It's one thing to watch folks make financial mistakes out of greed, stupidity or both. But it is quite another to watch what is happening to some retirees like Jim Kosel who did any number of things right, only to be foiled by what would, in other economic times, be forgivable mistakes.
Kosel is featured in the Portland Oregonian article, What To Do When The Nest Egg Cracks.
Kosel followed most of the rules pre-retirement: He saved on a regular basis; He saved over a long period of time; He planned his retirement in detail; He downsized by moving to a smaller town.
So why is he now driving a school bus and deferring his dreams of taking an RV around the country?
Well, somewhere along the line, just after he sold his urban home and found a smaller one in a rural area, he got the bright idea of NOT paying cash for the new home. Instead, he took out a mortgage, and played the stock market with the proceeds of his original sale. The idea was that he could both pay the mortgage and pocket some extra cash.
But his retirement plans hadn't included a downturn that saw 50% of his retirement funds vanish. Not only did his "extra cash" go away, so did the money for the mortgage. His retirement plans didn't include a mortgage payment. Nor did his plans include his wife losing her job.
So instead of traveling across the country in an RV, he's driving a school bus.
Hindsight being 50-50, it's easy to see where Kosel made his mistakes. No one should have a mortgage in retirement. And he should have purchased and fully paid for the RV he wanted. Economic conditions and gas prices might ground the RV upon occasion, but at least he would have it available to him.
Still, I do feel sorry for him, because I think he set a fine example for his family. If it can go so wrong for him, what about the rest of us?