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A retirement horror story

By Barbara Whelehan · Bankrate.com
Friday, October 14, 2011
Posted: 2 pm ET

More than half (54 percent) of full-time workers from ages 21 to 64 participated in their employer's retirement plan last year, according to a report released earlier this week by the Employee Benefit Research Institute. Among all workers, including part-timers, the participation level was 40 percent.

That means a lot of people slip through the cracks.

The phenomenon extends overseas in England. More than a third of nonretired adults no longer pay into their plans, according to a Prudential survey. Nearly one out of three who don't participate (27 percent) say they just can't afford the contributions.

The fact is, they can't afford not to make them.

Frightening true story

What happens if you don't do any retirement planning and you have little savings to fall back on?

Let me tell you a story about my eccentric friend Jeanette, who many years ago received a Master of Fine Arts degree from the Hoffberger Graduate School of Painting at the Maryland Institute in Baltimore. During most of her career she worked part time as an art teacher. She's also a talented artist in her own right whose works are being sold by an art gallery in Naples, Fla., though she hasn't seen any proceeds from recent sales. She doesn't want to press charges against the gallery owner because if she does, she says, her name would be mud in the art community. "No, you don't understand the art world," she says each time the subject comes up.

Between her pension and Social Security, Jeanette's income amounts to $900 a month. When her mother passed away some 20 years ago, she left Jeanette her condo and a small portfolio of stocks, about $50,000 worth. Over the years, Jeanette slowly liquidated the stocks, spending the money on necessities. Six years ago, she sold her condo at the height of the real estate boom and bought another cheaper one outright for $85,600 in a different area. The reason for the move? She thought her neighbors were trying to gas her. Jeanette is plagued by delusional thoughts.

Three weeks ago she was evicted from her condo. While movers hauled her furniture and all her possessions to the parking lot, two police officers seized her, put her in a "cage" and brought her to the psych ward of a local hospital. She had been "Baker Acted," involuntarily committed for detention so that psychiatrists could evaluate her mental health. I received a call from her that evening. "Barbara, you've got to come pick me up. I have to get out of here," she said urgently.

It wasn't that easy. They wouldn't let me take her anywhere, not even to look for alternative housing. The hospital's case manager wouldn't talk to me until Jeanette signed a form, which Jeanette was reluctant to do. It took me a week to convince her to sign it. Her stubbornness is exasperating.

When we finally talked, I told the case manager that Jeanette didn't belong in a locked ward, and she didn't belong in an assisted living facility either. That was where the case manager was trying to place her. Jeanette didn't go along with the idea. She said she didn't want to eat prepared food in a dining hall; she wanted to cook her own food. And she didn't want to give up her Social Security check to live in a facility. That would mean she'd have no way to make car payments. And if she gave up her car, it would be like giving up everything.

A couple of days after I talked to the case manager, Jeanette was released. Our mutual friend Louise picked her up and took her to a nice, but inexpensive, hotel.

Why was Jeanette evicted? It turned out she had ignored a $6,000 plumbing bill, which over time, due to fines and penalties, escalated to $15,000. She paid her bills, but that one she had dismissed, telling herself she had been singled out by the condo board. There was no proof the leak came from her apartment, she'd told herself. She ignored the bills, and then years later, the eviction notices. In her mind, it was all a big scam.

Now she feels she's really been scammed. She lost her paid-for condo to the condo board in a foreclosure for a judgment of $11,337.20. Prices for comparable units are on the market for around $35,500.

Getting back on track

Over the past couple of weeks, Louise and I have been trying to help her straighten out her finances and find housing. Her stuff had been put into storage, paid for by her brother in New Jersey. Jeanette can't go back and live at the condo; the board won't let her back in. Apartment rentals seemed out of the question, at a minimum of $665 a month. Luckily, a friend of a friend found a one-bedroom apartment for $410 a month.

On Monday, Louise and I accompanied Jeanette to visit her broker, and she sold the last of her stock -- 461 shares of Merck, 12 shares of Comcast, and three shares each of AT&T and Verizon. She got roughly $15,000 from the sale.

Jeanette is living on the edge and it's only a matter of time before she runs out of resources. This is what retirement looks like without retirement planning, but who's to blame for this? She's always lived a frugal existence. She was lucky to get an inheritance. But one big unexpected bill -- and her inability to take it seriously -- were all it took to throw her life off kilter.

Do you have a horror story to share? Bankrate is running a Halloween Horrors contest and is looking for scary financial tales. The winner with the most votes gets a $200 award. A selection of stories will be published in a future Bankrate article. You can also enter via Facebook. The last day to submit a story is Wednesday, Oct. 19.

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42 Comments
harry
November 06, 2011 at 7:29 pm

I make part of my living from fine art sales and I know how dismal the market is for fine arts now. I don't know how good this person is as an artist but even the best are suffering from poor sales. I am fortunate in that I have a day job and have not quit to pursue my dream of making art full time. Probably never will as it's just to risky.

Krina
November 06, 2011 at 11:31 am

She spent a lifetime doing what she loved. She followed her passion.

JEB Rogers
November 05, 2011 at 11:30 am

Oh, please. It is obvious this is not a simple case of "poor financial planning"....this case should be an example to everyone, if you suspect a relative or heir may have cognitive problems, talk to an attorney who specializes, or a financial planner....if you can.

dave
November 04, 2011 at 6:55 pm

Quite frankly - who cares?

She made her bed and can sleep in it. Its time we stopped legislating according to sob stories.

Lets go over the parts you left out. She chose her profession. She chose to not pay her bills. She chose not invest. She chose to sell off her inheritence. She chose to be ignorant about finances. She is an adult.

Time for folks to take personal responsibility. The one part of the story that is true is that folks should be relying on friends and family and NOT the government!!!!

EDU
November 04, 2011 at 2:29 pm

IT IS SAD, THAT JEANETTE DOES NOT HAVE WISDOM IN MONEY MANAGEMENT. GODLY WISDOM LEADS TO EFFICIENT AND PRODUCTIVE MONEY MANAGEMENT.

Pensions
November 04, 2011 at 1:25 am

Anyone with a pension now should be thankful, especially if the payor has not gone bankrupt (many more will in the future, more likely if the plans are not frozen for new participants). I'll never have one, so I am planning on my own. And I also adding ZERO from Social Security, as anyhting I might get will be a surplus, which is what it was designed to be - supplemntal retirement income.

Planning
November 04, 2011 at 1:25 am

If you can't afford to save for retirement, you have made some bad choices, related to your education, career, health (eat standard American diet and don't exercise can lead to big medical bills) and / or family decisions (too many kids, divorce etc).

don lingl
November 03, 2011 at 8:01 pm

back in the old days, we had unions, with our own pensions, not the bogus 401k programs today. i know not one person who has retired on a 401k, but florida and arizona is loaded with pensioners.

woodrow
November 03, 2011 at 4:52 pm

Here is an even bigger horror story. People don't make enough money to save for retirement. Maybe you can go out to their cardboard castles under the bridge and explain how they need to start a retirement fund. Poor people never retire.

RockyMissouri
November 03, 2011 at 3:55 pm

I would think that some caring and responsible people in the Art community around Naples, Florida would come to the aid of this artist. If this artist is being taken advantage of, and become a victim of fraud....I'm certain that the Justice Department would be interested.....