Down the Up Escalator (24 page)

Millions of other retirees found their portfolios falling rapidly too. Like Henrietta, many people with individual retirement accounts and 401(k)s had simply checked off boxes on forms they got through their employers. Under the management of brokerage firms that they hadn’t chosen, their money grew far more than it would have if they had put it into insured bank accounts. Yet they seemed to have only the vaguest understanding that they were not savers or old-fashioned pensioners but investors. During the week of the crash I met a man on a bus who reminded the people around him about 1930s movies where “a guy in a top hat grabs the telephone mouthpiece and yells, ‘Sell! Sell!’ But I don’t know who to call!” I imagine he eventually reached someone who advised him not to panic.

Of course many professionals representing banks, insurance companies, corporations, pension funds, and really wealthy individuals (that is, the investors who control the overwhelming bulk of securities) must have ignored such advice, or the markets wouldn’t have plunged. But millions of others stood paralyzed like the proverbial deer in the headlights while their portfolio wealth declined 30 to 50 percent.

I’m going to leave Henrietta frozen like that for a while and talk to a couple of other modest investors in their later years.

“If You Give It Away, You Don’t Have It”

An author I know heard that I was interviewing recession victims. She herself had been helped over a rough period by a blue-blooded and generous woman who now might qualify as a victim.

My writer acquaintance had been living in the suburbs when her husband suddenly died, leaving a messy will. His children by an earlier marriage claimed the house; they even had the electricity turned off. Perhaps the author had some legal recourse, but this wasn’t the time in her life for a draining battle. She’d just gotten a book contract and wanted to get on with it.

At that moment Prudence invited the writer to move to her Manhattan apartment, explaining the modest rent by saying that they would “share” the place until Prudence sold it. But Prudence made only occasional trips to Manhattan from her Massachusetts home. Not only that, but at the height of the real estate boom Prudence postponed selling the apartment for the full two years that it took the writer to finish her book. Then, and then only, did she put the
place on the market. Fortunately, it sold within a week because the housing bubble was already quietly deflating.

Prudence put her half a million dollars from the apartment sale into building a new wing on her Massachusetts house, outfitted for her old age “but so stylishly,” my writer friend said, “that you don’t notice the grab bars, wide doors to fit a wheelchair, special bathtub for codgers.”

The first use of the new wing was another act of benevolence. When Sara, a truly penniless writer, began suffering from a lung disease, a regular cleaning woman appeared to keep her apartment dust-free. When the disease advanced to the point that Sara needed oxygen and could no longer walk the stairs to her own apartment, Prudence transported her to the codger wing, where she sheltered and fed her with such self-effacing care that Sara was able to work there for six months.

Then came the financial crash, and suddenly, according to my author informant, “Pru’s financially savvy son tells her that her base expenses—taxes, maintenance of house and sixty acres, heat, car, et cetera—are more than her income, which is now down to nothing. Everything she spends is coming out of capital. Now she’s trying to rent half the house to help pay for expenses.

“She was always the most generous landlady, always arriving with lovely stuff from the bakery or a book she thought I’d like. Now she’s eking it out. I know you’re discreet about all this. If it fits what you’re doing, I can ask Prudence if she’d talk to you.”

Frankly, I hadn’t envisaged the typical recession victim as “eking it out” on sixty acres in one of the wealthiest communities on the Eastern Seaboard. But to someone of inherited wealth, having to “dip into capital” is bound to be distressing. Besides, I was curious.

Prudence picked me up at the train in an old station wagon. She was wearing gardening boots and loose clothing that could pass for pajamas. Her face beamed with cream, butter, and the benevolence she was known for.

The house was as lovely as I’d heard—the new wing airy and inviting, the old wing cozy and inviting. Both blended unobtrusively into the New England woodland that surrounded the house. I complimented Pru on the renovation.

The original plan, she explained, was to be able to offer the old wing as a free home to some person or family who would help her when she became less self-sufficient. “Someone to bring hot meals to me the way I did for Sara.” But because of the stock market crash, the house would now have to become income producing. She’d already had a couple of short-term rentals.

While Pru bustled to set out a cold lunch (amid apologies), I looked around. On one wall I noticed a set of Audubon prints, on another, a group of dark, 1830s-style portraits. “Your ancestors?” I joked about the stiff-collared fellows in their gilt frames.

“This one fought in the Revolution and became a banker. This one we don’t know that much about, except he doesn’t seem to have been a nice person. And Thomas W. was a lawyer and banker in Philadelphia. That’s his fire bucket.” She pointed to a corner of the room.

It turns out that one side of Pru’s family came over on the
Mayflower
and the other was sent to help govern the Massachusetts Bay Colony. I looked again at the old bucket in the corner and realized that a lot of what I thought of as flea-market treasures scattered around must be family heirlooms.

As for the Audubons, one of her ex-husband’s forefathers (they
were from a richer and newer old family) subscribed to the original set in the nineteenth century. “I think you’ll enjoy this detail,” Pru said, and described how her husband’s generation divided them up. “They dealt them out facedown like playing cards, one for you, one for you, one for you. Seventeen each, I think. These”—she pointed to the long-legged birds on the wall—“are the ones we got. My husband left them with me in exchange for the contents of the wine cellar.”

After lunch we moved ahead another hundred years. I asked Pru about her parents, and she brought out the 1930s housewarming album. Their estate looked out over Long Island Sound, and I could almost hear the waves under the orchestra as guests danced beneath hanging lanterns.

“In the photos my father looks so happy and confident, my mother so beautiful. Look at them greeting the guests. It’s like a Fred Astaire movie.”

“Like the Great Gatsby!” I said, staring at the men in evening dress and the women with Erté gowns and marcelled hair.

“Grandfather started X [a company whose name you will certainly know], and it was a family firm till it merged with Y [you’ll know that name too]. Father was a director. But he opposed the merger so strongly that he left the company and sold all the stock in the middle of the Depression. Then there were his own schemes.” My husband recognized Pru’s father’s name in connection with a warplane he developed but couldn’t sell to the government.

“At the height of his financial panic we were living on a private beach of over a mile in a huge house with horrendous expenses,
and Father started running around the mansion turning off the lights. With personalities like ours, reality doesn’t always sink in quickly enough.

“By the time I was eight or nine, all that”—she gestured to the album—“was over. But wherever we lived, the housewarming album was always on the piano. It was the Shangri-La of happy marriage and great prosperity.”

Now we were up to the present, and I thought it would be uncomfortable for Prudence to talk about her own finances. In fact, it was, but she was determined to learn how.

“When I grew up, it was normal to be rich and ‘we don’t talk about money.’ Women certainly don’t. That’s why Sara and I decided that we will always talk about money and use the real numbers. It was hard at first, like using dirty words.”

Hard as it was, Pru did her best to tell me how she lived before the crash and how she lives now in real numbers.

“Before the crash I took $2,500 a month, and if I needed to paint the house—that was $20,000—then I just ask them to sell something.”

“Them” was a firm created in the nineteenth century to handle her family’s investments. It would accommodate Pru’s onetime expenditures by selling some equities. A frequent category of onetime expenditure was purchases from local artists or the kinds of benevolences that I’d heard about. Pru didn’t seem to engage in the formal charity that gets one’s name on letterheads. In her own words, she simply “saw what needed to be done and did it.”

“One year I spent $30,000, well, almost $40,000 on charity,” she admitted. “But in the nineties my money in the stock market tripled. So you could give it away, and it would replenish itself.

“By 2007, I realized that things weren’t going up by 30 percent
anymore. Before I deposited the money from selling the apartment, I had about …”

Pru tried sincerely to come up with her net worth. She’d remember things like the stocks her father-in-law handed her personally over the years—then couldn’t recall whether they’d been sold or not. As she said, she was brought up not to talk or think about money. But by her best effort she came up with a figure of about $600,000.

I suspect she’d find other bits of wealth tucked away here and there if she looked. Pru never, for instance, considered the cash value of the Audubons, the ancestors, or the first-edition books she’d pick up usually meant for some acquaintance who might like them.

“But then,” she recalled, “between September ’08 and November ’08, it dropped down to under $400,000. By the speed it was dropping, I realized that I was looking into the abyss.”

“So what did you do?” I asked.

“I quickly canceled my cell phone and all my newspaper and magazine subscriptions.”

I let out a laugh but swallowed it. “I’m sorry, I was just thinking about your father and the lights.”

In her own panic she phoned her son to help her get a grip on her finances.

“My son told me that I did not have an ‘income’ as in a Jane Austen novel. I had a finite amount of money. And if I kept spending the way I was spending, then in three years I would have to sell the house and go live in an apartment.

“He was furious that I had made no investments for steady income. What I didn’t realize was that everything I had was in
stocks. But I can’t sell while the market is down like this. If I did that, I’d have to take a permanent loss.” As her father had done.

“My son made a point of letting me know that he and his partner—he’d started some companies in Japan—had problems too. He couldn’t be in a position of bailing me out, but he was willing to put in a lot of work helping me in my reformation.”

So Pru and her son got serious about budget cuts.

“I decided to mow only half the lawn and just make pathways through the rest.” The gardeners would now come every
other
week. Pru also decreased the cleaning woman’s hours. “I asked if she wanted me to find her other customers, but she said she was fully booked. That made it easier.”

Other cuts were more difficult. “I believe in supporting the local economy, and the pharmacist was already hurting. But the stock market crash hit just as I fell into the Medicare gap. I was spending over $500 a month on drugs … One anticancer drug was $350 a month. I asked my doctors did I really have to take it, and they said yes, if I didn’t want to have cancer.

“So in January I switched all my prescriptions to a mail-order plan where you get three months at a time. And I’ve never gone back to the pharmacy,” she said with remorse. “I’ve always believed it’s important to bring your business where it helps. But this is the sort of impulse that has been slapped out of me.”

Less than a year later I was in Pru’s home with my husband as a weekend guest.

“Wow, white tea!” I cried when I spotted the large silver bags
from Upton. I was merely thinking about the different teas I’d get to try, but Pru took it as a comment on her profligacy.

“I was so tired of being penurious,” she apologized. “The stocks are up, so life can go back to normal in little things.”

“So what are you back to spending on?” I asked, pulling out my notebook. What a bore I am. Money is Pru’s least favorite topic, and I was there on a social visit. Still, she obliged me by listing some recent indulgences.

Her home was going to be on a house tour for a local charity, so she’d fixed the lightning rods. “They were actually falling over. We pulled out the copper and reused it, but it was still $4,000.”

She’d also refinished two silver pieces—“one of my father’s racing trophies and a candy dish.

“The man I brought it to said the dish was Russian, 1883. He turned it over and recognized the name of the maker from the St. Petersburg area. And the sailing trophy was Tiffany’s, but it wasn’t from the 1930s—that’s when my father raced—it was probably made in the 1880s. He said they mass ordered them and put dates on later.

“It was such a delight to listen to his esoteric information that I never even thought to ask what it would cost. The bill was $640. The Upton’s tea order came to $180.”

My husband asked if items of that size could really affect her overall security.

“They most certainly do,” she said. “When those bills came, I had to take money out of capital and put it in the checking account.”

In Pru’s family circles “dipping into capital” was a sign of moral weakness and often imminent ruin. “I must train myself to always ask, ‘How much will it cost?’ ”

————

At the start of most dinners Prudence says the same brief blessing: “Thank you for food, thank you for friends, and make us mindful of the needs of others.” When I admired that last clause, she said that she’d picked it up from a retired minister friend. “But with the recession he switched to ‘make us mindful of the poor.’ ”

“I don’t like that as much,” I said.

“Me neither,” Pru agreed. “I told him I felt singled out now that I’m about to be poor myself. He’s changed it back.”