Via Meadia has what ought to be a pretty darned good option for some of the boomer retirees who (like MANY of their peers), have acted more like the grasshopper than the ant.
Now they are reaping the fruits of their profligacy. Pension programs across the country are going broke, as we’ve covered time and time again. Rising life expectancies could add as much as $97 billion to the tab according to the WSJ.
So boomers can rely on neither their own anemic savings nor on public pension plans to get them out of the hole they’ve dug for themselves.
But Via Meadia values mercy as well as justice, so we hasten to point out that there’s still some hope for those entering retirement age. Retirement expenses are much cheaper in other countries like Panama and Ecuador. And retiring abroad lets you live a much more lavish life on a tighter budget, and the kids only have to fly an hour or two past Florida to visit and chide you for the profligacy of your youth.
If only they could. But the majority of them can’t.
This isn’t a new issue — Chez Happycrow has been sounding the alarm on this issue long before it was an easy hit on a Google search. And those GenX types who didn’t take this seriously and start trying to figure out how to set up retirement in spite of the declining earnings and low social mobility are in just as bad shape. The GenX challenge is how to retire without any of the promotions or raises that the generation before them enjoyed — and not surprisingly, many of my cohort are failing, too.
The answer, “discipline,” seems to be in short supply lately. All those old 401k arguments might have meant something…except that so many people have already spent them. If the bills pile up and your only option is to eat your 401k, your only real option is to downsize your lifestyle until it fits inside your belt. But that’s considered harsh and uncaring language nowadays.
So why not say “the hell with it,” sell out, and go to Panama?
Well, there’s a little problem with that. Who’s going to buy? As we’ve pointed out, the entire rotten edifice that regards housing as an investment and cheers when housing prices go up (including this morning’s radio bobbleheads on NPR, which continue to think inside the box on the subject), still don’t get that housing is first and foremost a cost — the cost of not being homeless. Since Boomers aren’t retiring, but are holding onto any job they can, as long as they can, with “I’ll just keep working” now turning into a Boomer non-retirement mantra, Milennials can’t afford to buy their houses. And don’t look like they can afford to have enough kids to fund the pension programs, either.
Well, there is some hope. Boomers have chased the buy-and-flip for a long time, and perhaps counterintuitively, many of their houses are both newer and worth more than those owned by younger generational cohorts. That means that they’re potentially prime rental properties, IF they’re unencumbered by a mortgage. If, like many Boomers, the person in question is still carrying a mortgage, well… write it off. That rent isn’t paying for Jamaica — it’s paying for the bank not to take its house back. (That’s right, its house. Until you’ve paid off the mortgage, you may be paying property taxes on that puppy, but you don’t own it).
So Mead’s partly right. The select few who didn’t save enough, but did have the discipline at least to kill their mortgages and not get into HELOCS, etc, can pay a professional property manager 10% of their monthly take to manage the place, and go retire someplace cheap on $800 a month. If the thought of talking to people who speak another language scares them (oddly, I’ve encountered a lot of people with this problem), well, they speak English in Belize, and the climate there is easy on the arthritis.
It ain’t great. But at least for the lucky few, Professor Mead’s got a point: it’s a hell of a lot better than the oncoming train wreck the rest of their peers are about to suffer.