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| Sunday, July 25, 2010 |
| Money Makeover: Dave and Carole Lutness |
 The LA Times money makeover article: Despite solid finances, couple are reluctant to begin retirement journey profiles Dave and Carole Lutness. Carole and Dave Lutness prepared for retirement the old-fashioned way.
They paid off their house and cars, accumulated no credit card debt, lived frugally and saved with a religious fervor. Carole, 68, is a psychiatric social worker for Los Angeles County and Dave, 64, is an information technology specialist with Guitar Center. Both still work full time.
[...]
The Lutnesses have a combined annual income of $118,000. In addition to having paid off debts and the note on their six-bedroom home, they've accumulated a total of about $560,000 in savings and mutual fund investments. Including their home, they have a net worth of a little more than $1 million.
Still, Carole, a lifelong saver and reluctant spender, fretted about financial security.
"I'm scared to touch anything," she said.
[...]
In addition to their savings, the Lutnesses' retirement is secured by two pensions that Carole has coming from the county and a previous employer. McIntosh said the pensions, along with the couple's Social Security payments, would give them $58,000 in annual income, adjusted for inflation over their lifetimes.
"Why are they delaying their retirement?" the financial planner asked. "They get so much unearned income."
The Lutnesses have lived frugally, in part from necessity. In the 1990s, Dave was laid off four times within a five-year period from different jobs. Each time, the couple pared back, nixing cable, gardeners and housekeeping help.
Also, their commitment to the environment steered them toward a less consumptive lifestyle. To reduce their carbon footprint, they rarely used air conditioning at the house despite 100-degree Santa Clarita summers. The heat came in handy in another way because they line-dried their clothes.
When Carole's job was closer to her home, she took the bus and walked to work to save gas. And Dave hasn't bought a new car in a decade, even though his Toyota Corolla has more than 300,000 miles.
Their lifestyle helped give them the freedom to stop working and relax — most of their living expenses in retirement would be covered by pension and Social Security income. McIntosh said they could dip into savings as need be to fund hobbies and travel. As I read this article, I was kind of siding with Carole that perhaps the couples retirement account of $560,000 was not enough (since she is reluctant to sell her house and release that equity). But when I read the part about her pension income - I changed my opinion.
It is strange to read about someone reluctant to retire, since I am very much looking forward to the day I can stop commuting and clocking in at the office.Labels: Money Stories |
| posted by Boston Gal @ 9:31 PM *
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| 8 Comments: |
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What's with the financial planner saying he'd prefer Carole to drop politics altogether if it is one of her passions?!
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you can stop any time, what are you waiting for?
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I cant help but think that they are being a little selfish with their refusal to retire, in this market there must be thousands of unemployed people living on the breadline who would be thankful to replace them in their jobs.
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My financial situation is similar.
Excellent pension, social security, plus 401 K money allowed me to retire at 62 after working since I was 18. However, what I've
noticed is when you see TV shows and read newspaper stories about the 9.5% unemployment rate and the difficulties folks are having in getting jobs, I question why I walked away from a job that paid me
over 100K. I feel anxious altho my income (pension, SS,401K) will be more than enough to live on for decades. Maybe these folks have those ideas playing in their heads?
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Mostly ditto to mOOm - I desperately hope that he was just a random financial planner, and not someone geared towards socially responsible investing, since he seemed to have an abominable grasp of matching lifestyle to convictions. If Carole *wants* to reduce contributions, great. But if that's a priority, then it's important, and replacing it with (often ineffective) volunteer tourism trips isn't necessarily an acceptable alternative, depending on what she wants to fund.
Often, money makeovers seem to take a cookie-cutter approach, with just enough customization so that it gives the profiled people good starting points. Even here, I think the main point (you have enough to retire now) was definitely made. But the cluelessness as to what makes these people tick was pretty jarring!
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I get keeping cars till the wheels fall off but I would not want to retire with a car that had 300K+ miles on it. I would replace that car (frugally) before I retired.
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@9:38 I think it is unfair to think they are selfish for not wanting to retire. A job is not a communal good that is passed around once you've "used it". It's is agreement between two parties to exchange work for money.
Furthermore, it may be that both of their employers have hiring freezes and even if they were to leave, would not be replaced.
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One could argue that people who retire when they can still work are selfish because they're no longer contributing to the economy.
It's not like there's a fixed number of jobs in the economy. For all anyone knows Carole could be so great at what she does that she creates jobs that a cheaper replacement (IF they could replace her) wouldn't.
So many people have no understanding of general equilibrium job markets it is sad. I blame the American Education System. Though to be truthful, Europeans are much worse on this particular subject.
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What's with the financial planner saying he'd prefer Carole to drop politics altogether if it is one of her passions?!