Duty

Terry, his squeeze, child and the pooch live in a Vancouver apartment. “We’re stuck in one of those dog crate condos,” he says. “Getting no closer to being able to afford a place with a patch of grass for the kiddo or dog.”

The faithful blog dog read here last week about the travails facing our growing crop of wrinklies. The average income for the 65+ crowd is barely over seventy grand a year (that’s for a couple), of which at least half comes from pubic pogey. In any decent city, it’s hardly enough for a happy, interesting life.

Meanwhile old people often have a ton of net worth sitting in real estate when it could be generating income. Worse, that property costs a lot to carry – even with no mortgage. Property taxes keep swelling. Insurance premiums are insane. Condo, strata and maintenance fees never go down. Special assessments are a special surprise in high-rises. Replacing a roof, a furnace or four leaky windows can carve a big hole in retirement savings. And speaking of that, most people leaving work have a nestegg less than half the size it should be.

The big lies people tell each other: (a) my house is paid off, so I’m okay, and (b) retired people don’t spend much, so I’m okay.

But, of course, you’re not. Unless you have a fat DB pension or a chunky, liquid financial portfolio, retirement years will probably not be golden. For you, or your offspring.

Like Terry.

“My folks live in a condo mortgage free in a ritzy location in Vancouver,” he says. “Yet their income leaves them feeling unable to enjoy retirement beyond just surviving.

“I’ve been supplementing their retirement income, without their knowledge, to help out. Happy to do it as they raised me and did a lot for me and many others. However, I can’t shake the feeling that I’m sacrificing my own kid’s future somehow.  We can’t afford to buy a home, unless of course we move far from the aging parents who seem unwilling to leave ritzy town.

“When I grew up with 2 siblings, my parents owned a pretty average house with yard built in the 60s in a major city suburb.  Today, despite that same house being in need of a total renovation, I can’t afford it despite being successful in my field and having an income higher than most.

“I don’t blame my parents for any of this.  I hope to stay close to them as they age and inevitably need assistance.  But they seem completely unaware of the reality when it comes to housing options for my generation. (In my 30s). So, if I want to give my kid the same type of childhood I had, I have to ditch the wrinklies and move away.  Or stay close out of a sense of duty.  And have my child live a concrete existence.  The dog is starting to get big as well and needs to run…”

“Any advice for how to best help my parents without giving away my child’s future?  Surely there must be a more cost effective way for them to continue in retirement.  I’ve floated the idea of getting a house with a granny flat.  But even with their property value and mine combined, that’s not possible in the area they live.  Not even close.”

The lament is common. Old geezers choosing real estate security over income insecurity. Adult children feeling deprived of the housing they want, and that they remember. And now guilt. Is the first duty of parents to their children, or their own parents?

Well, time for Terry to man up.

The wrinklies in the ritzy condo have had seven decades of life to figure stuff out. Their decision to roll most of their net worth into one apartment unit in an expensive hood, populated by people with far higher incomes, was a dodgy one. It was hedonistic, myopic and illogical. As stated here often, you can always rent a roof over our head. You cannot rent a lifetime income.

So, Terry, stop with the altruism. Tell your folks you’ve been diverting income to support their unsustainable lifestyle. Reveal that this is penalizing your own family and depriving your child of the experience your parents gave you. It is generational inequity. Your highest obligation is to your own nuclear family. You intend to fulfill it.

But that does not mean abandoning the elders. Far from it.

They need to sell, repatriate the capital buried in the opulent condo and get it invested for a stable, permanent income stream. You can help make it happen. If they walk away with a million and a half, for example, that can turn into seven grand a month – enough to rent a sweet condo or house in a decent area, and get by without being subsidized.

So, go seek a property for your wife, kid and dog where you can afford one. If you need it, buy it. And don’t wait for the government to force real estate prices down. That ship sailed.

About the picture: “Here, for your approval, is a picture of our family ranch dogs, all rescues and all compatible in temperment,” write Kris and Colleen on the Prairies. “We appreciate your steady and insightful comments on the state of the economy these days, with the hope that we all can remain as calm as these 3 canine examples.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.