70 Year Old Free Spirit Offers Lessons on Retirement Planning.
Posted: April 6th, 2011 | Author: Joe | Filed under: Retirement | Tags: Debt, Retirement, Retirement planning | 2 Comments »This is a sad story about Susanna Wilson, 70, who never planned for the future. She has no retirement savings and now realizes she “can never retire”.
Not to seem heartless, but this is another example of poor (or no) planning, and bad choices. Not everyone is born a good decision maker, and some are better than others. But by and large, decision making is a skill and it can not only be learned, but it can be improved.
I offer this story to my readers as a means to learn form another’s mistakes, and remind ourselves of the importance of proper planning and not letting our emotions rule our decisions entirely.
Planning is important.
Despite owning a several businesses (a clothing line, perfume maker for example) and earning $65,000 a year in the 70′s she never saved a dime for retirement. Being self employed, she could have saved up to 25% of that per year in a Keogh plan – tax deferred! That’s $16,000 per year in her account, and off the top of her tax bill!
Following your heart and ignoring your head can be costly.
Her free spirited ways led her to leave University of California, Berkeley before graduating to follow and marry her college sweetheart, a “minimalist sculptor and sometimes rock musician.”
I’m not saying you have to be Mr, Spock all your life and let your passions wither on the vine in a desert of logic, but if it was truly meant to be, then it would still be meant to be after she graduated college. Postponing would have at least given her a degree – an important commodity in the decades following her stint at Berkeley in the late 1950′s.
Besides, in all likelihood, she would have realized it wasn’t meant to be and she could have saved herself one of her eventual two divorces. Incidentally, Divorce is also a costly “life event”, especially for Ms. Wilson since she never received any alimony.
There are always possibilities.
Flash forward to today and things look bleak. Ms. Wilson lives on her social security check of $900 a month, and a one day a week job at a local jewelry store for $12.50 an hour.
She’s got a house with a $5,477 mortgage, and about $9,000 in credit card debt. The credit card debt is from living expenses, so her income is clearly not enough to get by.
The good news in all this is her house. She inherited it with no mortgage, but had to take out a mortgage to pay for repairs. That leaves her with more than $150,000 in equity and since she’s over 62, she’s a candidate for a Reverse Mortgage. In fact, she’s probably a poster child for one!
A reverse mortgage would get her a monthly check from the bank. Not to mention, it would eliminate her mortgage bill in the process. Increased income, and decreased expenses – it’s all around winning!
Read Susanna Wilson’s story here.
There’s a good lesson to be learned in her story. No one really wants to plan for their old age (or even their own death), but failing to plan for these events always causes problems. I’ll have to share Ms. Wilson’s story with my clients when they seem reluctant to take financial planning seriously.
I know a couple of people that are in that same position, and it is kind of sad. Reading stories like this should help motivate people to save when they have the chance. Taking advantage of 401k‘s and Roth accounts are imperative in today’s world if you want to save for retirement.