Full-time employment began for me the Monday after my Sunday college graduation in 1969. I was blessed with three wonderful journalism jobs that lasted without interruption until my step-by-step transition to retirement. I never earned hedge-fund-style money but always had more than I needed and enough, even in my 20s, to own real estate and cars, take vacations and save a bundle. Not bad for a single woman without a trust fund.
But retirement changes the financial calculus and we may be on the threshold of the huge Baby Boom generation going belly-up at the same time. Few of us will spend our golden years traveling the world. Few of us will leave behind inheritances. Some predict they will have to work forever, although forever is a very long time and I don’t see many help-wanted ads for 70-year-olds.
All of this was hypothetical for me until the last year or so. I left my job at 60 to write a book for Knopf, create a blog on contract for the New York Times and lecture for tidy sums across the country. For a while I made more money than I ever had before ―- until I didn’t. Now I live on a defined-benefit pension from the Times (that check, for $1,193.08, drops the first of the month) and Social Security ($2,414, which lands on the second Wednesday.)
Defined-benefit pensions have all but disappeared for white-collar American workers, replaced by 401(k)s, which require employees to decide how much to contribute and be their own investment managers. Social Security, created as a safety net in 1935, where you pay in while working and take out in retirement, seems increasingly under siege ―- a promise that could be broken. So I consider myself blessed and fret about friends and family just a few years younger. I can count on $3,307 a month, or $39,684 a year. That doesn’t cover basic expenses in New York City, but is better than what future retirees can expect.
With a gap between the money that comes in and the money that goes out, I’ve recently started spending down my savings, sparingly and with trepidation. That money is meant for old age, when I will have to pay for any long-term care I need, without help from family. But how exceptional that I have savings at all!
According to GoBanking Rates, a personal finance website, 34% of Americans have no savings, 65% have less than $1,000 and only 15% have $10,000 or more. To be sure, the poor are at a disadvantage (73% of those earning under $25,000 have less than $1,000 saved). But everyone seems ill-prepared for an emergency (62% of those earning between $75,000 and $99,999 also have less than $1,000; 44% of those between $100,000 and $149,999 and 29% with incomes of more than $150,000 and up also have less than $1,000.). And emergencies aside, what about the mundane facts of life, retirement among them?
I am the child of Depression-era parents and subscribe to certain edicts as such. If you can’t pay for something in cash, you can’t afford it (except a house). Bouncing a check is never OK. Paying interest on credit cards is for fools. There’s a big difference between things you want and things you need. My father and mother are both long dead, I’m almost 70, but I still live by their rules. So I likely won’t wind up eating out of a dumpster or living on the sidewalk. But I’ll likely always be afraid that I might. Perhaps fear is what separates spenders and savers.
It helps to be naturally frugal, the gentle way of saying “cheap.’’ But everyone has idiosyncratic splurges. In the city with the best public transportation in the world, I’m a taxi cab addict, especially if my destination requires a connection by subway or bus. The apartment looks drab? Buy new sheets, even if the linen closet is full-to-bursting. The dog needs to be groomed? Only the best. A white standard poodle costs upward of $200 and if it rains the day he has an appointment that’s money down the toilet.
So, when (if?) I’m an impoverished pensioner, there are corners to cut. There are places to live where $40,000 is above the median income, like Abilene, Tex.; Canon City, Colo.; and Sheboygan, Wisc., according to the AARP. But that would require a car and not having a superintendent to wash the windows and change ceiling light bulbs. It seems a bad bargain.