The Fallacy of Retiring From a Book

I’m gonna tell a story ’bout a man named Jed poor mountaineer… wait wait wrong channel. What I’m going to tell is a little family history. My grandparents aunts and uncles are all dead so spilling a little family history won’t matter much. My grandfather was born about 1905 and he had a wife a few years younger. Gramps had a sister a few years older than him so she was born 1900. She married a guy probably 5-10 years older than her so he was born 1895 or 1890 or so and he was my uncle. My dad, also deceased was born in 1928. That locks you into a reality of pre depression life. In 1900 there were only 45 states as UT was added that year. WW1 was still 18 years away. Both my Gramps and Uncle were entrepreneurial types but expressed that in different ways. My uncle was technical, he built radio stations and wired telephones and “saved half” even in the great depression stuff needed doing and somehow he managed to get paid to do it. My aunt always worked. She was a telephone operator and they had no kids so the second income helped to create a nest egg. After the depression my uncle bought a failed “summer resort” on Mackinac Island in Michigan. It was a few cottages on the beach. The was no bridge joining the 2 parts of Michigan across Mackinac straits and things were all by Ferry. Now I-75 crosses the straits.

The cottage business was seasonal, rich people from Chicago and Detroit trying to beat the heat down by the beach in the summer, ice and snow in the winter so my Uncle bought a trailer down in Florida and they worked the resort in the summer and enjoyed the sun in the winter. Does this sound familiar? Eventually they qualified for SS and Medicare and sold the cottage business to retire to Fl. My uncle always drove the best Cadillac, it was his feature. My uncle lived into his 90’s and then my aunt into her 90’s. Despite my uncles facility with finance over the ensuing 30 years things got tight. In my aunt’s old age she would go order an early bird special and then complain about it and try to get it comp’d. It was embarrassing, then she died. The disposition of her things fell to my Dad. After all was said and done she had about $15K left to her name. Better than nothing but a real bounce the check for the under taker kind of story, and I understood why she always tried to get her early bird comp’d. They lived a FIRE kind of life. It worked! Barely. She still drove that Cadillac but parts were falling off at the end.

My Grandpa was a hard charger. He started with A&P around age 11 pushing carts from the lot into the store. He didn’t have the job he just pushed the carts and got noticed, and pretty soon he had the job. He wound up as the meat buyer for A&P down in the Chicago stock yards. The cattle and hogs would flow in from far and wide on the trains, and he would buy the herd that would feed the people. The guy could pick a $100 steak while it was still on the hoof. He would bring home a hunk of beef liver that would put sirloin to shame. Roast beef? Don’t get me started. He grew in that grocery business to become Vice Prez and in the end was building shopping centers and all kinds of stuff, but he wasn’t an owner he was an executive and he retired on a good pension and SS + Medicare to a 55+ community in FL about 25 miles from my Uncle. It was a nice new community and he immediately became president of the HOA or something for the community and he got on the building committee of the proposed new church down the road. In the beginning when there was nothing they would have Mass in his living room. Eventually a church and school were funded and built and he continued to live off his pension. I liked the location as my grandmother could go down the street turn right go to church, then go a little farther down the road to a shopping center get her hair done, maybe have lunch, go grocery shopping pull out on the cross street and turn right, go down a ways and turn right and wind up at home. If you ever drove in Ft Lauderdale traffic you’d understand the value of an old lady only needing to turn right to survive. My grandfather died from AIDS in the 80’s. He had a triple A done and as is often the case was transfused with tainted blood which hustlers sold for McDonald’s money. It was a time when AIDS was just being understood. That right turn routine became even more important as my grandma soldiered on. Eventually she broke a hip, went into the hospital, got her hip fixed, infarcted 2 days later and actually blew out the wall in her LV. I trained as a cardiac anesthesiologist and had seen a lot of badly scarred heart but never a blown hole in the muscle! It fell again to my Dad to take care of the disposition. Grandma who was just under 90 when she passed had about $50K left. Her finances initially were solid but as the originals in the retirement community died off the places were sold to families and being an older community, lower middle class families. Those families wanted services like swimming pools so the home owners fees sky rocketed and taxes skyrocketed and Gramps wasn’t president any more to ride herd. So a pensioner was in a bit of a pickle with a fixed income and rising expense.

That’s enough history but it does lay out the reality. Someone born around 1900 had a whole different reality than someone born in 1928 and someone born in 1952 (me) and someone born in 1997 (my daughter). My aunt and grandma made it, barely. A nursing home stay would have wiped them out. What’s the likelihood of a nursing home stay at age 89? You can get out your future value calculator all you like but it doesn’t reflect reality. That 20th century was a century where America had a great expansion and we all remember that. In the 21st century up to 2017 GDP is up on the average only 2.1% over 17 years. 17 years is more than half a projected retirement. It may not give you pause but it gives me pause. Pensions work until they don’t. Real Estate works until it doesn’t. Stocks work till they over inflate and then regress to the mean and the regression steals half your net worth.

You can learn a lot about retirement just by taking a few hours and journaling your family’s history and the economic circumstances in which that history occurred and then thinking through salvation strategies. Beats hell out of wasting your time watching the talking heads on CNN try to beat themselves to death with their lips and trying to out snark each other.