Kiplinger Magazine has this near great article, written by Mike Piershale, on how to recover from a pre-retirement financial mess (click here). Don’t ever think you are immune from a financial setback or crisis. It can happen to any one of us.
Having a personal financial setback when you’re closer to retirement can be doubly stressful. You’re dealing with both the financial reversal, and the realization that you have less time to earn the money back. Perhaps you had to deal with a job loss, an expensive illness, divorce or a business failure. Or it may be that you just haven’t saved enough or you’ve racked up too much debt to retire.
Since I am NOT a financial expert, I can’t give out any advice. The only thing I can do is tell you about myself. My husband and I suffered a huge financial setback in 2009. The Great Recession was already underway and my husband’s long term employer went out of business. DH was 52 years old and it took him over 2 and a half years before he could land another job. Yes, you read that correctly. He was out of work for over 2 years! The recession was in full swing and DH couldn’t even get a job delivering pizza or pumping gas. He was a Disney executive and mostly got laughed at most jobs he applied for.
By the time my husband found steady work, the stress from our financial lives got to him. Even though we were debt free, had a mortgage-free home, paid-for cars, no consumer debt, no charge cards, the constant daily toll of scrambling to pay our bills and put food on the table was insufferable. We were constantly, constantly dipping into our savings accounts, our retirement accounts. Till finally DH suffered a heart event. In fact, he suffered several heart events. The first one was Takotsubo Cardiomyopathy, otherwise known as Broken Heart Syndrome.
Yes, You Can Die From a Broken Heart– It Is A Real Medical Condition. The Mayo Clinic defines it as this: “Broken heart syndrome may be caused by the heart’s reaction to a surge of stress hormones.
Once he was cured of Broken Heart Syndrome the doctors discovered he had two aneurysms, one of which, Celiac Aneurysm is extremely rare. Only 200 or so people have been diagnosed with this disease in the last 100 years!
Aneurysms of the celiac artery are rare vascular lesions that represent only 3.6% to 4% of splanchnic artery aneurysms. The estimated incidence of celiac artery aneurysms ranges from 0.005% to 0.01%. Since the anomaly was first described in 1745, 178 additional cases have been reported.
So, we were hit by a double whammy. First hubby’s unexpected unemployment, then when finally offered a job, he was not well enough to take on full time work. I don’t want to delve too deeply into what my husband and I went through. Just know it was very unpleasant, the stress on our marriage was horrendous and yes, we liquidated a lot of our cash and retirement savings just to keep going.
By this time, it was 2012. I qualified for my Social Security at age 62 (reduced, since I took it early). Hubby qualified for his pension (reduced, since he took it early) and we started liquidating assets. We sold our RI vacation home (at a hefty loss), DH’s precious sailboat, I sold all my un-necessary gold jewelry, our silver coin collection, bicycles, housewares and any equipment we no longer needed or could utilize. The process was very painful.
If you are facing the same conundrum, here are the steps Kiplinger advises you to take. Some of them DH and I did. Some of them, we just couldn’t face. How do you turn your life around? How did we?
Take Action Now: Your First Steps
Start by facing the reality of your situation. This was the step I had the most problem with. I could not face our reality. I could not face the fact that DH and I were going to be a lot poorer than we planned. I knew we could never regain what we lost. I knew that DH and I would never be the same. We’re low income now. This was tough for me to accept.
You must create a budget. I cut everything down to the bare necessities. I was obsessed with buying and having enough food. There were a few times I was late paying our taxes. Thankfully I was creative enough to fudge our way and stay on schedule.
Go further, if necessary. We had to find ways other than cutting expenses. We had to bring some money in. DH took on odd jobs. I worked part time. But the work was always temporary and we earned just enough to keep squeezing by.
Tackle Your Debt
This is a funny one because we didn’t have any debt. We also didn’t have any FICO scores so that we could borrow some money to tide us over either. I cringe when I hear near-retirees exclaim that their mortgage is paid off and they don’t have any car loans or credit card bills so there is no need for them to save for retirement. WRONG! See above. If we didn’t have cash in the bank and retirement funds we would have lost every single thing!
Work on Bringing in More Cash
Hubby was limited on the work he could do but I was the creative one who brought in any money. I tutored seniors on how to use a computer, I earned money writing stories for other internet web sites, I worked as a reporter for two local newspapers writing about neighborhood social events, I made money blogging, I managed social media sites for start-up businesses. Since I’m a computer geek, anything that had to do with a computer, I could earn money at.
Stick to a Smart Social Security Strategy
Since I was the smaller wage earner, I took Social Security at 62 and we are delaying DH’s till he turns 65. He’ll get the bigger check. Mine is incidental. Waiting for me would only get me an extra $100 or so. DH’s waiting will get him hundreds of dollars more.
Consider a Reverse Mortgage
For us, this was a definite no-no. Taking out a mortgage would have defeated what we were trying to accomplish: be debt free. Plus we had zero (0) FICO scores. No one at that time would loan us a dime. Today, that is completely different. We now know the value of being able to borrow money. We both have FICO scores in the 800’s, we both have credit cards, lines of credit and are extremely careful with this blessing. Dave Ramsey is so wrong on this debt-free crap, it isn’t funny. Ramsey’s advice is downright dangerous IMHO.
Rebuild Your Cash Reserves
We’re currently still working on this last step. It’s been kinda hard since we both are limited on how much work we can take on. A job for me is totally out of the question. DH does some work and he’s been fortunate that he’s gotten work with bosses who understand his health problems. They hire him for his brain not his brawn. That’s been a blessing, for sure!
We live a retirement lifestyle that neither one of us could have imagined nor planned for. Who knew that things could go so horribly wrong in the blink of an eye? I will say one good thing and that is DH and I are both happy. Our marriage is different now. We’re important to each other and we don’t take ourselves for granted. I finally understand the philosophy and value of money. I respect credit. Being in debt is not the devil in disguise. I also understand the value of being debt free. I don’t think DH and I would have made it through The Great Recession if indeed we were carrying debt. So, take what you want out of that reality.
Live well and prosper, my friend. Live well and prosper.