Believe none of what you hear and only half of what you see, poet Edgar Allan Poe is said to have recommended. He might well have advised you to withhold belief from part of what you read as well.
This struck me recently when I dug into a Wall Street Journal piece titled “The Dream of a Florida Retirement is Fading for the Middle Class.” As a recent transplant to the Sunshine State, I tend to read articles that focus on life in my new home. My wallet has held the driver’s licenses of many states as well as our nation’s capital—California, Washington, Virginia, D.C., Connecticut, and now Florida.
No place is perfect. Each offers charms. Every one comes with a down side. That’s life. But living in a middle-class town in Forida, “for rent” signs at $1,500 a month struck me as a bit of a reach.
So, I dug in with interest, and, to my surprise, the reporter somehow neglected to focus on the middle class. In fact, after bouncing between high-net-worth couples and mobile home parks, the piece ended focusing on Josiah Hadly III, an 87-year-old man who, after working a series of jobs including “service station worker and security,” retired to a mobile home in Florida from Pennsylvania eight years ago. He recently lost his wife and is facing rent increases on the land on which his home sits.
Hadly gets by on his Social Security check of $2,400, withdrawals from a “small retirement fund,” help from family, and some cash from the sale of teddy bears he makes. (Hopefully the article kicked up some demand for those bears.) “Florida doesn’t really do anything for me any more,” he says. The reporter ends this story on this touching note.
The point of the essay isn’t to explore the affordability of Florida. There’s no doubt that people like me moved in and pushed up real estate prices. (The 2021 and 2022 spike in the cost of everything didn’t help either.) “Flo Grown” locals, as they like to advertise with decals on jacked up trucks, may resent the change. I’ve heard “Yankee Boats,” disparaged by more than one Flo Grown fisherman.
I write this piece because I think Mr. Hadly provides an important lesson that we may all benefit from keeping in mind. First, he’s obviously not “middle class,” as the article implies. Head to your favorite research tool—i.e. AI tool—and ask it to define middle-class in the United States. Its answer will not include a person with less than $30,000 in annual income and few assets. That doesn’t make his case any easier, or less sad. It does mean, however, that it fails to support the author’s thesis.
Here’s what happened. Mr. Hadly was living a comfortable, but not a middle-class lifestyle. He had his Social Security check and his wife, who is now deceased, was cashing a monthly check as well. (A spouse is entitled to, at minimum, half of the full retirement age benefit of his or her spouse. This paid the bills with likely a little left over. When she died, her Social Security check stopped. The household income dropped by a third.
The article notes that Mr. Hadly’s main struggle is paying the rent on his land. (This is analogous to property taxes and HOA fees for middle-class people who own the land under their houses and condos.) Her check paid that bill.
It’s gone.
Big problem.
I’m not sure where in the United States Mr. Hadly is going to be able to live a middle-class lifestyle on $2,000 a month. But I’m certain it’s not possible in any of the areas in which The Journal’s readers tend to live.
Here’s the financial planning lesson—the reason I’m writing this essay. There is always a loss of household income when a spouse dies in the United States. The smaller Social Security payment evaporates. This must be anticipated and, if possible, hedged against. For many middle-class Americans, the loss of income is offset by loss of discretionary expenses, such as extra car insurance, restaurant bills, and travel expenses, just to name a few potential adjustments.
But working people like Mr. Hadly tend to use most of their income for fixed-cost, basic expenses, like property taxes and utilities, and don’t have discretionary expenses to adjust. He’s facing tough times precisely because he and his wife were not living a middle-class lifestyle. They needed all their income to afford the basics.
The saying “two can live as cheaply as one,” does tend to hold when one is scraping by. It is a strategy that, when well deployed early in life, creates a lifetime of financial success. It has at least two corollaries. The first is that “two can also live as expensively as three,” as I’ve found can also be the case. The second: “one can’t live on two-thirds of the income it requires to support basic household expenses.”
This is the sad reality that the reporter uncovered with Mr. Hadly. It has little to do with Florida in particular, but we’d all be wise to keep it in mind when we build our retirement lifestyle.