Meet Jessica and Joel Soffer. They retired early a few years ago while still in their fifties. But the current economic crisis is catching up with them.
As somewhat misleadingly reported by the Los Angeles Times, the Soffers have a net worth of $1.4 million. I say misleading, because their actual retirement funds started at just over $600,000 and are now, of course,less. The remainder is equity in the home they love and have no intention of leaving.
One's net worth is not necessarily, or even usually, what is available for use during retirement. We all need a place to live, preferably a paid for, mortgage-free place. If we don't want to downsize or if that's not realistic (in my northwest city, downsizing is possible in terms of home size, but not realistic in terms of cost. If a 970 sq. foot downtown condo costs the same as my inner-city 2800 sq. ft. home, what's the point of moving?), then the equity is largely useless. That might change should the terms of reverse mortgages get more reasonable. But for now, when it comes to retirement planning, I only count pensions (as in, wish I had one coming!), Social Security (please let it be there when I'm ready to bail from working life!), and retirement savings.
I understand the Soffers' wanting to keep their family home. I also understand their desire to travel now while they are early in their retirement and still have their health. But one thing I don't get is the balance that the Soffers carry on their credit cards. It's not clear from the article if this is a decreasing balance or one that was acquired during retirement but either way, I'm surprised that they haven't made it a priority to wipe it out.
What I also note about the Soffers (and what I see as a real possibility in my own future) is how much they expend on their two adult children. Both of their children are single parents, and over the course of one year, the Soffers have helped out to the tune of $15,500. I wonder if they would have paid out that much had they both still been working and had a better sense of their own monthly expenses. For myself, while I do help out my five adult daughters (more than I want and less than they'd like), the fact that I have only a certain amount of income coming in each month limits how much of that I am willing to use for them. I wonder if my feelings will be different after retirement, when suddenly there is a larger "pot" of money from which to draw. I wonder if I'll remember that that "pot" must last my lifetime.