It was a unicorn of a Monday evening in my house. As the working mom of two teenage girls whose spouse travels most weekdays, our household is more Grand Central Station than Rockwell-ian. Yet, last night we actually had an evening that was a throwback to my 1980s upbringing - once the dishes were done and homework was completed, we sat down and watched a television sitcom as a family. Whoa.
The girls opted for a new sitcom titled "Indebted" - high jinx and laughs ensue when a baby boomer couple moves into their son's home after a luxurious lifestyle and healthcare costs deplete their lifesavings. While most can find a little relaxation and entertainment in a situational comedy, this one hit specifically close to home for me - or more specifically, close to work for me.
Over the past two years, I've built Tight Ship Advisors to specifically support, educate and protect people like the fictional characters portrayed in Indebted. The sage retirement advisor is encouraging people to begin planning for all of life's twists and turns beginning at the age of 60 - while you're still in an earning phase of life. Yet, during those earning years, we, as parents & grandparents, take immense pride & joy in creating family memories through providing a lovely home, going on regular family vacations, supporting extracurricular activities, underwriting education.... all of which are capital expenditures that push nurturing a longer term plan into the backseat.
On two separate occasions, I've worked with couples that have gone from owning a 1MM residence & providing a upper class lifestyle for their family during their 30-50s to hundreds of thousands in credit card bills & no assets during their fixed income phase of life at the age of 65+. The belief, actually the hope, that income and lifestyle are stable was the driving force in their habits they establish early on. With both these couples, bankruptcy and reliance on adult children was inevitable to keep their heads above water. TV mimicking reality.
From 1991 to 2019, bankruptcies amongst those age 65+ went from 2% to 13% of the total filings. The reason behind this is not just about poor financial decision making. The staggering rise of out of pocket costs for healthcare, the failings of the pension system, falling wages of their cohort and laborers finding themselves without a market to work within make EVERYONE susceptible. Again, take the example of the two families I've assisted through their bankruptcy. One had been a commodities trader and the other owned a copier business - in hindsight, both had lucrative careers that were not going to produce strong Social Security benefits nor positions or categories that would stand the test of time.
So, what is the final takeaway to this cautionary tale? Always be playing the long game. A healthy financial plan must start today with engagement of qualified advisors - financial, legal and personal. Wealth management strategy is a beautiful thing that accounts for all of your priorities/goals while creating firewalls against potential health or financial catastrophe that can meet you along the way. Personal assistance in the form of a Certified Senior Advisor is going keep your household budgeting & healthcare costs in check during the changing chapters of life. Your lawyer is going to create an impenetrable bubble around your home, health & loved ones that will minimize tax implications and adhere to your long term wishes.
Commit to planning. Find your qualified advisors. Rest easy spending your retirement on your terms.