WSJ: A Retirement Wealth Gap Adds a New Indignity to Old Age

[Aerides]

a lifetime of planning and the fortune of well-timed home purchases and stock investments."[/I]

I had no idea wealth accumulation had nothing to do with getting an education, working hard, saving, or living below ones means. Who knew!

I like to look at this as perhaps the working hard, saving, lbym part, is included in the "lifetime of planning", that wasn't bolded above.

I'll be the first to raise my hand and said a well-timed home purchase gave me a leg up. I bought a tiny house in 2001, sold it for double in late 2005 and invested the money (I was getting married and moved in w/DH). Got very lucky with timing there, purely driven by personal life stuff, basically cashed in the entire RE bubble of the early aughts.

And well-timed stock investments? I was financially ok enough to take advantage of the post-2009 Bear Market, and socked away the maximum in my 401k while getting awesome returns.

Did planning and saving and lbym contribute to both of those? Yup.
If those two didn't happen (the RE and the Bear) would I be RE by now? Nope.

 

[pb4uski]

From the Scientific American report:

"The researchers argue that the following factors are all important in giving people more chances of success: a stimulating environment rich in opportunities, a good education, intensive training, and an efficient strategy for the distribution of funds and resources."

And that is "academic bullsh!t"? Here are some of the success factors enumerated in the report: (The Scientific American article should have been dated April 1 rather than March 1).

In light of the fact that most of us who are here at E-R.org were born in the U.S. into at least middle class/working class families, had decent upbringings and were given good starts in our lives - those factors alone tick off every one of the report's conclusions listed above. Call it what you want - good fortune, luck, whatever. For those of us in that cohort (likely a majority here), our biggest challenge had nothing to do with pulling ourselves up by our boot straps, but rather, not squandering a randomly determined birthright.

Yes, academic bullsh!t. According to the article (correlation is not causation by the way).

• The chance of becoming a CEO is influenced by your name or month of birth,
• The number of CEOs born in June and July is much smaller than the number of CEOs born in other months,
• Those with last names earlier in the alphabet are more likely to receive tenure at top departments,
• The display of middle initials increases positive evaluations of people's intellectual capacities and achievements,
• People with easy to pronounce names are judged more positively than those with difficult-to-pronounce names,
• Females with masculine sounding names are more successful in legal careers.

Lets look at your

"The researchers argue that the following factors are all important in giving people more chances of success: a stimulating environment rich in opportunities, a good education, intensive training, and an efficient strategy for the distribution of funds and resources."

Stimulating environment rich in opportunities... I don't even know what the heck that is.

A good education... most of us went to public schools that everyone else went to and we know that many people who grew up poor used the public education system to better themselves through study and hard work and moved up the socio-economic ladder.

Intensive training... again not sure what that is but if they are referring to post-secondary education then many less advantaged people hustled and went to college on scholarships, loans and earnings from working.

As for funds and resources... I'm guessing that like us, many received nothing from their parents as a jump start on financial success... I know I didn't... I wanted to earn it on my own like the previous generation did and instilled in me.

If it were truly "luck" then all of our peers should have been financially successful as well and we know that some have been and some have been spectacular flameouts so that alone proves there is more it than just environment. Ditto with our kids and their peers... they all had similar opportunities... some have been successful and others not. Is environment a factor... perhaps... but many succeed in spite of lower than average background and opportunities and many fail in spite of better than average background and opportunities... so there is much more to it than "luck".

[Mod Edit]

 

[mrfeh]

Agree that you left out the 'lifetime of planning' part.... And timing and luck DOES have a lot to do with it...... You were lucky enough to be born in a locale that probably offered you a Free public education. Not to mention Good Health. The paragraph that you quoted also said "SOME are on solid financial ground".... So, nothing here to get that worked up over.

+1

Luck/good fortune does play a large part. That's not to say hard work and discipline don't.

It isn't either/or.

 

[MichaelB]

Yes, academic bullsh!t.

Why not just say you disagree?

 

[corn18]

Can we give examples of what we feel was good or bad luck in our lives? Mine was being adopted by a great middle class family which provided me with the opportunity to be where I am today. Beyond about age 15, everything that happened to me was my fault.

 

[FIREd]

Luck definitely played a part in my success. Sure, doing the right thing (LBYM, taking risks by investing my money, etc...) allowed me to take advantage of the opportunities that presented themselves, but the returns I obtained on my investments were due to luck. I have no control over what the market giveth. In hindsight, the housing crisis of 2008 was perhaps my generation's greatest money making opportunity. After a 9-year bull market, it is tempting to take credit for my financial success. But it could have just as easily ended very badly instead (history is full of economic catastrophes upending people's lives). If we had a full blown depression post-2008, my life would be very different. And I would probably be sitting here bemoaning a very unlucky set of circumstances.

 

[haha]

"The fault, dear Brutus, is not in our stars, but in ourselves"

LOL, Shakespeare is helpful no matter what our viewpoint!

Ha

 

[NW-Bound]

Eh, have y'all read the article quoted in the OP?

Here it is, but not from WSJ so open to the public: https://www.msn.com/en-us/money/ret...ap-adds-a-new-indignity-to-old-age/ar-BBNWwV1.

The story is about the conflict in an adult community in Santa Rosa, California. Some of the residents wanted to fund development of a pickleball court, while others did not want to see their dues go up. The division between the two groups came from the difference in their retirement incomes.

The president of the HOA one day found a paper bag on his front porch. Inside was the chopped-off head of a rat. Also, there was a note with a succinct message: "You are next".

The article's point is that this epitomizes the conflict between the haves and have-nots among retirees.

Whether you are or consider yourself lucky or unlucky, how do you feel if you receive such a paper bag on your front porch?

 

[Fedup]

I'd like to call back to this. While I agree that luck has a part in all of our successes here, this is a really crappy thing for your family to say to you. It sucks when the people that you hoped would be happy for your success are jealous and just try to minimize it.

And there were plenty others (likely in your own family) that had the same level of luck but chose not to take advantage of it.

DH and his brother are perfect examples of two men with almost identical luck in life in terms of sex, race, upbringing, childhood education, generation, etc., but drastically different life paths due to their own choices. So even those dealt a better "hand" can play it poorly.

From the same family, you can have different results. Take my brother and I, very close in age, only one year apart. We went to almost identical public schools in our teens.

He is not academic since birth, all he abled to manage was to graduate with a BS degree in engineering, probably the lowest grade in 5 years. He would have quit school, became a technician at the time, but my mother would not hear of it. He got fired multiple jobs early on, therefore he became very frugal early on, paid cash for everything. He started out poorly, but he has nice and friendly character so once people found out he actually had a BS degree they promoted him from technician to software engineer. Married to the same type of frugal person and stayed working with the same company for years with large pension for both him and his wife, max contribution to 401k, company matched in stocks, the same stock that went up 90% last year. While his coworkers and friends sold out early, he hold on to it. Double that with his wife. Technically they can retire but still working.

While I did better in education in every aspects, I was a risk taker and that came with risk. Risk does not always mean good. I didn’t have to take all these risk, but being a risk taker, I did. But one good thing is I’ve always managed to get out of trouble eventually. I was unemployed at least 3 times in my working years, all coincide with a recession. I did eventually retired at 55, but I could retired a lot earlier if I didn’t take all these risky moves.

So you have to take into account of one’s temperament as well.

 

[daylatedollarshort]

+1

Luck/good fortune does play a large part. That's not to say hard work and discipline don't.

It isn't either/or.

+1. It takes both. Some of our peers made amazing amounts of start up money and it is all gone just from spending way too much instead of investing and living off the proceeds.

 

[pb4uski]

You raise an interesting observation.

The reason that I have such trouble accepting an assertion that educational and social opportunities are a primary determinant of success is the scores of situations out there where siblings have widely different outsomes in the game of life despite virtually identical educational and social opportunities. We have so many threads here of posters whose family who have had virtually identical opportunities in life have family living hand to mouth and looking to "borrow" money from their more successful family members.

While I agree that educational and social opportunities are an important factor, hard work and persistance must also be an important factor... otherwise we would not see such variation in outcomes.

 

[DAYDREAMER]

Can we give examples of what we feel was good or bad luck in our lives? Mine was being adopted by a great middle class family which provided me with the opportunity to be where I am today. Beyond about age 15, everything that happened to me was my fault.

I was lucky to be born in the USA.

 

[HtownRose]

The example given in the article is a valid concern IMO, and not just for retirement communities. As much as I don't enjoy dealing with a yard, the potential of skyrocketing HOA dues keeps me from considering a move from my SFD neighborhood to a more "townhouse" type setting. I could save on the cost of the home, but the continuing expenses are much higher & much less predictable. Something I remember from college econ about capital vs. ongoing expenditures...

BTW even if I had unlimited funds, I would be voting against everyone having to pay for the pickleball court - let those who want it finance it IMO. We have a lovely pool complex in my neighborhood that used to cost extra if you wanted a pool pass, then they raised the dues on everyone & it was "free" for everyone. Great for those who use the pool, not so much for those who don't.

 

[youbet]

Luck is the intersection of opportunity and preparation.

Especially so-called “bad luck.”

 

[daylatedollarshort]

Can we give examples of what we feel was good or bad luck in our lives? Mine was being adopted by a great middle class family which provided me with the opportunity to be where I am today. Beyond about age 15, everything that happened to me was my fault.

My family didn't have a lot of money but I lived near a university I could commute to that had a good tech program where companies like IBM and AT&T recruited from. Early on I worked in some then obscure software that became high demand. I was living in a city with 3 or 4 employers for this kind of software. I bought a Bay Area paper at a news stand one day and found huge ads for people with my skill set plastered all over the help wanted section and within a few months had 8 job offers plus relocation. We had many more lucky breaks after that.

I could have been born in a country where women were not allowed to drive or attend school or in this country as a crack baby with health issues and in the foster system. So sure I worked hard in school and I had to pass the job interviews but luck played a huge role.

 

[hausfrau]

Can we give examples of what we feel was good or bad luck in our lives? Mine was being adopted by a great middle class family which provided me with the opportunity to be where I am today. Beyond about age 15, everything that happened to me was my fault.

I was lucky enough to both meet my handsome, down to earth husband and discover that he actually liked me. This was after I ended a long-term relationship with someone that wasn't really going anywhere. At the time, I was in my late 20's and it was more difficult to find someone unattached. I thought I was doomed to never find anyone to seriously build a life with.

 

[hausfrau]

The WSJ article about the retirement community scares me away from ever wanting to live in one of those places. I don't think there is enough autonomy. I get that places/towns/cities change over time, but I'd hate to be bound by all those rules and fees. I feel the same way about owning a condo too. We are DIYers and I'd hate to have to submit to a group vote on anything. I never like paying for anything I can do myself.

 

[Mr._Graybeard]

Eh, have y'all read the article quoted in the OP?

Here it is, but not from WSJ so open to the public: https://www.msn.com/en-us/money/ret...ap-adds-a-new-indignity-to-old-age/ar-BBNWwV1.

The story is about the conflict in an adult community in Santa Rosa, California. Some of the residents wanted to fund development of a pickleball court, while others did not want to see their dues go up. The division between the two groups came from the difference in their retirement incomes.

The president of the HOA one day found a paper bag on his front porch. Inside was the chopped-off head of a rat. Also, there was a note with a succinct message: "You are next".

The article's point is that this epitomizes the conflict between the haves and have-nots among retirees.

Whether you are or consider yourself lucky or unlucky, how do you feel if you receive such a paper bag on your front porch?

Strange article -- and one that hardly reflects the headline. It would be so easy to resolve such a petty squabble, but some folks have a need for drama in their lives.

It reminds me of an article I read awhile back about an assisted living complex where the residents stole from each other just to have something to do.

 

[Hermit]

Eh, have y'all read the article quoted in the OP? ...

This is not a new situation. I had a workmate many years ago that was the board president for a condo association in Aspen, CO. Aspen had become a major destination for the rich and famous while he and other middle income families had purchased units in the condo in prior years. The rich started buying the condos as the came up for sale and soon it was an all out war between the rich who wanted to upgrade everything after purchasing their condo at a bargain. In other words, they wanted to kick out those who could not afford the additional fees.

Maybe it should be called "Gentrification" of Oakmont Village?

 

[pb4uski]

The example given in the article is a valid concern IMO, and not just for retirement communities. As much as I don't enjoy dealing with a yard, the potential of skyrocketing HOA dues keeps me from considering a move from my SFD neighborhood to a more "townhouse" type setting. I could save on the cost of the home, but the continuing expenses are much higher & much less predictable. Something I remember from college econ about capital vs. ongoing expenditures...

BTW even if I had unlimited funds, I would be voting against everyone having to pay for the pickleball court - let those who want it finance it IMO. We have a lovely pool complex in my neighborhood that used to cost extra if you wanted a pool pass, then they raised the dues on everyone & it was "free" for everyone. Great for those who use the pool, not so much for those who don't.

... For many, of course, the issue wasn’t really about pickleball. It was about a divide that had opened between wealthier residents who moved to the village more recently and the less well-off, who said clubhouse updates, new fees and expensive amenities would be budget-busters. ....

.... The community now splits neatly into two camps. Some believe it should only “fix things that break,” he says. “Then there are people like the people who are starting to move in. They have a lot of money and want to live the lifestyle to which they’ve become accustomed and they want to do it here,” he says. “People are having more trouble getting along.” ...

"There were clearly sides. One side felt that we’re an active-adult community and it’s our responsibility to provide activities and facilities to the membership,” says Oakmont resident Al Medeiros, 71, who now sits on the board. He counts himself in that group, which he says had been “vilified.”

“The other side seemed to think that well, we’re poor, so we really need to make sure our dues don’t go up and we should just provide the minimum,” he says. ....

I can relate. Our condo association is going through this right now. New residents want to see some upgrades and updates to the 40 year old facilities and are willing to accept some increases in HOA fees in return and the older residents just want more of the same and to keep HOA fees as low as possible.

While many of these older residents cry poverty they nonetheless have newer vehicles in their parking spots, some renovations in their units, etc.

What they fail to understand is the impact on demand and property values of keeping the facilities "relevant" and desireable to today's buyers. For example, we have been debating a renovation to the clubhouse to modernize it and make it more functional... currently, when we have a party we are elbow-to-elbow with no room to move about... meanwhile fully 1/2 or more of the clubhouse space are bathrooms from back in the days when saunas were popular... for the men, we have 4 showers, 3 toilets, 3 urinals and 3 sinks that take up bunch of space and get limited use... ditto for the ladies less 1 shower and 3 urinals. The renovation would cost ~$1,000 per unit where units go for $150-300k. It is easy for me to see that a nicer, updated and more functional clubhouse would improve values by 3 to 7/10ths of 1 percent but many members just can't see it.

Now all of that said, $300k for a "tournament-quality pickleball complex with tiered spectator seating" seems excessive (and I like and play pickleball).

 

[bclover]

About 3 years ago a couple of people that I know from a social group always would say to me "it must be nice to be retired." Bothered me at first but then I was like screw that. Now when they say it I say "Yep. I highly recommend trying it."

Never understood why folks felt the need to explain. Once in a while if some one says I'm "lucky" I just smile and say "I prefer to think of it as Blessed".

Ironically I was playing on one of my disney fan sites (yes I'm a big lover of the mouseworld) and we were discussing the raise in food and drink prices and I said, 50 cent on a bottle of soda wasn't going to bite me on vacation.

Got a snide remark, "well all of us can't be wealthy retiree's, some of us have to watch our budgets".

I just said "sorry to hear that, I like being a wealthy retiree". lol sorry I am not about to explain nor apologize

 

[daylatedollarshort]

Eh, have y'all read the article quoted in the OP?

Here it is, but not from WSJ so open to the public: https://www.msn.com/en-us/money/ret...ap-adds-a-new-indignity-to-old-age/ar-BBNWwV1.

The story is about the conflict in an adult community in Santa Rosa, California. Some of the residents wanted to fund development of a pickleball court, while others did not want to see their dues go up. The division between the two groups came from the difference in their retirement incomes.

The president of the HOA one day found a paper bag on his front porch. Inside was the chopped-off head of a rat. Also, there was a note with a succinct message: "You are next".

The article's point is that this epitomizes the conflict between the haves and have-nots among retirees.

Whether you are or consider yourself lucky or unlucky, how do you feel if you receive such a paper bag on your front porch?

Part of the problem with living in that particular retirement village is there isn't as much else to do as there is in a closer in more urban area or some of the newer villages. We looked at living there and rejected it for that reason. I think the "haves" should have considered before they moved there instead of trying to change the place and force out the "have nots".

 

[timo2]

I was lucky I was born into the post-WW2 egalitarian societal framework. That is the first piece of luck for most people in this forum. That framework is what allowed us to use our ambition to earn a decent amount of money. Societies without that framework don't allow a person without pre-existing wealth to get ahead, no matter how ambitious.

1) my father came from an auto worker family but through the GI bill he was able to get an engineering degree. 2) the economy until the 1980's allowed one earner incomes to support a family 2) University tuition was affordable in the 1970's 3) Thanks to modern medicine and decent health insurance I was able to get past a heart attack at 51 and continue earning in the high earning years. 4) there still is social security and medicare for us older folks.

Most of those situations are not available for the current younger generations in the USA. Interpret that as you will, but it it is the actual case.

 

[ceciledian]

What I found objectionable was the implication that wealth is accumulated by "luck" or "timing" -- well timed-home purchases or well-timed stock buys.



I guess I'm a little thin-skinned on this topic because I've been hearing it from family members. I went to school at night while w@rking full-time, w@rked hard and advanced my career, put away money every month, generally lived within my means, and was able to FIRE this year. But, according to family members I was able to retire early because I was "lucky".

Earlier this week my sister in law told us we were lucky because of our ability to go south for the winter. My husband had the same reaction to the term “lucky” as you because we also planned and LBYM in order to FIRE. I on the other hand took it to mean we are lucky to escape the Minnesota winter. [emoji38]

 

[Fedup]

Never understood why folks felt the need to explain. Once in a while if some one says I'm "lucky" I just smile and say "I prefer to think of it as Blessed".

Ironically I was playing on one of my disney fan sites (yes I'm a big lover of the mouseworld) and we were discussing the raise in food and drink prices and I said, 50 cent on a bottle of soda wasn't going to bite me on vacation.

Got a snide remark, "well all of us can't be wealthy retiree's, some of us have to watch our budgets".

I just said "sorry to hear that, I like being a wealthy retiree". lol sorry I am not about to explain nor apologize

I have had some of this at some college website. They have no problem wealth shame me, same as fat shame, but I never told them their health would improve if they stop using marijuana regular. Maybe not, but that’s my claim.