I just spoke to a former co-worker a few days ago with whom I hadn’t spoken to in a few years. She and her spouse are just a bit older than the oldest boomers and have resided in the same house in ChulaV since 1961. Both she and her spouse are retired local gubment workers, like myself.
We were discussing retirement options within our plan (she and I are in the same plan) and this is what she told me:
“I don’t know why we fed the (IRC sec. 457) plan for years. When we were still working, we just went to the seminars and blindly followed their instructions. It was ridiculous to do that. We haven’t really made much money on it for the last 15 years and now have to pay taxes even on the little draw off of it that we take every year. We don’t even need the draw. We’re not world travelers. We just work in the yard and have local hobbies with other seniors at the community center and I go to my choral group once a week and [spouse’s name] got involved in a community group. We can’t even use the healthcare allowance so we don’t get it. [Spouse’s name] is a military retiree so we have Medicare plus Tricare for Life (for Parts B and D). We’ve never in our lives paid a dime in medical expense. Our grandchildren are in college now so we’re helping them and we don’t travel to see them much anymore because they’re too busy. My sister (in eastern seaboard city) doesn’t get around too well anymore to do things and sightsee. [Spouse’s name]’s relatives in (New England city) are all dead now so we don’t make that yearly trip anymore. We don’t need any more vehicles or home improvements. [Spouse’s name] just added more insulation to the room addition for something to do so we are very comfortable. I now wished we would have not contributed to the plan and paid taxes on the income while we still working and had three kids to support. Our property taxes are $400 per year. You can’t take it with you.”
Thousands of retired workers in SD are double-triple covered for all of their needs. I know because I’m surrounded by them. Don’t discount the longtime resident in that ‘hood which appears to you to be (gasp!) “working-class” as poor and ignorant. If Medicare goes away tomorrow, these folks can promptly apply for and get their healthcare allowances of nearly $400 month from their retirement associations to help them pay premiums. Their primary residences were were paid off long ago and many are just sitting on a pile of cash that is going nowhere.
All that money, folks … WHOEVER ends up using it, is your competition in the local RE market for years to come.
The local, long-established families in CA and their progeny will be the winners in this game. That’s the way it’s always been here, especially in coastal CA counties, where the land is valuable.
You can’t fix this.
Edit: I wanted to clarify here that my former (retired) co-worker and her spouse currently have five (5) monthly incomes and a paid-for house. Each has a public pension, each has SS and they have a military pension with medical benefits. This is all exclusive of the balances in their 457 plans. Even if all of these pensions were small (in this case, they aren’t), if you rub five nickels together long enough, they will eventually get hot.
I would venture that they are still saving a lot of money every month. What else would they do with it?
