Economy could make for not-so-golden years
October 21, 2008
The Park City Senior Center was crowded Monday afternoon with about 40 people eating lasagna and meringue pie from paper plates. They had come for the center’s weekly lunch and a lecture about managing pain from home.
But the hurt these days for Park City seniors isn’t just physical. It’s also financial.
Times have never been tougher for John Gurrola.
A native of California, Gurrola, 67, worked at Bank of America in Los Angeles for more than 30 years. He retired in 1998, invested some of his savings in blue-chip stocks, and moved to Park City.
But most of his extra money went into purchasing shares of Washington Mutual, the troubled mortgage giant that collapsed in late September because it heavily invested in selling risky subprime mortgages to customers who later defaulted.
With three condominiums to keep up (two are rental properties) and the financial markets taking blow after blow, the failure of the Seattle-based bank could not have come at a worse time for Gurrola.
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The condos were once a source of income and are now a liability because Gurrola’s tenant can’t pay the rent. One of Gurrola’s rental properties is near the Tanger Outlet Factory Center. The other is about an hour away in Midvale. His wife was also recently fired from Mervyns clothing store, which plans to close 16 stores in the state.
At the same time Gurrola saw his own prospects diminish, executives at Washington Mutual saw multimillion dollar paydays after JP Morgan bought the company. One CEO, Alan Fishman, lasted just 18 days in his position at the head of the company but received about $18 million for the job, according to news reports. "All the CEOs get millions and we lose everything," he moaned after the Park City Senior Center’s luncheon Monday.
The economic crisis has called for cutbacks in Gurrola’s spending and habits. He leaves his Geo Prism parked in the garage in favor of city buses now. He wears a sweater instead of turning on the heat and tries to conserve electricity.
Still, he faces an uphill climb.
Asked to sacrifice, not spend
Stuart Monroe, 74, was surprised to hear what President George Bush implored the American people to do in the wake of Sept. 11, 2001: Keep spending. "The difference was, in previous wars, everyone was supposed to make a sacrifice," he said.
Monroe, who rents a home in Park City, likened the advent of the credit card to television, computers and information technology: They are distinctly modern phenomenons that didn’t exist when he was born.
He is yet to feel the economic squeeze from the markets. "I haven’t felt it yet because most of my investments now are fixed" in mutual funds, he said. "Where’s some wood I can knock on?" He said growing up in the 1930s has given him a generational advantage over the baby boomers, who came of age in more prosperous times. "One advantage most people here [at the Senior Center] have is we grew up in really frugal environments," he explained. "They thought us how to save and not live beyond our means."
Monroe was raised in middle-class neighborhood in Virginia and his parents struggled. His dad worked two jobs 16 hours a day. In the daytime, he laid flooring and at night he worked at a meatpacking plant. Monroe’s mom was a secretary. "My dad worked with his hands," he said. "I didn’t appreciate how hard my dad had to work. I lived in Arlington, Va., where a lot of my neighbors were generals or admirals or congressmen or in executive branch of the government. We lived in a neighborhood that was beyond our means, but my dad wanted to be there for his kids."
The family’s struggle for money, both before and after the Great Depression, was common, and his parents practiced little tricks to save money and conserve food where they could. Monroe remembers when his mom would store bacon grease in coffee tins during World War II and deliver the tins to the grocery store. "They used to make explosives out of that," he said. The fat was high in glycerins that could be used in the production of dynamite and blasting gelatin, Monroe, a former organic chemist, explained.
From an early age, saving was an important part of his upbringing. "They gave me 50 cents a week for allowance, and I had to put 25 cents of that into savings" that quickly turned into $25 bonds. "A big deal for me at Christmas was getting a second-hand basketball and a used bicycle," he said. "We used to get together as kids and go around to each others’ houses and see who got what for Christmas. That Christmas I was voted No. 1 because I got the best gifts."
What impressed Monroe later in life was the importance of investing a fixed amount of money into the stock market even, and especially, when it is down. He was 53 in 1987 when the stock market took a historic plunge. "I hadn’t done any investing up til then," he explained. "All the older people, the people who are now my age, were panicked, because their savings had just been flushed and I didn’t really understand what they were talking about."
Rather than panic, he decided to invest. His risky investments paid off in the 1990s, when the market soared, and helped bankroll his transition into retirement and his move to Park City four and a half years ago.
Today, his money is mostly in conservative investments, but he remains wary of the economic environment.
A woman who ‘never knew hardship’
Green acres was the place to be during the Great Depression, said Lee Kent, who was born and raised in Eureka, Calif. "We had a lot of mills, a lot of trees, and a lot of ranches," she said.
It was an easy life only by the most stringent standard. Her husband left her with a 19-month-old baby to fight in World War II. "We never really had a hard life," she said, "like people who came in from Oklahoma and Arkansas."
Kent remembers purchasing a gunny sack of corn in tow for 25 cents. It was enough to feed an Army. "We didn’t know what hard times were," she said.
Today, Kent lives with her daughter in Park City and collects government pension from her days as a postal worker. "Many of the people here aren’t as lucky as I am," she demurred.