Read this excerpt from a WSJ story. What is your impression? Is this just a sad tale or do the facts not add up? How does a person go from earning $150,000 to living on Social Security? And how about “meager savings?”
It will be interesting to compare the conservative and liberal points of view.
In any case, I’d like your comments. You can read the full article in the link below.
Mr. Smith came to Palo Alto in the 1970s. He married, Alfie, a native of Indonesia, in 1984, and they raised her son here. Mr. Smith climbed the corporate ladder, eventually earning as much as $150,000 a year, he said. But in 2006, at age 62, he was laid off from S3 Graphics Ltd. An S3 spokesman declined to comment. The next year, his wife died at age 55.
Unable to find a job, he soon went through his meager savings. By 2010, with his only income a $1,700 monthly Social Security check, Mr. Smith could no longer afford his $2,150-a-month rental apartment. When he couldn’t find another rental, he moved into the RV. – Excerpt: The Wall Street Journal 4-8-14 Full story here.
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If you read the full story, his stepson says he is not surprised of the circumstances given the man was a spendthrift. All too often it seems to me that people we may feel sorry for have created their own circumstances. Meager savings after a lifetime of work and earning a well above average income just doesn’t add up for me.
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Apparent causes — 1. He failed to save (per his “meager” savings and his son’s comments about his father’s financial history), 2. At abt age 70, he is looking for work with his former coworkers help. What was he doing since he lost his job at age 62? 3. He refuses to move to a lower cost area. 4. California residential real estate both rental and and non-commercial is way over priced compared what the populace can afford. They need to look at how Houston keeps their housing prices much lower and do the same (hint: build, build, build). The same liberals who bemoan the fate of the homeless keep the price of housing extremely high (it shows you how much they really care).
This is a problem for California and this gentleman to solve — they made the mess and there are solutions available that only they can choose.
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I believe this is more common than one might imagine. I see a lot of people and deal with getting paid for what I do and there a quite a few retirees living on social security and not much more. I also see lots of people who are spending everything they make which is how you end up going from $150,000 a year to burning through your meager savings in a short period of time. I even know personally one individual who not only spends every penny in their paycheck but withdraws their employer’s (fairly generous) contributions to HSA and retirement accounts. I don’t have an answer but I see a big societal level problem coming as the boomer generation gets to retirement age and suddenly realizes that they don’t have enough money to live on. An article related to this shows retirement savings at laughable levels. http://money.cnn.com/2014/02/13/retirement/401k-balances/
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Nothing strange about the story. In a population of 313 million there are bound to be hard luck stories especially when the economy is in a funk. The question of concern is, is this story the average? I would say it is more an outlier. I can’t tell much from the given information whether the subject was at fault for a failure to plan, poor decisions or was just the victim of bad fortune.
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