New Year, New Home

2023 will be one of significant change for me (I hope).

Change in how I spend the bulk of my working day. How I earn a living. Where I earn that living. With whom I share my time. Yet as we turn the page into the new year my thoughts are with my parents, who will make just one significant change (I hope).

They are leaving their 4-bedroom home with its huge patio and multi-terraced garden in favor of a 2-bedroom apartment in a senior independent-living complex. I’ve been staying with my parents while waiting for my post-divorce life to begin, and though I was initially opposed to their move – they love their house, and my father is an enthusiastic gardener – I’ve come to see the wisdom of the move. They just don’t have the stamina they once did. My father is 87, my mother 82, and keeping up with the house and garden takes more energy than they want to give them. The reason for the move makes eminent sense. And I get it.

So they are not leaving their house kicking and screaming.

And yet it’s still not without stress.

Odds are that this new apartment will be the last place they live together. If – really, when – their health fails, it’s unlikely it will afflict them at the same time and in the same way, so even if they are in the same facility they may not be in the exact same place. And while we don’t talk about it, I think it’s clearly on their minds. How could it not be?

Mortality is the tie that binds us all. We all come face-to-face with it eventually, with varying degrees of grace. And this move for my parents is the most tangible evidence to date that they are approaching that point of their lives when their deaths are real possibilities. Not likely, but definitely possible, and more possible than it’s been before.

My father faced prostate cancer a few years ago and kidney cancer last year. He had moments of fear during each scare, but the information he got from his doctors in both cases was encouraging, and there were other options for treatment if the procedures didn’t succeed. We are eternally grateful that they did succeed. He was also in a small-plane crash in Tanzania 28 years ago, but that happened so fast he didn’t have time to reflect on his risk.

My mother has age-related macular degeneration, high blood pressure, and diabetes. Those illnesses erode her quality of life and hint of struggles to come, but none of them are currently life-threatening.

But moving into a smaller apartment with no yard to maintain is a tangible admission from them both that the scope of their remaining time is narrowing. My friend Jim’s parents lived in a retirement community that talked about the go-go years (where people were able to do anything they wanted), the slow-go years (where they could still do some of the things they wanted to do), and the no-go years (where they were limited to things in their residence). My parents are still enjoying their go-go years, but the end of that freedom is in sight, and the implications for what’s ahead are sobering to them.

And they are feeling it.

They’ll still make the move, but settling into a new community will include living with a new awareness, that, after a lifetime of moving about in the world, they might finally be in the last home they will see.

Aspirations

It seems we’ve ended this year’s third quarter with another decline in broad stock-market indices. Safe to say it hasn’t been a stellar year for equity investment returns.

I saw my friend Dave last weekend. He recently retired, and he’s a little freaked out by the market decline. He is in good shape money-wise, despite his anxieties. He has plenty of assets from his lifetime of work, and he’s worked with a financial advisor pretty extensively, so his asset allocation should allow him to weather this storm.

But he’s unusual.

First, he has assets. The median retirement savings for Americans 60-64 is about $225,000, which can reliably generate a bit over $10,000 per year in income. That’s not very much. Dave has a lot more, so he doesn’t need to eat into his principal. Eating your seed corn is only a good idea if you have no other choice.

Second, by working with a financial advisor, he’s balanced his investment risk tolerance with his desired returns. So he has investments that will provide him returns that might vary, but during times like this he should have enough cash-type assets to keep him from having to sell other assets at depressed prices.

Third, he is a frugal man. While he has hobbies, and he has an appetite for the whimsical purchase, none of that is particularly expensive. He doesn’t travel much, and when he eats out he’s content with good-quality fast food and local taquerias. He doesn’t drink to excess, his gambling is restricted to nickel poker with friends, and I’m pretty sure he wouldn’t even know where to source drugs outside a cannabis dispensary.

So he’ll be more than fine financially.

I’ve often felt that we are directed to oversave for retirement. It’s obviously not working if the median 60+ year-old has only $225,000, but I contend that’s because of low earnings rather than profligacy. Professionals suggest we save enough to allow us to live to 95 years old. Yet life expectancy is in the mid-80s for those of us already in middle age. Some of us will make it to 95, but most of us won’t. So we will have oversaved by several years, depriving us of those resources we could have used during our lives.

I get the moral hazard argument, but I’m not sure data supports the idea that people shirk their responsibilities. There are anecdotes, of course, because someone somewhere has done anything you can possibly imagine, but I think people are generally honest and have good intentions. Yes, we are lazy, and yes, we often take the path of least resistance, but I think we also see ourselves as team members, and we usually want to do our part for the greater good, especially when we think others are doing so too.

So perhaps we need to rethink our savings targets and enhance social security or some other public income program for those who live beyond their projected lifespans. It would free up resources, so people wouldn’t have to sacrifice as much, and it would help that $225,000 nest egg the average person has to use.

It won’t stop my man Dave from worrying, but it could let a lot of others sleep better at night.