Managing Your $ Wisely

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By Jerry K.Robbins


When I was a kid in the post-Depression years,  my mother often talked about, “The Poorhouse.”      

“We can’t afford that couch or we’ll be in The Poorhouse.”    

“We will go to the beach for only two days vacation. You want to end up in The Poorhouse?”    

“They didn’t give you a bonus (to my father)?  Well, we are headed to The Poorhouse for sure.”      

I believed there was actually a place where you had to go if you were too poor to support yourself. It was a large gray building with gun towers and dead ivy all over it and bars on the windows, much like prisons and mental institutions of the day.  Consequently, I never complained about the meager meals (a lot of rice and bread) my mother served.  I didn’t ask for a new bike.   I didn’t need a power mower to cut the grass. I was glad to help out by having my own newspaper route.  

Now that I am older I know better.  There is no such thing as a“Poorhouse.” You simply live on the streets with the other homeless. You make a shelter out of cardboard. 

You wear rags. You find your food in dumpsters. You push a shopping cart with all your belongings. Your health care is a bottle of cheap wine.  If you are lucky there may be a soup kitchen near you.  

I know, I should have planned better. There are tons of books about financial planning for retirement with big words like, “cash,” “savings,” and  “investments.”  I can’t get past the pictures of rich C.E.O.s. Maybe a chart or two, but numbers in columns simply do not interest me.   There are strange things like 401K’s, IRAs CDs  stocks and bonds, reverse mortgages, nest egg, W4 forms, and bankruptcy. 
 

Only in this material will you find the unpleasant word, “stingy.” And all the inventories that want to know very personal matters like, how often do you fantasize about living in a nice home while having sex? how often do you go shopping?  have you ever thought of moving to a less expensive neighborhood? Do you get a rash if you have not played the lottery the last two hours? Have you thought of sending your spouse back to work?  Also, it is very depressing reading, seeming to put a bonus on dying young,  “Will you outlive your income?”  Shame on you.  

Of course, like me, you could dismiss this whole bothersome topic with something Ralph Waldo (as in Wal-Mart)  Emerson said, “Money costs too much.”

One of the problems of old age is that you most likely will not be earning big money. Most companies will not take retirees back, unless it is a lower-paying job.  The retiree must give up hope of  employment, unless it is to work as a “greeter” at  Hooters. Although the surroundings will be pleasant, you will not make enough money from that to live on.  To be sure, you may get a small check from Social Security, and maybe even a pension.  It is very unlikely, however, that you will be able to live at much more than 75% of your preferred standard.

Just how much can you expect? In the past, you had to work for 30 years with a final income of $5,000/ month, to get about $2,000/month in pension funds. (Think about it.) 

Thirty years, THIRTY years, and that will put you just above the 2010 poverty level of $22,314)  However, even that is not certain today as many pension plans are shrinking. As for Social Security  that depends on your earnings history. If you retire early, at 62, you can expect reduced benefits.  If you work, you can expect reduced benefits.  If the country goes to war against the Arab nations of the world, you can expect reduced benefits. If all the government/entitlement haters get into office you can expect no benefits.  Of course, you might have other savings between the mattresses that may keep you off the streets a little while longer. 

This is where “other current savings” could help out.  The more you have socked away the more you will have in retirement.  Simple.  But one seldom hears about this.  And the reason is it involves the cursed word, “budget.”  The way to a secure old age begins many years earlier, in the youth of life, when Starbucks and L.L. Bean want to take all our discretionary money   If a couple operates by that forbidden thing called a “Budget,” or “Personal Financial Plan,” there is the possibility of savings.  These savings can be invested. Short of a collapse (see below), these investments will grow in value, providing you as much as $500,000.  I don’t know why Retirement Manuals say so little about this. Or, maybe nobody’s listening. 

Let’s suppose, that after all these considerations,  you have a pretty good retirement income.  No matter.  Ruin can strike at any moment.  The stock market can crash.  

Banks can go belly up.  The housing market can evaporate.  Oil prices can skyrocket.  Taxes can increase fourfold.   

And all this can happen without you doing anything. That’s the point. It is out of your control.  You could be innocently sipping your $4.00 latte at Starbuck’s and obediently tapping on your computer when the news come up of another foreign war America is fighting that will cost you more money  And you don’t even know where Kodakiscan is.

So, your current plans for financially surviving retirement may not work out too well. There is no such thing as a  “poorhouse” today, but homelessness is a real possibility for you.  Is there a contrarian way to go about this important business of avoiding the poorhouse?  Here is the last chance for all of you who like me did not plan ahead enough.  Let me offer six, no, wait, seven,  proven steps to financial recovery.

1.  Use your “plastic” more. You don’t want to become like Nicole Hollander (Tales of Graceful Aging from the Plant Denial) who gets the shakes if she doesn’t use her card every two hours.  But keep your card handy. It will open bank doors after hours so you can empty the cash registers.  This is really not stealing since the bank has added so many unexplained fees to your account that you want to leave the country.  Of course, I’m only kidding about this.  

2.  But I am dead serious about insisting that you get your borrowing under control.  You can’t go on borrowing wildly.  My Uncle Ben use to say, “Never accrue debt. Control your borrowing.  Borrow only enough money to live nicely.”  That’s a pretty good rule, don’t you think.  Follow it, or I will order an Intervention.

3. Learn how to shop with coupons.  You’d be surprised at the money you can save. My wife gleefully reports, “I saved $1397.50 at the store today.” That could be true for you. And, eventually you will find a need for the forty cases of toilet paper you have stashed in the garage. 

4.  Speaking of Starbucks coffee, just cut it out.  That will save you a whopping $1460.09 a year.  With that you can buy ALL the Suze Orman books and tapes about getting rich.  The books are not worth reading, but they will make good firewood when the power company shuts off your service. 

5.  Be firm with your dependent parents.  Sooner or later they will want things, like walkers and medical care.  Say to them, “Just because all your friends have walkers and medical care doesn’t mean you should.”

6. Learn to be happy with less.  Although you are probably a Baby Boomer use to having everything, you may have to cut back in old age.  I know these things are important to you, but give up haircuts, tattoos, pedicures, Yoga instruction, ballet, aromatherapy, guns, and your pets.  The amount of money it takes to keep a pet is astronomical.  If you explain it to Fido, or Kitty, I’m sure they will understand.

7.  Finally, heed the advice of magnate Andrew Carnegie who said something like, “The man who dies rich dies disgraced.” Figure out a way to use up all your savings so you don’t have to burden your children with a big inheritance.  They don’t need it, and won’t appreciate it.  “Oh, Dad, he was such a Loser.”Let me close with a special word about scams, to which us older people seem especially vulnerable.  We get a lot of advice about watching out for scams.   And we need it.  Nasty people pick on us out of proportion to how much they bother other people.  Many of these nasty people contact us over the phone.  

Here are some defenses. 

1. The next time you are called by a criminal solicitor try this,-While you are talking hang up. The caller will think something is wrong with your phone, and move on. Or say, “I’m really not interested in what you’re selling,  but I would like to talk to you about Jesus.”

2. Don’t ever send money to anybody who is trying to bail your granddaughter out of jail.

3. Don’t give your credit card number to  anyone who says he is from your bank and needs to confirm your account.

4. Don’t send money to collect some jackpot, prize, or free cruise. 

5. Don’t buy Disney World tickets that promise a discount.

6. Don’t fall for the funeral directors scam when he insists that, of course, you want the best (most expensive)  casket and services for the deceased loved one. 

7.  If your husband offers you a free week in Hawaii for a little job he has been asked to do involving baseball bats in a parking garage, tell him definitely not. 

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