Do you think our economy is booming? Do you think life is good? I don’t on both counts. Homelessness is on an all time rise. Long time, well-established businesses are closing daily. Yesterday, Barney’s, a century-old icon of America’s luxury men’s apparel, announced they were filing for Chapter 11 bankruptcy (click here). Sorry to be so pessimistic, but I just don’t see this great economy everyone is talking about.
The rich are still getting richer. And the poor just keep on getting poorer.
Barney’s is filing bankruptcy because they can’t afford to pay their rent anymore. Ditto for other large corporations such as Toys “R” Us, Radio Shack, Sports Authority as well as other clothing chains such as Gymboree, Charlotte Russe, The Limited and Sears. Thousands and thousands of people have lost their jobs? Where did they go? They may have gotten other jobs but I can assure you most of them are making less than what they were earning before.
Here in New York, we may have passed the $15 minimum hourly wage but because of this added increase many restaurants are closing (click here). The hourly rate rise has caused a mini-recession. Business owners are cutting hours. Almost no one can work overtime anymore. The cut in staff creates problems for the workers who remain. It’s a lose-lose situation. Restaurants were forced to raise their prices. A lowly hamburger will now set you back $12. In turn, many people have stopped going out to eat which has now caused double trouble to restaurant owners. Throw in the sky high rents of New York and is it any wonder that our homeless numbers have increased?
It used to be that the homeless were either bums, alcoholics or drug addicts. Not any more. Many homeless today have full time jobs. They just can not pay the ever increasing rents and housing costs. Not even on the so-called $15 an hour minimum wage. Just like those big corporations listed above, human beings are slowly going out of business.
This blog, however, is about retirement. What does Barney’s fate or the minimum wage have to do with us retirees? Plenty. The Feds have cut the interest rates (click here) and because of this new thing called ‘tariffs’ we retirees have been hit with a double whammy. We can’t earn much interest on our money anymore and we have to pay more for what we need with our slowly dwindling financial reserves. We retirees can cut all the corners we want, we can go without, we can live on less but eventually we have to pay the piper or wind up on the streets. It might get worse. We might have to ask our children or our family members for help. Or do what most every retiree I have met over the last three years do: side hustle for some extra monthly cash. That’s what DH and I do. Don’t shrug and say it’ll never happen to you. Sure it will. The odds just aren’t in a retiree’s favor anymore. It’s all a matter of time.
True Story: Lucinda, a widow, age 90, has lived in the basement of her daughter for the past 25 years. She owned a condo but sold it 25 years ago despite being advised against it. Her daughter is now 65 and would like to retire. So, her daughter sold her home and moved in with a girlfriend. Where does that leave Lucinda? She moved in to a trailer, down the road from her oldest granddaughter, at $1795 a month. Lucinda’s only income is a $2500-a-month social security check plus she is in credit card debt to the tune of $10,000.
How’d you like to be Lucinda? At 90 years old? Her condo is now worth almost a million dollars. If she had hung on to it. Owning real estate might be a liability but when it comes time to sell your own home, especially in retirement, that liability can become quite a life-saving asset! One of the first things I always recommend to retirees, is to always secure a place to live. Renting puts you at the mercy of greedy landlords. See above. Most people, as well as top brand named corporations go under financially when they don’t own the property they reside or work in.
The only good point to the falling interest rates is that borrowing money has now become cheaper and easier. It may be wise to buy a home with a 3.5% mortgage BUT no one’s income is guaranteed anymore. Even the slightest blimp to your income can send you ducking for cover.
Keep monitoring your budget. Make cuts if you have to. I still say that having a side hustling job may be the ONLY way to deal with our ever changing economy. I still don’t think it’s great. Every month is a new agitation. We need to be spry and flexible. We need to keep cutting, doing without or replacing what we want with something we need. DH and I cut our cable. Again. We don’t watch TV anymore. Especially the news. We’re always on the internet streaming something. DH like motor shows. I love YouTube. We never go to restaurants anymore. Almost all our entertainment needs are met by local freebies. We stay at trailer parks with no amenities when we RV now. KOA and Good Sam prices are out in orbit. Even National and State parks are cost prohibitive. We cut our yearly travel time down to three months a year vs five months.
Our food budget will take yet another hit. We thought we were immune from rising food costs by shopping at Aldi. Wrong. Almost everything there has gone up too.
Live well, my friend and prosper. Live well. And prosper.