew she had only one more year of employment?

• Debt clearance. The number-one goal was to get rid of a $30,000 home-equity loan I’d taken out to renovate the house my son and I copurchased, to make it livable for him. It required me to take a second job, but I accomplished that.

• Budget reallocation and expense control. Believing I soon could be living under the Seventh Avenue Underpass, I started getting used to spending a lot less. Over the course of nine months, I cut the discretionary budget from $1,500 a month to $900, and aimed to get it down to $850. I got used to running the air conditioning a lot less during the summer and trained myself to tolerate uncomfortable temperatures inside the house.

• Food purchase habits. I began stockpiling nonperishable foods, such as canned goods, beans, and rice. Eventually I bought a freezer so I could store meats and frozen vegetables purchased on sale or in bulk.

• Cultivation of new income sources. I got my foot in the door at Heavenly Gardens Community College, so that a teaching gig of 3 & 3 + 1 — the maximum number of courses an adjunct could teach at the time — was waiting for me the minute I walked off the Great Desert University campus. Meanwhile, I ramped up The Copyeditor’s Desk so the contract editorial work was flowing in by the time the salaried job ended.

• Early Social Security draw. With retirement investments down by something over $200,000, my financial manager strongly advised me to delay drawing from savings as long as possible. Even though it was not in my interest to start Social Security before reaching so-called “full” retirement age, the piddly income from teaching and freelance editing was not enough to keep me in my home and put food on the table. So, I was forced to start taking Social Security two years before “full retirement age” and six years before I had planned to do so.

When one is laid off a job in one’s sixties, one is “fully” retired, no matter what some rule-making bureaucrat or affluent legislator imagines. I applied for job after job after job — everything that I was well qualified for, everything that I was even remotely qualified for, and everything I figured I could stand to do even though it was menial work. Believe it: no one is interested in hiring an elderly worker, especially not during a major recession.

• Postponed or canceled decisions about planned major purchases. Even at the time the job ended, my car was reaching its dotage. Normally I keep a car for 10 years or until it reaches 100,000 miles, whichever comes first; the Dog Chariot was 10 years old on the first day of my surprise retirement. I’m still driving the thing. It’s rounding on 14 years old now and has almost 120,000 miles on the odometer. I probably will run it into the ground before buying a new tank.

All of these OMY strategies cushioned the fall into permanent unemployment (which is, after all, what retirement really is).

And when one bounces off that trampoline into a brave new world, one finds that permanent unemployment is just another word for freedom. Today I can’t even imagine going back to a full-time job — perish the hideous thought!

It really is true, contrary to the warnings of ever so many financial advisors who want you to give them your money to invest, that you can live a lot more cheaply in retirement than you do while you’re working. With fewer external demands pushing up your expenses, it simply doesn’t cost very much to live well.

I’ve managed to stay in my home, despite increasing insurance and tax bills. My son and I have not defaulted on the downtown house (although, admittedly, for awhile it did look like we might have to). I don’t seem to be having any trouble keeping the place maintained. Gerardo is still employed. Various workmen still find jobs to do around the place, and none of them is being asked to go hungry. I still have a dog. I can still buy the clothing I need, whenever I feel so inclined (which isn’t often). I can still get a monthly haircut. And I can even go out to lunch or dinner occasionally.

Without the cost of a daily commute, without the need to buy and wear expensive dry-clean-only clothes, without  the five-day-a-week restaurant lunches, without the repair bills occasioned by the wear &  tear on your car, and without the many other expenses one invests in a career, you save a surprising amount of money. And one quickly becomes accustomed to buying more intelligently, to curbing extravagances, and to cutting waste — so quickly that these new habits are not perceived as significant hardship.

Thinking about your financial life as if you had only One More Year to go will not only help you to get your money affairs in order, it will smooth the way into a comfortable and happy retirement.

 

Medicare Supplement: QUALIFIED!

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Thank goodness! The agent I stumbled across while trying to navigate the Medigap labyrinth after Mutual of Omaha decided to up its Medicare supplement premium by $433 a year called to say Government Personnel Mutual’s underwriters have approved me for a Plan G policy.

That will be a difference of almost $700 off the two grand that Mutual of Omaha proposed to jab me with.

A few months ago, I’d heard from another insurance salesperson that Mutual of Omaha (which is part of United of Omaha) is notorious for luring new Medicare recipients into a Medicare supplement policy by offering the lowest prices around, but then after a year or two, they jack up the prices through the ceiling. The current episode suggests she was right.

What’s going on there is that when you first get on Medicare, you have a window of a few months in which to decide whether to buy a Medigap policy; in that first “open enrollment” period, carriers may not subject you to underwriting, and they can’t except pre-existing conditions or anything they imagine might be a pre-existing condition. But after that introductory period, any change, even to a different Medigap policy offered by the same company, has to go through underwriting.

Because most Americans in their 60s have been “diagnosed” and something like 90 percent of those 65 and over are on some sort of medication, after you’re enrolled in that first Medigap plan you have about a snowball’s chance of getting approved for a new policy. Thus, once you’ve signed up for a Mutual of Omaha policy, in about 90 percent of cases it’s a gotcha. In a big way. They can raise their prices and there’s not a damn thing you can do, short of going bare or switching to an HMO.

To accomplish the $700 difference, I had to switch to Plan G with Government Personnel Mutual. It’s the same as my old Plan F policy, except that Plan G hits you with a $142 deductible, whereas Plan F has no deductible. Obviously, Plan F is preferable; however, I can afford $142 out of pocket, and the difference in premiums is so great that it’s worth it.

After running through an interminable punch-a-button noise-maker at Mutual of Omaha, I finally reached a person who seemed in a position to put an application for a Plan G policy through that outfit’s underwriting. She sent me not one, not two, but three duplicate applications. These are multipage, intrusive questionnaires, and so I felt no call to fill it in and drive it to the post office three times. I sent one. Haven’t heard a single word back from them.

Government Personnel Mutual has a better A.M. Best rating than Mutual of Omaha and far fewer consumer complaints floating around the Internet. And, apparently, it has no reputation for gouging its customers.

So. That’s a relief. And it’ll even give me a few extra dollars in my pocket next year.

Money Happens!

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Well…we could say it re-happens. Got a tax refund of $2300, mostly because the college withholds taxes even though I don’t earn enough to pay them.

In an anchorite’s world, that’s a very nice chunk of money. It means I’ll have to draw down nothing from retirement savings to cover Q2 living expenses, and much less than planned for Q3. All the while, m’dears, not teaching freshman comp.

mwa  ha  ha!

It also plumped the Survival Savings fund, the “pool” that’s fed quarterly from Fidelity, from The Copyeditor’s Desk, and from teaching the online magazine writing course, and from which I draw a monthly allowance to meet expenses. It’s right back up to where it was on January 1.  Before the first-quarter disbursal, that fund had about $12,600.

I couldn’t freaking believe it.

So. Barring any new windfalls, Survival Savings will end the year with a balance of about six grand, significantly better than planned.

Since I probably can dispense with the Q3 drawdown from the S-corporation of $360 (we transferred most of the planned 2013 distributions in the form of loan repayments and dividends), in 2013 earned income should come to a grand total of $4800, for the two online courses.

2013 Pool

Meanwhile, revenues are flowing in to the S-corp at an acceptable rate. I’m not working very hard — believe I’ve developed an allergy to work — but I don’t have to work very hard to earn enough to adequately supplement Social Security, a 4 percent drawdown from savings, and the most minimal teaching schedule possible.

God is great, beer is good, people are crazy.