Small towns and the social safety net

Take those studies about retirement savings with a grain of salt. In retirement, I won't have expenses for a mortgage, child care, college savings, retirement savings, or FICA. Yes, health care expenses are going to be higher, but all those other areas are going to be gone from our budget. Retirement planners have a vested interest in having you save (read: buy their products) as much as possible, and make a living by promoting fear.

That said, I do agree with your point that small towns will be more likely to provide support to those they know need it.

"The study found that three out of five middle-class Americans retiring now will outlive their savings if they keep the same standard of living."

The second part of the sentence, which you left off, is important.

And I would not live in a small town unless I was paid to do it.

Interesting perspective, John M. I think the key here is not so much geography but *stability* -- meaning that people who live in a given place stay put long enough to develop real relationships with those in geographical proximity.

Communitarianism, the high-falutin term for what Rod's describing, has purportedly been the coming thing, at least in leftist/New Agey quarters, for about 15 years, without ever quite arriving. Maybe that's because the economy has stayed strong enough to keep most people from descending into real deprivation. What happens to this movement (if that's what it is) if the economy goes into long-term decline while, at the same time, the population ages and more young families live closer to the financial margin?

One troubling sign: In some areas rising gas prices are endangering one of the most widespread forms of communitarian activity, Meals on Wheels programs for the elderly.

It will be interesting to see what kind of human-service support networks develop in evangelical and Pentecostal megachurches. Do they care for their elderly, families with absent parents and other congregants in need the way small-town and neighborhood congregations traditionally have? Or are their resources used up in capital spending, missionary work/prosyletizing and insulating their members from the secular world with self-contained educational and "lifestyle" facilities?

Charles: "Savings" commonly include investments; most people with 401(k)s and IRAs have far more stashed there than in cash. Until the real-estate crash, financial planners also counted home equity as part of one's saved assets. Typically, while you're working, your investments are geared to growth. When you retire, your investments are regeared to produce income; growth becomes a secondary consideration.

When I retired a couple of years ago, I sold my house and invested the equity, and reoriented that and other investments/savings to produce income. Now I'm supposedly set, at a modestly comfortable level, until age 93. If I live longer, I'll be down to Social Security and a very small pension - below the poverty line.

That's what's meant by outliving one's savings. It's a real prospect for most middle-class boomers, even those who've saved responsibly during their working lives.

Rod writes:

"I think the key here is not so much geography but *stability* -- meaning that people who live in a given place stay put long enough to develop real relationships with those in geographical proximity."

Interesting. For a while I have been playing with a notion that a high capital gains tax is a position that crunchy / Wendell Berry conservatives should support. This is counterintuitive, but it's an intellectual sore that I can't seems to stop tonguing, so to speak. Bear with me:

Capital gains is gain unrealized until the sale or disposal of a property: an increase in the value of one's home or one's ownership interest in a business is not a taxable event until one sells that property or ownership interest. Insofar as we think people make economic decisions in light of the tax obligations those decisions are likely to implicate, a higher capital gains rate will have two effects: 1) it will discourage the sort of investment speculation that we see in the market presently -- the market's peaks will be lower, to be sure, but the troughs will be shallower. 2) it will discourage the sort of speculative home ownership that has led, in the recent past, to the housing bubble, and has destabilized neighborhoods in the longer past.

Insofar as both of these types of speculation destabilize and undermine the sorts of social institutions that crunchy cons seek to cultivate, it seems to me that there is an argument to be made for discouraging that speculation by means of the capital gains tax.

To be sure, there are direct negatives: most obviously it will be harder to raise large amounts of capital, and companies will feel shareholder pressure to pay dividends, rather than increase the stock price. On the whole, I'm not sure that's a bad thing. But I'd love your thoughts, Rod.

Anyway, my point is, how are people of my generation seriously expected to start families, when by our 30s we are still struggling to keep ourselves and our parents afloat?
Posted by: Mike F. | July 17, 2008 4:09 AM

Do it the traditional way. Move in together. People can live under the same roof, sharing resources and sharing work, far more easily than adult children can assist elderly parents financially while trying to keep their own separate lives going. There's just such a cultural block against this. And the generations of families don't know how to get along with each other. For every financial challenge there is a lifestyle change that can be made to get around it just fine, most especially throughout the West where people are safe, free, etc.

Do it the traditional way. Move in together. People can live under the same roof, sharing resources and sharing work, far more easily than adult children can assist elderly parents financially while trying to keep their own separate lives going. There's just such a cultural block against this. And the generations of families don't know how to get along with each other. For every financial challenge there is a lifestyle change that can be made to get around it just fine, most especially throughout the West where people are safe, free, etc.

Posted by: emuna | July 17, 2008 3:47 PM

Emuna,
You're, right, the generations don't know how to get along with each other.

Once the extended-family-cohabitation model goes away, it is very hard to return to it. Imagine, at minimum, two couples in one household, of different generations, and possibly grandchildren. Whereas in times past the advice of elders was sought out and valued, what happens today is quite different. The older couple make demands for time and resources on the younger couple, while also wanting to be involved in the intimate details of various decisions. The younger couple is bitter at the unwelcome intrusions, and the elders do not understand why their help is being rejected. People my age can instantaneously foresee these neverending spats. That's why its sometimes ok to use your parents as a temporary respite between jobs/life phases, and to gamely deal with their meddling, but moving in together is a whole different story. If the only way to afford a family is to live in a large, squabbling, toe-stepping clan - I'll take the childless life for the time being, thankyouverymuch.