Friday, January 30, 2015

Old Folks' Homes

Why do old people seem so stingy?

Living here on retirement island, you see a lot of interesting things - or see things in a new light.   One interesting thing of note is how old people tend not to upgrade or modernize their homes.  Most of the houses here were built in the early 1970's, and when an oldster passes on and the house goes on the market, it often is in original condition with the avocado green appliances and wall ovens in the kitchen, and the baby-blue or pink tile in the bath.  Sometimes they have the original green shag carpeting and "paneling" in the "den".

My Dad, when he bought his last house (in every sense of the word) didn't change a damn thing.   He left the ugly wallpaper the previous owners (also old people) had chosen, and even the ugly curtains they left behind.   He didn't bother upgrading the kitchen, which had an enormous Amana "wind-up" microwave.   I am sure that thing leaked microwaves like mad, and with his pacemaker, he must have danced a jig in the kitchen every time he made popcorn.

But his attitude was, "Hey, everything works, why change it?"  - and given his tastes in home decor, that probably was the right approach.

Our generation is a little different.    A friend of mine in Florida bought a nice home there for nearly $800,000.   The previous owners had just updated the kitchen with new cabinets, granite counter-tops, and brand-new black appliances.   They decided to tear it all out and start over.  She didn't like the wood they chose for the cabinets, the color of the granite, and she wanted stainless steel appliances.   So a wrecking crew came in and smashed the countertops with sledgehammers and tore out brand new cabinets and took it all to the dump.

Our generation is a little different?   Our generation is a LOT different.   Our generation is insane.   And the experience of my friend in Florida is not an anomaly.   We have other friends who did similar things to their kitchens - tore out perfectly good cabinets to replace them with very similar cabinets.   One friend did a job that really changed nothing (but at the same time changing everything) and I made the mistake of failing to notice the $40,000 "improvement" they had made.   To me, the cabinets and appliances and counter-tops looked not that different than what they had before.   And I failed to understand why they remodeled until they mentioned that a neighbor across the street just had their kitchen remodeled.  Keeping up with the Joneses - Status rears its ugly head once again.

But once you retire on a fixed income (such as social security or a pension) or on your savings (410(k) and/or IRA) or a combination of both, you start to understand why old people think they way they do.   Throwing money at a house, you realize - after owning several - really doesn't do much for you.   It adds little or nothing to the resale value of the house - maybe a fraction of what you spent.   After five or ten years, the "value" of a new kitchen or bath largely evaporates.   It is now just another old kitchen and old bath.

As a retiree, you have to insure that you will have enough money to last the rest of your life, so suddenly the idea of dropping $30,000 to $50,000 on a kitchen remodel seems kind of foolhardy.  Moreover, you realize that this may be the last house you own and when you leave, it will be feet-first, or to a retirement home or assisted living.

But mostly, I think, you realize that a house is just a "thing" and not an end in and of itself.   How nice your bathroom or kitchen is (or, the new thing, laundry room) does not reflect on who you are or what your real values or worth is.   In fact, that sort of behavior starts to seem horrifically repellant.   Yes, it is nice to have a comfortable, safe place to live that is not a maintenance and cleaning nightmare.   But the need or want for a "look at me!" home starts to fade, really fast, particularly when you have to pay taxes on "look at me!" and clean all those bedrooms and baths, just from the dust that accumulates.

Of course, eventually, houses need to be remodeled.   And at this point in time, we are seeing a lot of residents leaving the island here, feet-first.   The houses are being snapped up by some investors or vacation home buyers, and being remodeled and re-done - some rationally, some irrationally.   We bought our home after a local Real Estate Agent bought it (in very bad shape), gutted it, and remodeled it.   Finally, I thought, a house I don't have to work on! 

Others are buying and remodeling homes for their own retirement plans - often spending enormous sums in the process.   A nice couple down the road spent $500,000 on a home here (which is at the high-end of the market) and then threw at least another $100,000 to $150,000 at it.   They won't be able to get that kind of money out of it for quite a few years.   So I hope they plan on retiring here for a long, long, while.

Still others have bought homes, remodeled them and decided to use them as vacation homes, coming down to visit for a few weeks a year.   While this is a nice luxury to have, it is a staggeringly expensive luxury.   For the costs involved, you could stay at a first-class resort and have room service every day.   Vacation homes are a dodgy "investment" unless you can rent them out with regularity and flog the snot out of them.   But then, they get worn out pretty well and if you plan on retiring there, you'll end up having to blow out and remodel the whole place, top to bottom.

But I understand now, why old people don't bother wasting money "improving" their homes and why they hang on to older cars instead of constantly trading-in every few years.   It costs a lot less money to live this way, once you decide that you really don't care what other people think of your bathroom or what car you drive.

And right there is a little nugget of truth that perhaps someone in their 30's should think about (but of course, will not).   Live like a retiree and maybe someday you will be able to afford to be one.