Too poor to retire, too young to die (2016)
graphics.latimes.com
graphics.latimes.com
Why do newspapers use as examples people who seem to have done everything wrong? Is it because formerly middle class people are somehow more relatable to the readers of the LA Times than people who never had much of a chance to begin with? What about the poor elderly who never went to business school or were born in an area with few opportunities?
This lady gets almost $17,000 a year in pension and social security, which puts her just outside the bottom 1/5 of the income distribution. She’s presumably eligible for Medicare. In a rural town it would be enough for a decent living.
It most certainly would not be. Survivable? Probably. Decent? Absolutely not.
And Medicare recipients still have out of pocket requirements, that's the whole reason Medicare supplement insurance exists. The average out of pocket expense for Medicare recipients in 2014 was over $4,000.
Tell someone making $1,400 a month they need to budget $350 a month for health care.
17000 / 12 = 1416.67
This lady gets (almost $17,000 a year in pension) and social security
Sorry, your probably right.
And that's assuming that insurance covers everything health related (it probably doesn't).
It's hard to budget $350/mo when you spend $121 in a single day on food and entertainment.
Really, though, it seems like quite a few of her problems stem from trying to do this when single, without a roommate. With a spouse or roommate many expenses get halved.
Hit the nail on the head. And not only is it the readers that skew towards middle class but it's the writers as well.
"Organic" labeled food is much more expensive than beans, rice, and basic chicken. She even decides to buy a $21 prime rib dinner from a restaurant! the article mentions that it would be good for 3 meals. $7 per meal is much larger than what it would cost to make that meal yourself from groceries.
I feel for her situation, but it's hard to ignore a lot of the bad decisions she makes.
Another place in the article mentions she got a $300 speeding ticket for driving 43 in a 35. That's a pretty bad mistake to make when you are living on fumes.
She appears to have to park her camper at camp sites, bicycle use might or might not be practical (I suspect bringing groceries back from the store is functionally impossible on a bicycle).
https://www.reddit.com/r/personalfinance/comments/7ak7jm/its...
TL;DR: OP shows how a healthy 20-something could quickly overrun a $27,000 yearly income by just living.
It will come as little surprise to many readers that someone who was forerly poor has remained poor. It is more notable when someone who was formerly comfortable is now barely scraping by. The latter will garner more attention from the audience and potentially will have more impact.
She owes $50,000 on her credit cards. Let's assume an 18% interest rate. The minimum she could pay to actually pay off the debt (just enough to even pay the interest) would be $765 per month (54% of her income), which would take 22 years and 1 month to pay off, with $152,024 paid in interest.
She also has a $268 monthly loan payment for her aging rig. That means $1033 a month is going just to debt. And in my area, for someone getting on Medicare with no drug plan, for "original medicare", the estimated annual health and drug costs are $3,880.
So after medicare costs and debt, how much is left for housing, food, transportation, and incidentals, per month?
$60.
She's clearly going to die before she can pay her debt off, so maybe just don't pay the debt and use the $825 total to help pay for housing, food, transportation, and incidentals, all of which are higher when you don't have a residence or stable income. You won't have any credit and the creditors will try whatever they can to come after you, and maybe you can dodge them for a few years until you die.
Can you live off $825 a month? Yes. Will it be decent? Hell no. And if you have any major unexpected bills (such as emergency dental work and repairs on a rig, ballooning past $8000) you're fucked. Which, of course, happened.
But we’re talking about the public safety net here, and that’s exactly the assumption you have to make.
She doesn’t need to pay her credit card debt. She can just declare bankruptcy. That’s the point of bankruptcy. She also doesn’t need a vehicle that costs as much as rent in small town America.
If she could declare bankruptcy, don't you think she would have? She's 80, she has heard of the concept.
The vehicle is her only shelter. Have you ever tried to pay rent with bad credit and no employment history? Not to mention, please show me a single place in all of the united states where rent is $268 per month and isn't a crack motel.
You can rent a studio apartment in Chicago, in an apartment building (not a "crack motel"), for $350/mo. That's an apartment in the middle of a relatively expensive urban area. Clearly, there are non-crack-motel apartments that are significantly nicer than the Chicago apartment further afield.
But there are some requirements to file chapter 7:
- First she needs to document all her financial records, which of course she has been doing in expectation of this point in her life
- She needs to hire a bankruptcy lawyer, because otherwise she basically has to become her own lawyer and figure out her state/local bankruptcy laws and steps, which is very difficult for most people.
- Non-exempt property, such as cash, a second car or car she doesn't use for work, is sold to pay the debt. Does an RV you live in count as a car you use for work? if not, there goes her home.
- She has to get time off to go to the 341 meeting and do the mandatory credit counseling and debtor education classes and certification
- Filing for bankruptcy costs between $1,400 and $4,000 on average in filing fees and other costs.
- The whole process takes about six months on average, assuming everything works out.
I would love to know how somebody who's living paycheck to paycheck and can barely afford milk and bread can accomplish this. Clearly there are obstacles that she may not be able to overcome.
But I don't think anyone really cares about reality, looking at the way people in this thread are simply dismissing her using various theoretical devices to prove she simply isn't doing it right. If it were easy or simple to fix her life, she probably would have, because she is much more motivated to have a better life than random people on the internet. (Not that people not choosing to look at reality bothers me - it's people who do not fully understand the situation pretending that they know better that bothers me)
She'll need a professional to file for her, that's true. So, she should do what most people who file Chapter 7 do: use the money (saved gradually) she'd pointlessly burn trying to service the debt to hire someone to file Chapter 7.
In the meantime, she should immediately stop making debt service payments. It does not matter that the process will take 6 months, because her creditors have no practical recourse against her. Watch someone with a six figure income and significant luxury assets simply stop paying credit card bills that are integer multiples of this debt, and see what happens. Hint: the debt decreases as the credit card companies and their collectors realize you've stopped valuing your credit score. They're hoping beyond hope you'll spend some amount of money, any amount of money to avoid Chapter 7, and they will keep hoping for years.
The majority of Chapter 7 bankruptcies are no-asset bankruptcies. People who own homes, cars, and retirement accounts keep them in Chapter 7. A 79 year old woman living in a trailer isn't going to sell anything to retire credit card debt in Chapter 7.
It is not only wrong but borderline irresponsible to suggest that someone in this person's circumstances entertain the idea of sending another dollar to a credit card company. The credit card companies are victimizing her today, and she has a clear means of defending herself. She needs to be informed and counseled to make the decision to avail herself of that defense.
As for "reality", I've managed this process for people. I'm confident what I'm saying is reality, just like I'm confident that you can find a place to live in a "non-crack-motel" for less than $290/mo.
With the little money she does get, she has to pay for transportation, food, communication, and health and auto insurance. Assuming she abandoned the RV she could maybe find one of these cheap Chicago sublets (which I assume are not in a food or transportation desert) and start saving money (assuming creditors can't garnish social security or pension). But she would still get hit with the occasional emergency bill, extending the time it takes to save. Once she finally saves enough she can go through bankruptcy and probably be successful. So then she could in theory just continue living in the sublet, or wherever in the country has the cheapest housing, until she dies.
It's not a very promising life to look forward to, and I don't know how many people would really just stop what they're doing and go full-on monk to recover over this kind of long term process.
Either way: if she's getting good counsel, she's not paying the credit card companies. They're not getting another dime from her.
At the 7-month mark one of the credit card companies (I owed them $15,000 at 29.9% APR) sent a piece of registered mail: if you send us 3 post-dated cheques for the next 3 months for $1200 each (total $3600), we'll consider the debt paid off.
I ignored them and did a Chapter 13 instead. (Well, the Canadian equivalent).
Unfortunately, and I think particularly with norms and expectations from pre-gen-X (and pre-universal-financialization) culture, it's a mistake a lot of people make. It's tragic: these are people who need every dollar they make, shoveling enormous amounts of their capital into a black hole. In reality, attempting to service these debts prolongs their exposure.
It's these sorts of bad decisions that I think Rayiner is referring to upthread. For someone in the financial situation the subject of this article is in, credit card debt should be off the table, full stop.
The next 15-20 years are going to be very, very tough for older Americans.
Why are your parents living in a high cost-of-living area?
Wouldn't it make sense for them to move somewhere they could better afford?
Both of my parents are immigrants from a small country, they immigrated to NYC because it's one of the few cities in America where other folks from our country settled. Moving would undoubtedly allow them to ease up on rent and cost of living, but it would also move them away from other family members, long time friends, church community, etc.
As mentioned, both are very sedentary due to injury despite the fact that my dad works a grueling job, if they moved away from the community that has supported them for ~30 years I could only see their quality of life worsening.
Big Macs are neither cheap nor filling. Fast food is extremely expensive. Anyone who’s ever been poor and collected enough to escape poverty understands this. Americans, as parroted by this journalist, don’t know what poverty is. How is it that you have 17,000 dollars per year and still struggle to survive? If you’re poor and eat fast food and keep your home stocked with disposable utensils: you’re hopeless, you're going to be poor forever.
If you’re poor you can’t eat fast food if you want to stop being poor. You can afford dried lentils. Dried beans. Meat when it’s on sale. Apples when they’re 79 cents/lb or when you can get them for free. Americans just don’t know how to live without getting owned by the man. “Poor” Americans are overwhelmingly people who don’t understand home economics and how not to give all their money to rich people. They make one bad decision after the next. It’s a cultural problem driven by the absense of local community, support structure and values.
What’s happened in the past hundred years is that capitalists have played divide and conquer with cultural systems to make people increasingly alone and isolated from one another, less economically viable and increasingly helpless. Cooking—a thing that every person on earth could do for nearly every meal they consumed–became a thing that's difficult. Cooking: Don't Try This at Home. It's simple: Capitalism doesn’t value consumer empowerment. It values consumer servitude. Instead of being raised by grandparents and community members, American children are raised in daycare. Instead of grandparents helping with cooking, working Americans are tasked with preparing food for the family, a task that is impossible. Things you could rely on from family and community are things today you have to get from corporations. We replaced family and community with government and corporations and this is what we got: A culture that says Big Macs are cheap and writes so as a matter of fact in the local newspaper of record.
Sure, I could make a meal with more calories for a little cheaper... but at a high up-front cost in money, and an prep/cook cost in time.
The American idea that poor people get to organize their time the same way that non poor people get to organize their time is near the core of the problem. The argument that eating fast food saves you time is deeply troublesome because poor people, while disadvantaged in many ways like having to use public transit or not having transit, generally have the lowest premium on time because their time is worthless.
Assume I don't have prep time, because I'm not at home, or because I'm already late for my second job in an attempt to provide for myself at minimum wages.
A lot of folks don't have the time or energy to stock up for, prepare and cook proper meals, whether rich, poor, or somewhere in between. Call it a tragedy of the modern times.
The supermarket. You’ll have 10-15,000 much better calories, but you’ll have to cook them in water before you consume them.
If you can’t find time to cook and you’re poor, you’ll be poor forever. If you can’t find time to cook and you’re middle class, you’ll be poor soon enough. If you can’t organize your time to run your home economy, you’re going to be poor. Your home economy is the basis of all your wealth. It’s fundamental. If you “don’t have time” for that you’re a slave to The Man, parroting that nonesense for the privilege of eating inferior food other people prepared for you at a huge markup.
> Call it a tragedy of the modern times.
I am! :) It's the tragedy, really.
Can also bake a potato in the microwave, throw some butter, sour cream, shredded cheese, and seasoning on them. Baked potatoes (or skillet fried, etc) make fairly cheap meals.
Pasta is something that is cheap and easy to make, for time management purposes, boil it while you are taking a shower in the morning. Throw it (along with some tomato sauce) in a ziplock baggie in the morning, take it with you for lunch.
I realize that time is limited esp. if you are working 80 hour weeks at minimum wage. And then there is the time it takes to stop by walmart to pick up the ingredients. However many people that I know that complain about lack of time also spend quite a bit on either watching TV, or taking smoke breaks, or other things that would be better spent on meal preparation instead of running to McDonalds.
Even if you eat 1000 calories of pure sugar, there is no way in hell you will be hungry again in 30 minutes.
That is completely backwards. The marginal utility for a poor person working an extra 10 hours a week is massive since it might very well the difference between being able to pay rent or not. The marginal utility for me working an extra 10 hours a week is probably negative since I'm already 'rich enough' to buy everything I need so the extra money doesn't mean that much to me and those extra 10 hours will keep me away from things I care lot more about (like being able to spend an hour cooking for and eating with my family)
"Her savings long gone, and having never done much long-term financial planning"
Six paragraphs in, the root of elderly problems nation-wide:
"Nearly one-third of U.S. heads of households ages 55 and older have no pension or retirement savings and a median annual income of about $19,000"
Is it possible that the lack of long term financial planning, aka saving money, is the crux of many of these tragic situations?
What if it is? Even if that were the case 100% of the time, which you and I both know it isn't, the results are still something we have to deal with.
At todays prices, as soon as the normal ailments of aging set in, nearly everyone will be drained of savings sooner rather than later.
Wow, with decisions like that it's no wonder that woman is in a bad position. Honestly, though - am I supposed to feel bad for someone like this? You can bet that if I was barely scraping by I would not be spending $100 on a guided tour of a building, or at a restaurant getting prime rib (something the article mentions she also did). I wouldn't be eating out at all or doing anything that involved any sort of discretionary income because I didn't have any. She doesn't have any but she act like she does. It's not rocket science that the numbers don't add up in the end.
Gee, I wonder...should I go to Peter Luger's for dinner this Friday or pay my gas and electric? Tough call.
If they're spent doing nothing but hustling to pay bills, and there is no enjoyment to be afforded outside of that, why bother finishing the last few? Being old sucks enough as it is, with all your faculties failing and everybody abandoning you.
She's dead now. She got to enjoy the museum and a steak while she still had a chance. I don't begrudge her that.
Like, how mean is that thought process? We need to be helping each other out, not comparing the size of our scars and the length of our therapy sessions. So what if someone hasn't had it was bad as you or some hypothetical person? Be kind.
Case in point - how many people who are poor somehow manage to own smartphones? That's basically the updated version of the fridge concept but it is still an extremely valid point. The woman in the article was able to become a "road gypsy". Would that have ever been possible prior to the 21st century in any scenario where she wasn't possibly facing starvation or at least malnutrition as she traveled the country? No.
Let me put it another way - I personally have never met a single person who was responsible, level-headed, and made rational decisions with their money ever wind up in a scenario even remotely like this woman's.
What does this prove? Those people wouldn't be hanging out on HN for sure!
Edit: But you're right, you're not wrong for having your opinion.
If lunch put her over the top as she says, why did she buy a $21 lunch? The Ice Tea probably cost at least $3.50.
Let's be real, there weren't two extra meals in those leftovers.
The problem runs way deeper than Oh But The Degeneracy Of The Family can address it.
Maybe we should start a foster-care system for homeless like we do orphans.
I'd bet that < 10% of homeless would be willing to participate even if there were enough households willing to host. But, that doesn't mean we should ignore those 10%.
Elder-care is a whole different story. Especially in later stages of life.
My mother died in July at 59 from a brain hemorrhage. I took her in 2 years ago, and I paid ~$1000/month for her prescriptions before the ACA kicked in. After it kicked in, her prescription costs dropped (thankfully, as I was going to Canada to get non-controlled prescriptions) but her provider costs increased.
Only because I’m a tech professional in a top earning tier was I able to do this while supporting my wife and daughter. What is the solution for the rest of Americans?
Side note: After her death, I received ~$48k in medical bills that weren’t covered by her health insurance. Bad news for those providers.
This isn't "why healthcare costs are so high".
It's absolutely despicable. More than walking away, very choice words and a lawyer on your side are in order.
But lately, I have more and more friends that don't want to have children.
The girls are in their 35s and guys in 40s, add or take five.
They share and attempt to behave as if they are in their twenties.
They enjoy the easy Toronto life, spend everything they earn, cluster together with others of similar lifestyle, and reinforce each own egos that they are doing it right.
In a way, we live in amazing times where that is possible. But sometimes, life changes, and at that point, not having family to take care of you, is just bad.
So, for the woman in the story, if bad luck put here there that's sad.
If it was her own choice, well, it is harsh, but not forming and helping a family, as your parents did with you, and helped out their parents, is a selfish act, and I guess the price is similarly horrible.
Edit: Clarity. English is such a weird and misinterpreted language.
Synergy, something more than the parts.
My grandma and grandpa showered together in their 70s as to not break bones in the bathroom.
This is, I imagine, vastly different from what they did there in their 20s.
Each decade brings new challenges and lifestyle.
Man is a pack animal. We need our tribe and our pack.
Choosing to be alone will reap many temporary benefits. However, it's a gamble, as society, and the very core of what drives us, isn't meant to function in isolation.
Life is with other people, and more so with ones that are of your own kind, to face whatever the times may bring.
Take this as you will.
IMO we just live in fairly unprecedented times. Most people are still learning how to cope with new technologies and moral norms while trying not to completely throw away sacred traditions.
I imagine that built for purpose would be cost competitive with remodeling and adapting aging buildings anyway.
The woman profiled in this article is 79 years old. She gets $1200/month from social security and a $190/month pension. If we as a society think that $1390/month isn't enough to live on and that 79 years ought not to have to work to survive then we should have some program that gives her more than $1200/month.
Maybe that should be a means tested program, though that comes with side effects, or maybe an elderly UBI. Or perhaps you disagree with one or both of the premises -- like that you think that $1390/month is plenty. That's okay too.
My point is that social security with its strange formulas and conceptual inconsistencies isn't some fact of the universe like that the sun will burn out. It is something that we Americans picked and we Americans can change if we decide to.
(the things you call mandatory savings and anti-poverty aren't separate things, but it is mandatory because the anti-poverty funding is done on an actuarial basis with the broadest possible base; in any case, you receive benefits based on having paid in, not just because you is old)
Given that some people don't qualify at all it isn't a particularly well designed anti-poverty measure. You can say that it isn't supposed to be until you are blue in the face, but that's certainly how it was and continues to be sold. Given that if you died at age 60 without a wife or children your estate gets nothing, it isn't a particularly well designed mandatory savings program. That is another way it was and continues to be sold. Given that there's no underwriting it isn't a well designed insurance program (annuity).
Like our tax advantaged retirement savings options -- with its grab bag of different programs -- or Medicare with its bizarre A/B/D distinction (not to mention C) no one would actually set out to design a system like social security. People defend it because it is the status quo and they fear the unknown that admitting ought to replaced would open up.
The situation for her does suck, but seeing profiles like this makes me want to tear my hair out.
If you're trying to service $50,000 in unsecured debt (likely at a 24.99999% interest rate) with less than $2000 in gross income, just declare bankruptcy. You've lost the game of financial planning; continuing to play it just makes sure you remain a loser for the final few years you spend on this mortal coil.
Clear the slate and start over while you still have time. She has nothing to lose (she won't be able to finance a new car, RV or house in her current circumstances either) and a few hundred dollars a month in disposable income to gain. That's around a 25% increase overnight, just by waking up and doing what every corporate citizen in this country does when its own debts get too onerous.
That is a decent salary if she lived in a cheaper state like Mississippi or Kentucky. I realize there are other factors at play here, but its your choice to retire in a ridiculously expensive state like California.
"Post a selfie of feeding the hungry"
"Leftover food spotted on the corner of 5th and Lincoln"
Then sell user data to law enforcement.
The GOP/libertarian answer is likely to be that "too young to die" isn't true. No, they won't come out and say it, but the policies they promote come down to that. "Just die already, it'll be good for the economy (or at least the stock market)." Problem is, they won't die. They'll end up in hospitals more often, or prisons. If you think nobody has deliberately gone to jail just to ensure three squares and health care, think again. Some will end up in their children's homes, which can be great sometimes but is more often a drain on those children's own prospects. Many will end up on the streets. The rich families who send their kids to Washington or Wall Street won't be affected and thus mostly own't care, but it will be a literal disaster for everyone else.
Like it or not, the only real choice is for us as a society to do more to look after the elderly. Not only is it the humane choice, but when you add up all the costs of the alternative that's even worse. And no, we can't rely on private charity to do the job. There's nowhere near enough organized charity for that, and at the individual level very very few of the people affluent enough to offer help will go anywhere near somebody else's poor grandmother. I'm extremely fortunate that I can afford to pay for my mother to be in a nice assisted living facility, but everything below that is a hellhole and my personal solution doesn't scale to all of society.
My other thought was, if possible, why not have a veg garden? As the legend Ron Finley says "it's like printing money."
Sure it take time and effort but if you consider it to be a permanent PT job (that she rarely has) then it could be a big help.
Go to any bank rate calculator[1] and look at what a $50K debt in credit cards does to you. If you learn only one thing from this cautionary tale it should be how expensive credit card money can be.
Without that debt she would not be in great shape but she would be a lot better off.
[1] http://www.bankrate.com/calculators/credit-cards/credit-card...
And we still don't have a single payer healthcare system.
Think about it this way - the average household income is something like 55k in the US. Even if it were just the far lower 7k number, that's nearly 13% of income. That maps out to around 6 weeks of work/income for which the member(s) of that household must work for to then have that money taken by government and given to someone else. And that's the best case scenario, using the lowest number. Households with multiple earners making larger amounts pay an even higher percentage towards all of this.
Medicare, Medicaid, CHIP, and marketplace subsidies: Four health insurance programs — Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and Affordable Care Act (ACA) marketplace subsidies — together accounted for 26 percent of the budget in 2016, or $1 trillion. Nearly three-fifths of this amount, or $594 billion, went to Medicare, which provides health coverage to around 57 million people who are over age 65 or have disabilities. The rest of this category funds Medicaid, CHIP, and ACA subsidy and exchange costs. In a typical month, Medicaid and CHIP provide health care or long-term care to about 74 million low-income children, parents, elderly people, and people with disabilities. (Both Medicaid and CHIP require matching payments from the states.) In 2016, 9 million of the 11 million people enrolled in health insurance exchanges received ACA subsidies, at an estimated cost of about $31 billion.
~868 / mo per person for medicare(57 m)
(both of these they paid all their life into)
~$668 /mo Medicaid and CHIP provide health care or long-term care to about 74 million low-income children, parents, elderly people, and people with disabilities.
And so again we are expected to pay for the mistakes of others. What incentive is there to save if you know you have a social net to save you anyway?
Yes, I understand, it is a terrifying way to live, I wouldn't wish it on anyone, but if we deincentivize personal responsibility, what stops this from becoming a larger problem? How can this be sustainable?
Edit: please do not mistake my attempt at objectivity for callousness. One must divorce personal feelings of pity and empathy for individuals when discussing matters which affect hundreds of millions of people. There comes a point where there are more people requiring assistance than we are capable of supporting, and part of the solution is to discourage recklessness.
You propose "personal responsibility" as the solution to this, but does Canada or Europe depend more on "personal responsibility" or less than the US?
When times are personally good it's easy to make arguments about what people should do, but when you're in a situation with no support things feel a lot different.
The fact that things feel different in hard times does not change whether objectively they are right or wrong.
All it takes is one big crash to wipe out years of long term financial planning. Illness of oneself, a spouse, child or parent can easily crater life savings. Sometimes people just live too damn long. And yes, sometimes people lack "personal responsibility."
To some extent, yes, you are expected to pay for the safety net of others. You never know when YOU might need it.
My problem is with this nonsensical mentality that, without any actual statistics, people automatically assume that anyone struggling is a victim of circumstance. Or worse, that they have somehow been abused or stolen from by those with money. Which, by the way, I believe I'd a relatively new outlook in the history of the U.S.
The danger is that it encourages people to live haphazardly and in the long run is not sustainable. And, quite frankly, I have no desire to pay for people who lived selfishly in their own time.