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“I CAN’T GET DIVORCED.”
“But Randy, I thought you guys were moving toward one.”
“I mean, I can’t afford to. I just went to see my accountant and a lawyer.”
“And?”
“Remember, California is a community property state. Even though I made almost all our money, Sarah’s entitled to half of it. I know she was dedicated to raising Harris all those years, but wow, Steve, I’m cooked.”
“But you were such a sought-after internist. You must have had a fantastic income.”
“Yeah, usually almost $250,000.”
“So, what’s the problem? You own a beautiful home and a spiffy ski chalet, and I know you have a Roth IRA. My guess is you have about $5 million in net assets. So what’s wrong with 2.5? You planning a swinging retirement or something?”
“Steve-o, it’s not 2.5. I’ve got just $2 million total in cash and mutual funds and some bonds.”
“But what about your house here and that luxurious A-frame? There’s got to be some major bucks there.”
“Not really, even though that mountain retreat is paid off and would go for about a million. But I want to keep living in it myself, at least for as long as the separation goes on. Sarah will stay here.”
“Okay, and that house is in a primo neighborhood and worth maybe another full million.”
“You’re right, Steve. We just had it appraised for $950,000. But there’s a catch, a big one. It’s got a $450,000 loan on it. So, if I get the chalet, I’ll have to come up with half the difference in equity between the chalet and Sarah’s home here.”
“So, your take would be half of the $2 million that’s liquid, minus maybe $250,000.”
“Yup, so I’m left with $750,000 in cash. I’m 73 and fairly healthy. My parents both died at 91, so I could have almost 20 years left.”
“And the most income you can safely get on the $750,000 is about $30,000 a year. Even with Social Security, you’ll need to cut way into your principal.”
“It’s worse than that. The $750,000 will only give me a few years of a decent retirement. Don’t I deserve one after doing a thousand physicals over 40 years?”
“Yeah, Randy, you do. But you’ll eventually have to tap into the equity in your chalet as the last line of defense for a rewarding retirement. And if you don’t cool it with your lifestyle, there may even be a part-time job waiting for you. How did everything get so out of hand?”
“It wasn’t any one thing. It was a pattern. Although my parents were well-to-do, they were stingy. I didn’t live in as good a neighborhood or have the kind of clothes the kids in my high school did. Mom and Dad drove two clunkers. When I became a doctor, I decided it was going to be my turn. We purchased a charming old Normandy home and did a fabulous remodel of our kitchen and master bath. Sarah likes antiques, so we bought period furniture and invested in some art. You know I’m into high-profile cars, like my Jag. We always flew first class, stayed in four- and five-star hotels written up in Conde Nast Traveler and we ate in Zagat-rated restaurants. Steve, I have my suits custom-made.”
“I get the picture, Randy. You overcompensated for your parents’ penny-pinching with lavish spending on yourself. Now, you’re paying the piper. What can I say? I’m sorry about the mess you’re in.”
“Yeah, thanks Steve-o.”
“But what happened with you and Sarah?”
“It was just a gradual fizzle. We went from lovers to friends and then to mutual alienation. The killer for me was her dog fetish. Her obsession with breeding them required a ton of caretaking and over-the-top expense. It got to where I felt she enjoyed walking the dogs more than she wanted to walk with me. That’s when I decided to leave and live at the resort.”
“And you can’t get divorced because you’ll be left hanging financially.”
“Yup, and that’s not all. I’ve played drums in a local rock band ever since I moved up to the chalet three years ago. About three months ago, we got a new guitarist. Heather and I became friends, and now we’re really close and thinking about living together. I feel badly about not telling Sarah about all this weeks ago and plan on calling her tonight. But, Steve, I’m afraid she’ll file. I’d be broke and, frankly, a little scared. But unless I divorce her, Heather won’t live with me.”
“Oh my gosh, what a dilemma. Your money and your relationships are spinning out of control. And then there’s the whole guilt thing.”
“You’ve got the program. I can tell Heather I’m unwilling to get a divorce, and get back together with Sarah. The marriage would be very compromised, but at least it would rest on years of devotion. It would be safe and spare me from financial Armageddon. Heather is a blast to be with, but I’m afraid the honeymoon phase will fade, and I’d be left unhappy and with a barebones retirement. All this is dragging me down and my old college shoulder twitch is back.”
This conversation is a small embellishment of a recent phone call with a close friend, whose identity has been protected. Feeling materially deprived and humiliated in his youth, Randy chose to live above his means. Instead of the extravagant retirement he once imagined, he must now contend with the powerful and often conflicting forces of love, devotion, money and morality.
Steve Abramowitz is a psychologist in Sacramento, California. Earlier in his career, Steve was a university professor, including serving as research director for the psychiatry department at the University of California, Davis. He also ran his own investment advisory firm. Check out Steve’s earlier articles.
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This tale just goes to show that intelligence (smart enough to become a doctor) and emotional intelligence are two different things. Literally everybody has things from their childhood they need to deal with to become mature adults. Sounds like your friend still has some growing up to do.
Very much so. Too much CNBC, too much financial “advice” and a physician’s exaggerated sense that acting irresponsibly will be without consequence.
This reminds me of something I read once: The secret to a peaceful retirement is one house and one spouse.