Although there is no shortage of victims of the financial crisis, one group that has generally been missed is the middle aged and elderly. Yes, there are reports of people in their 40s and 50s moving in with their children or other relatives, but for the most part, this cohort does not get much attention.
Yet it isn’t hard to see how grim their prospects are. Many thought they’d be employed at decent jobs through age 65 and are un or underemployed. And those still working full time are often victims of downward mobility, and have lost a well paying job and are now working at a lower pay level. If you don’t have a decent level of earnings, you can’t save much or at all. These pressures come against a backdrop of loss of wealth due to plunges in home prices and to a lesser degree, financial investments. And that’s before we get to pension fund whackage and plans to “reform” Social Security and Medicare.
Some mainstream media outlets took note of an AARP study that found that the group that had the highest rate of foreclosures was the 75 and older cohort. And remember, these are people who retired after a period when unemployment was relatively low and the stock market delivered attractive returns.
While people who are under financial stress don’t much in the way of options, I see more and more people of modest and better means planning on becoming expats to make their retirement incomes go further. San Miguel, Mexico, was long a destination for older Californians who wanted to stretch their retirement dollar. A once well off jewelry dealer (the “trade” has been in desperate shape for over a decade) planned to move to Buenos Aires, but his situation decayed too quickly for him to exit. Costa Rica is apparently popular with economic emigrants. And I’ve now heard two mentions of Thailand in the last three weeks. One came a reader who told me how his Abyssinian/Manx cat Precious had been trained to stay on a porch, except when he unwisely tried chasing roadrunners and foxes. His e-mail had this sad postscript:
Without going into a rant … we live in rural Clark County, NV outside Las Vegas, and are in that group of former middle class folks that have lost it all … having invested our life savings in this property (peak month Jul, 2006) we have not been able to sell. To view the place Precious and I were behind the fox, go to the home’s website and see the view from the “Perch” seating area. We gave up selling. We have it for rent with option to buy. We hang on but face BK or foreclosure like so many others. When we leave we are moving out of the country. At 65, unemployed since 2007 in a small town, and with a disabled wife, there is no starting over here. We will be able to save more than half my small government pension/her social security in Chiang Mai, Thailand. I am not bitter, but I no longer believe in capitalism or democracy as I once did; not the way they are being practiced now.
Those who are approaching retirement age and have the time, energy, and financial headroom would do much better to get out of Dodge. America ranks badly on pretty much every social indicator, which means that moving to what is nominally a third world county isn’t just a step up in terms of spending power but often in overall quality of life. Thus we are likely to see another sort of hollowing out take place: the lower income and wealthy elderly will remain here, while more in between who have the resources and energy will depart. We already have the economic-oriented literature depicting retirees as a burden. Imagine what a middle class exodus in this age group will do for the political and economic position of the aged.