Why I Want To Be Wealthy

Meet Leonard. That’s not his real name, and the above picture isn’t of him, but it might as well be.

Leonard has worked at the Wal-Mart that I deliver chips to for the last 5 years. He stands up front, greeting the customers as they come in the store, giving them shopping carts and what-not. He’s the infamous Wal-Mart greeter.

I’ve known Leonard for most of the 5 years he’s worked at the store. He started out as one of the nicest old men I’ve ever had the pleasure of meeting. I always made a point of saying hi to him, asking him about how his day was going and about his garden, which he takes a great deal of pride in. Leonard’s personality made him a terrific greeter.

As the years have gone by though, Leonard has lost some of his pleasantness. He’s clearly irritated when people’s purchases activate the alarm going out the door. He still makes eye contact and says hi to everyone, but he’s lost his smile and rarely says his greeting with any expression anymore. He’s become more and more of a crotchety old man. He celebrated his 75th birthday just a few weeks ago and the staff threw him a party. Leonard scowled throughout the party, even refusing a piece of his own birthday cake.

I always assumed Leonard was bored with retirement and that’s why he was working. As the years went on and his attitude deteriorated, I wondered why he was still working. It’s obvious to everyone he no longer enjoys what he does. Last week, I caught Leonard in a good mood, and we started to chat.

I asked Leonard about his past. Where did he work throughout the years? Leonard told me he had decent jobs, but never any that provided any retirement benefits. He worked as a car salesman for a while. He worked construction for a few years. He would always work somewhere for a few years, then get bored and have to go try something else. He made enough to support his family, but there was never much left over to save for retirement. Like many of his generation, Leonard’s wife was a homemaker.

They bought a modest house to raise their family in, paying off the mortgage on that house in their 50s. At that point Leonard and his wife started to save as aggressively as they could, starting to invest in the late 1990s. Because they were close to retirement, they allocated their portfolio conservatively, splitting the assets approximately 50/50 between stocks and bonds.

At first, their portfolio did quite well. The stock market was booming, and even their conservative portfolio was rising with it. Emboldened by success, Leonard and his wife kept investing, except they were putting all of their new money into the equity part of their portfolio. Their advisor was telling them to, and the results were impressive enough for Leonard to give it nary a second thought.

Just a couple years later, the bubble burst.

Leonard stayed the course though, investing throughout the bear market. This time though, he wanted to preserve capital. So he sold his equities and stayed in mostly bonds. Over the last decade, he’s averaged about a 5% return, not nearly enough to ensure himself a comfortable retirement.

Then, as it always does, life started to rear its head and Leonard was faced with some difficult choices. His two daughters were getting married. Each wanted a fairly average wedding, totaling about $15k for each of them. Leonard gave them the money, even though he had to borrow against his house to do so.

Then his son decided he was going to buy a house. Leonard thought it was only fair to give his son the gift of a down payment, adding another $20k onto the debt. To add insult to injury, his wife’s car crapped out and she insisted on a new one. That added another $20k on the new mortgage.

Finally though, it was time for Leonard to retire. It was going to be tight because he had a mortgage again, but he figured they could make it. And for the first few years of retirement, things were going just fine. Money was okay, so Leonard and his wife dipped into their retirement savings to take a couple of trips. They spoiled their grandkids with all sorts of toys. They were enjoying retirement, just like you’re supposed to.

And then, Leonard’s wife got sick.

She had a fairly rare form of cancer, treatable with a combination of chemotherapy and various drugs. While she was in remission, Leonard started to develop some health problems of his own. Between the two of them, they have to spend a few hundred dollars a month simply on prescriptions. Leonard developed hearing problems, so he had to spend thousands on two hearing aids. By the time it was all said and done, the savings had ran out, and their expenses were too high for their pension income to cover.

If Leonard had been smart throughout his life, he wouldn’t be in the predicament he’s in now. He didn’t do a good enough job planning for retirement. If he had of started to save earlier and more often, he would have had a safety net. Unfortunately for him, he didn’t do it.

I don’t want to be the old man who has to go back to work. I want the freedom to be able to help my children, or to travel, or to do whatever and not have it have a huge impact on my financial well being. Most of all though, I don’t want to be like Leonard.

Tell everyone, yo!

24 thoughts on “Why I Want To Be Wealthy

  • March 21, 2011 at 7:18 am

    That’s a sad story :( Imagine if we didn’t have medicare to back us up (thank you Canada) it could have been worse. have you seen Sicko?

    I want the freedom too, to be able to raise my children, to take care of my parents and take them to doctors appointments if needed, go on vacation with family and enjoy life.

    • March 21, 2011 at 2:18 pm

      Sicko was a very distorted view of the American Health Care system. I would argue that if Canada didn’t have medicare “Leonard”, myself, and the rest of Canada would have a higher net income (Way lower taxes) that we could invest during our early years, with low insurance costs. The compound interest of those investments, as well as the increased wellbeing would most definitely help everyone out if they are wise.

      If you want freedom, it can only come from being financially prudent and forward thinking. Not from social welfare and government programs. Quite honestly in my opinion, (Get ready, i’m going to drop the bomb).

      I think Leonard is a burden, his workplace mobility and choice of working at Wallmart leave him poor. By his 50s-60s he should have been at a prime age for earning some of his highest yearly income. Experience and expertise is something he didn’t value and as such he put himself in this position.

      • March 23, 2011 at 3:33 pm

        Leonard has made lots of mistakes over his life, especially financially. Like so many other people, he just isn’t good with money.

        There are all sorts of baby boomers who have next to nothing in savings besides a bunch of home equity. If housing prices fall significantly over the next few years, it’ll put a lot of pressure on the retirement of a lot of people. There could potentially be a lot more Leonards over the next decade.

        As for healthcare, I like that Canada has a public system. If someone wants to pay for better care, they can travel to a country that provides it. I’m okay with paying higher taxes for it.

        • March 23, 2011 at 7:52 pm

          Agreed, I do like the mixed public funded private paid system. However, I don’t think it deserves much credit as being the hero. It’s people like Leonard who put me in a hard position as a tax payer. His OAS and CPP benefits net him well over $15,000/ year with no contribution what so ever. While I don’t think home values will drop too significantly in Canada I am afraid that social security will be come the crutch of the many.

          Instead of thinking about how social programs are “saving” people, perhaps its time people started saving themselves. IMHO

  • March 21, 2011 at 1:26 pm

    This is a sad story but probably more common than you think. When my mom was in the banking industry she was “encouraged” by her superiors to help folks like this (in their 50’s with no mortgage debt) to free up some of their finances for exactly these kinds of purchases. Home equity loans likely crippled a lot of Baby Boomer retirement plans.

    Who wants to pay their mortgage off and then go right back into debt again in their 50’s and 60’s?

    • March 23, 2011 at 3:35 pm

      No parent wants to tell their kid that they can’t afford to help them out with a wedding or house down payment.

      Once someone has decided they need the money, it’s pretty easy for a banker to sell them a mortgage.

  • March 21, 2011 at 2:28 pm

    I think it’s very irresponsible and selfish of his kids to ask/take money from their parents knowing that his dad had to borrow against his house. I know it is a norm for parents to finanically support their kids, but it should be based on education. I hope his kids are now stepping up and helping their parents throught this hard time.

    It’s not really Leonard’s fault that he wasn’t smart. People his age simply did not have the channel and vehicles we have now to become financially literate. He was not inform, and trusted professtionals.

    • March 21, 2011 at 8:12 pm

      If the kids knowingly took the money from their parents – I totally agree with you SY – but I suspect Leonard was too proud to tell his kids he had to borrow against the house to get the money . . .

      If so, they’ll get a rude awakening if they’re expecting an inheritance later.

      Sad story.

      • March 23, 2011 at 3:25 pm

        I didn’t directly ask him, but I’m 95% sure Leonard’s kids have no idea their parents are in financial trouble.

  • March 22, 2011 at 1:29 am

    Sad story. I agree that his retirement planning was bad. Lots of poor decisions.

  • March 23, 2011 at 12:22 pm

    I like the new layout of the page. Very.. retro :)

    I also agree with SY — it’s selfish when you know your parents are in dire straits, to take money for something like a wedding. I know it’s a big deal, it’s a big event.. but $30,000 is not chump change and it put him even deeper into the hole.

    I would have said: Screw the wedding, let’s sign papers and eat some homemade cake.

    • March 23, 2011 at 3:37 pm

      From what I’ve seen with my friends getting married over the last few years, the “screw the wedding, let’s sign papers and eat some homemade cake” attitude is not normal.

      Of course, I’m all in favor of eloping. 10-20k on a huge party? What a horrible financial decision.

  • March 23, 2011 at 1:33 pm

    I agree with SY that it’s selfish and irresponsible of his kids to accept the money.

    This is a common story. As a Career Consultant, I get people attempting to re-enter the workforce after retirement because they have to all the time. Sadly, they’re competing with people just starting out their career and rarely end up with positions that will actually yield them an income they could live on.

    • March 23, 2011 at 3:39 pm

      Leonard was somewhat lucky that he only needed to make about a thousand bucks a month to be able to live. Therefore, he could take pretty much any job that he could get.

  • March 23, 2011 at 4:57 pm

    Wow! That was intense. What heart ache! Thank you for sharing this story!

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  • April 3, 2011 at 12:53 am

    And that is exactly why Social Security should not be privatized: most people haven’t a clue how to deal with a bear market. He sells his equities and moves to bonds…eeek!

    This is exactly what my father did. Like Leonard, was not an educated man. When he saw he was losing money (not in the recent crash, but in a long-ago recession while he was still living), he sold out. Then there was the time when he invested in insurance securities, which in the 1960s were returning around 30 percent. When you’re not even a high-school graduate, you don’t get that maybe a 30 percent ROI is too good to be true. He got so excited he invested most of his savings in these instruments, and of course lost his shirt.

    BTW, my father worked overseas for 10 years before Americans who were staffing U.S. colonies had to pay U.S. taxes. He was frugal beyond your wildest dreams and invested every one of his pinched pennies for retirement. His goal was to save $100,000 (which at the time was a goodly amount of money) and then retire at the earliest moment. LOL! Imagine trying to retire on a hundred grand today, even if you have Social Security…that idea was washed down the drain by the double-digit inflation of the 1970s, after he retired with what he thought was a healthy nest egg.

    Not everyone can understand the game that is stock market investing. Nor should they have to.

  • April 4, 2011 at 3:49 pm

    Great article. Sad, but poignant. Thanks for sharing.

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