Expect cost shifts, increases in retirement

The Bakersfield Californian
July 30, 2013

My client, who I will call Sam, came roaring into my office the other day. He was in a foaming rant over toilet paper.

At first, Sam did not seem to be making much sense. Resisting the temptation to laugh, listened intently to Sam until I finally figured out what had happened. Sam had been reading his Wall Street Journal when he became incensed over the July 24 story, “Toilet-Tissue ‘Desheeting’ Shrinks Rolls, Plumps Margins.”

A much-revered business watchdog, the Journal reported tissue manufacturers were riding the backsides of Americans in a strategy to lift their profits.

According to the Journal, a Kimberly-Clark official credited profits to “desheeting,” which is a way of saying the company was reducing the number of sheets it stuffed into boxes and wrapped around rolls. Kimberly-Clark is not the only “short-sheeting” manufacturer. In fact, the practice has been going on for years.

Similar “shrinking” has been reported with many other products, such as breakfast cereals. The boxes are getting smaller, but the prices remain the same. Manufacturers just hope consumers won’t catch on.

But Sam has been noticing. Since retiring five years ago, he has seen his household expenses increase beyond the rate of inflation.

That is to be expected. Costs do not disappear when someone retires. Rather they shift. For example, no longer is Sam using his employer’s toilet paper at work during the day. Instead, the stay-at-home Sam buys his own. Everything from Sam’s air conditioning bill to his grocery bill has spiked.

But the toilet-paper “desheeting” seemed to be the straw that broke Sam’s back of “understanding and tolerance.” And he vowed not to simply “turn his cheek.”

Sam ranted about going back to the good old days, when a dried corn cob or a page out of the Sears Roebuck catalog wiped Americans’ bottoms. After all, it wasn’t until the late 1800s that an industry emerged to provide us with the softest wipes possible.

And while I think he was kidding about alternatives, Sam’s message started coming through loud and clear.

Please note that Sam is not a pauper. He worked hard all his life and saved his money. He was – and still is – a good steward of his investments and his retirement. There’s no doubt in my mind that Sam will continue to buy and use “high end” toilet paper.

What Sam was really ranting about was the manufacturers’ strategy to “squeeze” the last dime out of people on fixed incomes. Combined with the relentless march of inflation and the vagaries of a fragile economy, retirees often cannot keep their heads above the financial water line.

Sam’s point: When still-working people estimate the amount of money they will need to live relatively “secure” retirements, they must figure conservatively. Allow for predicted and unpredicted costs. Expect cost shifts.

A sound retirement plan has these key elements: early and consistent savings; wise investment management; gradual reduction in spending; and realistic retirement lifestyle expectations.