So, do you believe each of these individuals are to "blame" for their prediciment? Or that they, personally, could have prevented it from happening by something other than "hindsight"?
The reason I ask is that in future name-calling "us vs them" threads, I would enjoy refering the holier-than-thou back to this post.
Rotten luck and bad decisions clearly played a role. But I will let you judge for yourself.
1) My parents, before their marriage fell apart, were very much middle to upper-middle class. The divorce changed that in a big way, for my mom especially. My mom was making just about $1,500 a month at the time and she was receiving only $200 a month from my dad for child support (my dad made upward of $7,000 net a month). In addition, during the split, she inherited the family home which was too expensive for her to maintain on her own. But she decided to hold on to it because it was our home. So she had a rough time there for a while, at least until my sister and I moved out. Then she found herself with much more disposable income and went a bit crazy (pent up demand if you will), to the point of getting into credit card debt. She hid the debt for a long time but when she figured out she could not repay the debt on her own, we had to bail her out. Then, in her mid 50's, she inherited about $100K from her father. The inheritance did not last long as she went on an ambitious program to renovate the family home from top to bottom (a lot of it was cosmetic). She only saved about $7K from the inheritance. A few years later, she became severely ill. The doctor said it was stress-related and he recommended her to lighten her work load. At the time, she qualified for SS benefits, so she asked her employer whether he would allow her to continue working part time while she officially retired. Today she can easily cover her regular expenses. But I have to help with unexpected bills and large purchases like a new car. If she has to stop working, however, there will be a significant income shortfall.
2) FIL and MIL were married until fairly recently. During most of their marriage, they were undoubtedly upper-middle class (income above $15K a month). FIL was always an optimist entrepreneur who liked to count his chickens before they hatched. They loved to live large and enjoyed very expansive and expensive houses. Often time, the carrying costs were so high that they didn't have much left to save for retirement. FIL hated the idea of retirement anyways ("retirement is for losers", he used to say), so saving for retirement was never his top priority. MIL was a housewife and deferred all financial decisions and planning to her husband who kept her in the dark. A few years go, the marriage dissolved and they divided the assets 50/50. She was shocked at how little there was to split.
MIL used her share to buy outright too much house (once again) but she was counting on a hefty alimony check from FIL at the time, so she figured she could easily afford that "little" luxury. But things didn't go as planned. Soon after the divorce, FIL lost his job. The alimony payments stopped. Suddenly, there was no money coming in. But MIL was convinced the situation was only temporary so she failed to curb her spending for the most part. Fast forward a few years, and she is still not getting her alimony checks. She has gone through her savings and now she has to start depleting her retirement accounts. Of course, the financial crisis of 2008 didn't make her any more financially secure. So here she is now, collecting SS and having to count on a somewhat reduced nest egg to make ends meet. She still refuses to cut expenses to the bone, she laughs at me when I tell her to get a part time job, and she refuses to look into reverse mortgages. But I am convinced that, had the alimony checks continued to arrive, she would have been in a very enviable financial situation by now.
FIL's fall from grace was more dramatic. When he lost his job, he went from making a fine living to making no money at all. He looked for jobs everywhere, but I think he was asking too much money. When he couldn't find a job, he decided to create a company using a lot of his savings as seed capital. The company had a promising first year, but when he started running out of capital, he found himself in a bind. It was time to go out and find investors. Once again, it proved terribly difficult for him to find investors willing to hand out their cash in the midst of the great recession. It still is. So, he has no money coming in (except SS) and, as I said, his retirement savings are gone. The company is falling apart due to the lack of capital but he refuses to give up. He recently described his financial situation as "disastrous".
Sorry for the long post.
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