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A Retirement Wealth Gap Adds a New Indignity to Old Age

Many middle-class Americans are financially unprepared for retirement—and that is leading to an array of social tensions

This is an interesting article, and a potential “need-to-know” for those planning to move when they retire. According to this Wall Street Journal article, an unexpected problem could surface when you move from your pre-retirement “work” home into your ideal retirement home… in a community occupied by long-time residence.

As you make your new house a home, you and other transfers to the community may want to “upgrade” the community and improve services. While you might find the cost of these enhancements to be of high value, it is possible that the long-time residence will not see the same opportunity. In fact, you could be in for a fight. Not because long time residence don’t want changes to their community. But because they simply cannot afford these enhancements. For many, their hand-to-mouth retirement lifestyle cannot absorb anything beyond the fixed costs already difficult to manage. So, it is really a conflict of economics.

There are no take-aways from this article, no lesson except to be aware of a potential problem. My assessment is, it is a good idea to get to know the profile, or psychographics, of the neighborhood you are thinking about retiring to. Are you moving into a community or city with residence who generally share your economic profile? In the case of the article, the residence are tied together by a retirement community association. More likely for most a retirement community does not apply. But this same conflict can surface in communities where you are likely to be dependent on a majority vote or the resources needed to accomplish the same objective.

~ Rich Arzaga, CFP®

 

By Jennifer Levitz | Photographs by Rachel Bujalski

SANTA ROSA, Calif.—On a Saturday morning in retirement paradise, Ken Heyman stepped out to his front porch and found a brown paper bag. Inside was the chopped-off head of a rat.

Mr. Heyman was acting president of the homeowners’ association at Oakmont Village, an enclave in Northern California’s wine country for people age 55 and over. For months, the community had battled over the unlikeliest of topics: pickleball, a game that is a mix of tennis, badminton and ping pong. Some residents wanted to build a pickleball court complex that would cost at least $300,000. Others didn’t, saying they didn’t want to see their dues go up.

Residents shouted at each other at town-hall gatherings. One confrontation got so heated that a resident called the police. The governing board appointed a security guard to keep order at meetings.