Let me admit up front that, in my opinion, we Federal retirees, particularly those of us who were in the Civil Service Retirement System, have it better than retirees in many other sectors of the economy.
As more and more companies divest themselves of their financial obligations to retired employees, through bankruptcies or other legal action, many long-time employees suddenly find themselves with either vastly reduced annuities or none at all. That often leaves them largely reliant on their 401(k) plans, and lots of those accounts have shrunk by 50% or more in the last 16 months or so. It’s hard to think about major purchases such as a home, a car, or even a washer and dryer under those conditions, and the many current employees who are fearful of losing their jobs are not likely to be pumping up the economy with their spending.
Despite our theoretical advantages, many of us Federal retirees are also having to “economize” in some form or other in order to maintain our standard of living. Those of you who have read one or more of my previous articles on life as a Federal retiree will not be surprised to learn that I have maintained my hard-earned title of “world’s worst investor,” at least among the folks whose investments weren’t wiped out by fraudulent practices – such as when Bernie Made Off with an estimated $50-65 billion in investor funds via a Ponzi scheme.(See Is There Life After Retiring From the Federal Government?)
Back in 1999 I took all of my money out of the well-run Thrift Savings Plan (TSP) and invested it on my own, largely in high-tech firms, including more than my fair share of dot.coms. I won’t talk numbers, but I will tell you that it is not a good sign when several times a week – for many weeks – you receive notification through the mail that you are eligible to be part of a class-action lawsuit against a company in which you invested. To give you some idea of how things went, WorldCom was not even close to being my worst investment.
We eventually took what little was left in our accounts and turned it over to a financial planning firm with a strong reputation. After a few good years in the stock market, our investments actually amounted to more than pocket change, but, since roughly November 2007, all of those gains have been reversed, and then some. I was no longer making the investment decisions, which was undoubtedly a good thing, but the results have been remarkably similar to my returns during the dot.com disaster.
I started running through the various ways in which we could cut back spending: going out to dinner and movies less often; driving less; reducing our expenses for cable TV, internet access and phone service; cutting out my membership to the YMCA; reducing my skiing costs, etc. We have cut back on some lawn care services but, as of this moment, I haven’t done anything about any of the possibilities I just listed, except to drive less by “bundling” errands in terms of location, so that we are not driving 10 miles to do something one day and another 10 in the same direction for a different errand the next day unless it can’t be avoided.
I am also giving serious thought to using coupons again. Actually, I never stopped thinking about coupons – what I did do was stop clipping them. On those rare occasions when I did actually clip them, I either didn’t have them with me when I needed them, or maintained them in such a chaotic state that I couldn’t keep track of little things like expiration dates. More often, I would cram one newspaper supplement filled with coupons after another into a cubbyhole in the desk in the kitchen – sometimes for months at a time. As the late Don Adams (the original Maxwell Smart) might ask: “Would you believe, years?”
Adding insult to self-inflicted injury, when I do have the right coupons, unexpired, with me in the right store, I will often buy something I don’t need – because I have a coupon. The coupon manufacturers seem to know this particular character flaw of mine and they take advantage of it by printing coupons that are good enough to entice me into buying things for which I have no earthly use. Another twist involved restaurant coupons for what seemed to be large credits against the cost of dinner. But we found that we were spending more, even after the coupon was applied, than we would have if we had left the coupon at home, since we would tend to order more wine, appetizers and desserts. In fact, when we would plan a dinner out with friends, they would always make sure I didn’t have a coupon.
It’s a brave new world for this long-time coupon clipper – meaning that coupons have gone electronic. I recently got one from Pizza Hut that was good for 20% off my order, which in this case was a large pizza. I hadn’t had a Pizza Hut pizza for years, but this was too good a deal to pass up. So, I was pleased as punch when I picked up my pizza and saved roughly $2.50, but my joy was short-lived in that the taste of the pizza was virtually indistinguishable from that of the cardboard box in which it came. The following week I was able to order a large pizza from Papa Murphy’s, which was not only tastier by a power of 10 but also less than half the price of the earlier pizza – and with no coupon! So, perhaps the electronic coupon manufacturers also have my number, which is 1-800-IDIOT.
Despite my ongoing reluctance to live in the real world, I recognize that the day is likely coming when no one is either able or willing, or both, to pay for my so-called services as a human resources consultant and trainer. And given the current state of the U.S. and world economies, that day could be right around the corner. Since that income supports our travel habit as well as other expenses, cutting it out would have an immediate, and very significant, impact on our lifestyle. I used to take comfort from having a cushion in the form of a fair-sized savings account, but during my recovery from a car accident in 2007, we all but emptied it.
So, unless/until the economy improves, we are not going on any more exotic vacations – except the one that we had already booked before the economy went south. That one will involve flying to Rio de Janeiro and spending a couple of days there before boarding a cruise ship and crossing the Atlantic to Barcelona, where we will spend two nights before flying home. If you think we’re crazy, I have no effective rebuttal, but we figure that if this is our farewell to foreign travel, at least in the foreseeable future, we might as well go out with a bang. If this one does bankrupt us, I’ll simply apply for a government bailout.
At least I won’t give a $150 million bonus to the same person (me) who ran our financial ship aground.
Presuming that I don’t have to stay on board the cruise ship and wash dishes to pay my bill, I’ll write an article about the trip when we get back. I will close for now by noting that, as a retired National Park Service employee, I am particularly looking forward to seeing Brazil’s natural wonders, some of which I understand can be found strolling the beach at Ipanema. Perhaps we’ll even get to see an Amazon – oops, I mean the Amazon!