Friday, December 16, 2011

My Road Less Traveled

a road less travelled by Pictures, Images and PhotosThere is a risk, in this passage I'm in, of 'leaning unto my own understanding', rejecting the advice of others because it seems so wrong and going my own way, taking a road less traveled. That's a result of speaking with folk who clearly don't get what this journey is about and who base their suggestions on 'normal' conditions. My conditions are anything but 'normal'.

Three or four years ago, before I did my crazy investment thing to create lifetime income for my mother, I was advised to sell Mummy's last remaining asset. The feeling was that we could put the money down somewhere, let it earn interest and pay her bills with that interest. Boy am I glad I didn't fall for that logic! Interest rates have been piss poor since that suggestion was made (between 1 and 5 %) so we would have been paying bills with capital not interest, and I long ago learned that money has a horrible way of running out just when things are starting to get interesting.

Just yesterday, a friend was making the same claim, going so far as to suggest that I'm holding on to the asset because of my sentimental connection to it. LOL! There wasn't enough time (nor indeed do I think I would have been believed) to explain that sentiment went out the door in August 2007 when the ER doctor diagnosed Mummy with dementia. My friend cannot understand what I am dealing with, what costs I am looking at long term or really, any of the challenges - financial or emotional - that are facing us. She has no basis for comprehension. I get it.

It occurred to me that I needed to be speaking with someone who had a clue as to the challenges. I need a community of believers or at least of 'similar experiencers' with whom to share my stories. It became clear that there wasn't much point taking advice from someone who didn't understand that in this case, 'money' is finite but 'income' is infinite. Selling assets sounded like good advice except, we're not dealing with an ailment with a specified duration. This is not a '1 - 3 years to live' kind of story, this is potentially a '1 - 3 decades to live' kind of story. Finite sums of money will not cut it. Money could all too easily run out before the disease runs its course.

I've mentioned before that my mother's biggest financial goal post-retirement, was to hold on to her retirement lump sum. She was somewhat successful in doing so, but she didn't manage to grow it one whit. At the end of day she had almost exactly the same amount as she had started out with. Given the realities of her income during the period, this is a huge victory, but it definitely isn't any great money management success story of the 20th century. If you factor inflation into the equation, she lost ground financially.

Experts on retirement recommend that retirees expend their resources at a rate of 4% per annum. I think that's based on the assumption of a retirement of about 25 years. After 25 years of retirement the funds are typically exhausted. Mummy's certainly would have been. Trouble is, she was diagnosed in the twentieth year of her retirement. Had she followed the 'rules', we'd have had very little left for the uphill financial battle that is long term illness. We would have been at war with neither troops nor ammunition. Fortunately, that's not what happened but many retirees spend far more than the recommended 4%, far more, and when things go awry, they have to try to wage the battle of their lives without the necessary resources.

So, I hear what folk say but I've determined I have to go my own way, especially if the folk doing the saying have no earthly idea (and haven't even bothered to ask) what exactly it is we're dealing with. I have to trust that my instincts regarding what to do and how to do it are right. So far, so good. As my sister said to me some weeks ago, "You haven't been wrong yet." Let's just knock on wood and keep following this 'road less traveled'.

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