Message-Id: <>
Date: Sun, 4 Oct 1998 19:26:44 -0700 (PDT)
From: Tom Gray 

Enough Is Enough

October 4, 1998

When Enough Really Is Enough

The New York Times [p. BU11] {requires payment now}

Elton Pasea is a mutual fund salesman's worst nightmare.

Pasea, 76, a native of Trinidad, lives quite nicely in Nederland, Texas, on $1,200 a month: $700 from Social Security and $500 from a union pension. He has never owned stocks, bonds or mutual funds. His life savings of $33,000 are invested in certificates of deposit.

He is, he says, having the time of his life. He even manages to save some money, but it goes into the bank. "I don't know anything about stocks," said Pasea, a widower. "I've never even considered them."

And he apparently has never considered that, according to projections by mutual fund companies, he should be eating cat food. Or at least wallowing in financial misery, sorry that he didn't take the companies' advice and save more.

He doesn't have a million-dollar nest egg, and his income isn't at least 70 percent of his pre-retirement figure. That's what the projections say he needs. How can the poor wretch possibly be having a good time?

The reality is that the Elton Paseas of this world are living proof that many such estimations of retirement needs are self-serving, the product of an industry that has a vested interest in convincing people to save as much as possible -- in its mutual funds, of course.

Fred Waddell, a money-management specialist and associate professor at Auburn University, calls many of the projections outrageous because, he says, much of the data on which they are based are unrealistically inflated. He accuses the fund industry of "fear selling."

Nevertheless, many Americans have bought into the slick sell as they approach the final decade or so of their working lives.

Over the years, of course, the postwar generation has been famous for spending, not saving. So, in a panic, these born-again savers are playing catch-up, pouring billions of dollars into mutual funds and stocks and helping to fuel the bull market of the 90s.

They watch every twitch of the Dow. Their angst is palpable. When the market slumps, they joke about having to work until they are 80.

Well, perhaps these folks should lighten up a bit. The truth is that if your home is paid for and you are willing to move to a relatively inexpensive area of the country, you won't need nearly as much money in retirement as you might have been led to believe.

If you live in a high-cost, high-tax metropolitan area in the Northeast, for example, calculate how much of the money you spend goes to maintain yourself in that environment -- and how much you spend on work-related items like parking, commuting, clothes and lunches. Stop working and move to a lower-cost area and watch the expenses disappear.

Not to mention taxes. Nine states have no income tax: New Hampshire, Florida, Tennessee, Texas, South Dakota, Alaska, Nevada, Washington and Wyoming. In addition, Delaware, New Hampshire, Alaska, Montana and Oregon have no sales tax.

Be careful, though, of property taxes. You might be willing to settle for a state with a modest sales or income tax if property taxes are low. The October issue of Kiplinger's magazine compares these kinds of data from across the country.

And if you have frugal inclinations, you could be in a for a pleasant surprise. Just consider Pasea.

He retired to Nederland on the Gulf Coast in 1984 after 41 years of roaming the world as a merchant seaman. He wanted a small town and a warm climate in which to indulge a lifelong passion: bicycling. He rides every day (4,000 miles last year alone). He takes a couple of big bicycle trips a year -- one of them is usually in Europe -- all within his annual income of $14,400.

He doesn't have many health-related expenses. Wiry and fit from all that riding, he also watches his diet, which consists mostly of fish and vegetables, and has never smoked.

Pasea's house is paid for. If it needs repairs, he usually does them himself. Texas has no state income tax, and his property taxes run a little less than $400 a year. His utility bills average $100 a month. He drives a 1984 Nissan with "only" 216,000 miles on the odometer, so at some point he may have to dip into his savings to replace it.

His total expenditures in July were less than $500. This left him enough money to buy a plane ticket to Vancouver, British Columbia, where he spent three weeks in August with a friend. "It takes very little for me to live," he said.

But he does not stint when it comes to bicycles. He has spent about $3,000 on his two high-performance road bikes and related equipment.

Music is another passion. An amateur musician who used to play the clarinet, Pasea sometimes splurges on CDs -- modern classical (his "first love") and jazz.

And the rewards of such a Spartan life style? "I'm the happiest guy in Texas," Pasea said.

Date: 	Tue, 6 Oct 1998 09:46:20 -0400 (EDT)
From: "Beverly W. Shimada" 
Subject: Re: Enough Is Enough

I had the pleasure of reading this article on Sunday in the NYT.  I agree,
it is refreshing and inspiring.  I would like to note, however, that there
are differences between the situation Mr. Pasea's generation was in at the
beginning of retirement, and where we (baby boomers) will find ourselves
at that point, that are essentially beyond our control, and which require
more proactive retirement planning on our part than was required by Mr.
Pasea's generation.

Mr. Pasea has income of $700/month from Social Security, and $500/month
from a pension.  In spite of having worked continuously my entire adult
life in professional, reasonably-paying jobs, I have no pension coming.  
For me to have an income of $500/month, with an interest rate of 3%, I
need to have about $117,000 in savings (I'm assuming I live 30 years after
retirement).  Furthermore, Mr. Pasea does have SS, and I am far less
certain that that will be available to me.  Add another $164,000 in
savings for me to ensure that I have just the SS income (forget about
Medicare), and now I need almost $300k.  Finally, Mr. Pasea enjoys
excellent health, in part by his own efforts, and in part by luck,
heredity, etc, which cannot be guaranteed to all of us.  Health care can
cost tremendous sums even under Medicare.  He may have also
employer-provided health benefits beyond Medicare not available to me.  I
put this all together and I figure that to live Mr. Pasea's life style, I
should have at least $500k socked away before I retire.


> > >       By FRED BROCK
> > >       The New York Times [p. BU11]
> > >
> > >   Elton Pasea is a mutual fund salesman's worst nightmare.
> > > Pasea, 76, a native of Trinidad, lives quite nicely in Nederland,
> > > Texas, on $1,200 a month: $700 from Social Security and $500 from a
> > > union pension. He has never owned stocks, bonds or mutual funds. ...

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