August 2, 2011

Sunnyside — Tuesday, August 2, 2011

The past few days have been definitely on the sunny side! Summer seems to be finally here—only 2 months late! The sunny weather brings out more dogs in the no-leash park, bikes and walkers and runners, children running in and out of the park fountain and people lying on the grass. Sailboats and kayaks, jet boats and canoes join the working barges, fishing boats and tugboats on the river. It is not a day to think about finances.

Once, money was equal to sex, religion, and politics as subjects one did not talk about in polite company. Now we hear far too much about the other three. Only a few of my friends have bravely asked how I managed to afford this CCRC.

I wasn’t sure myself. I am scared to death of being in debt, since my father often was. During World War II store charge accounts were frozen. Each had to be paid up at the end of the month before one could charge again. This was hard for my father to remember, and it was embarrassing to go down to charge something I needed for school, be told the account was frozen, and leave the store empty-handed. I was lucky that he would always pay up and I could charge again—many were not so fortunate. But that, plus being a stay-at-home mom on a small budget, who had to take things out of my cart at the grocery store checkout when I didn’t have enough budgeted cash, has made me very conscious and fearful about over-committing resources. And, unlike my younger days, I can’t increase my income by taking another job, or earning “butter and egg money” by gardening, sewing, or putting up preserves. I’ve got to live on what I’ve got.

I ran my finances past my smart sons, my trusty CPA, and tax advisors. My husband managed well, and we had never gone into debt. What I had was free and clear so there was enough to cover the buy-in. The sweetener was that this retirement center returned most of the buy-in to my heirs so I wouldn’t be spending their inheritance: very important to my husband and myself. The Continuing Care aspect meant they would not have to impoverish themselves to pay for future nursing care—I’m told this can easily run up to $8,000 a month! There was also enough, with pensions and social security, to cover my monthly payments for the next 15 years or so—my current life expectancy. (All this, of course, depends on Congress to keep it’s promises—not actually a given at this point when no one can compromise on anything.)

What’s left is for “frills”—clothing, notions, entertainment. I have been pleasantly surprised at what is left in my bank account now that I am not spending on the “dailies.” There are no payments for utilities, garbage pickup, sewer fees. I don’t need the Y or a health club: this place has those. No maintenance for yard or house. I only need groceries for breakfast and lunch: my payments cover one meal a day and I usually pick dinner.

With transportation provided to grocery stores and shopping malls, my gas bill is minimal. I do far less “impulse” shopping—and I never did much—because I am no longer in and out of stores where I constantly see “good buys.” There is much free entertainment here, and far less pressure on being in the know about the latest movie or wearing the latest clothes. (Of course, Oregon takes pride in being casual.) I rarely meet friends for dinner out because I am not in a town where I know many outside people: I have to travel to Roseburg to see old friends for that. It saves money, but I am sacrificing easy friendships with these wonderful people. (That’s a shadow, and a big one.) On the other hand, I have plenty of dinner partners and rarely eat alone in front of the TV. My new place is full of new friends and acquaintances with dozens of fascinating stories to tell.

I’ve asked a few people for advice for trying to figure out financing the rest of one’s life, knowing, as Robert Burns poetically advised a mouse, that “... foresight may be vain. The best-laid schemes o' mice an 'men gang aft agley.” (I have to credit Google for the source and also for recognizing my phonetic attempt at Scottish spelling. A nice change. Usually it misses when it thinks it knows what I intended to type—maybe I should try dialect more often.) They all agree it totally depends on the person: in spite of the ads, one size does not fit all. But:

A) Work things out with the children you trust: as you age, they may become your caregivers and will need to know everything ... even though none of us like to have our children think they are now our parents! They may offer advice—but we’re still the adults.

B) Check every possible insurance policy to see what it covers and if you still need it. If you sell your house, you will no longer need that insurance. A different type of place will demand a different type of insurance. Mine requires rental insurancefar cheaper than what I was paying.

C) The general plan seems to include: 1) figure out how much you have in savings, investments, and other assets, 2) income from investments and pensions, etc., and 3) life expectancy.

D) What do you need to estimate for inflation? Rents and living expenses usually go up every year. Some investments and pensions do: others don’t. 5% seems to be the usual estimate of inflation.

Figure out how long the money must last: many actuarial tables give average life expectancies. It changes with your actual age, so if you once thought you would live to be 80, you may be surprised what these tables now indicate.

Work with a financial advisor so you know where you stand. “Transitioning” is scary. There aren’t that many role models as we get older, and no one can really predict the future. You have to plan the best you can, and just muddle through sunny and cloudy days.