Retirement planning for parent

[illgetthere]

Reverse mortgage?
How long until it is paid off, and how old is she now?

[pierogigirl]

If she won't make changes now, will she sell and move into the condo you buy?

I don't mean to sound harsh, but if she won't do anything to plan for her retirement, I don't think I'd feel responsible for solving the problem on my own, especially if it meant compromising my own ability to save for retirement and/or college for kids, or other financial goals.

If you buy a condo, make sure it will be easy to sell when the time comes, if you don't want to keep it. Are there retirement communities/assisted living apartments where you live? I don't know how they work, but if so, look into how they get paid for (can medicare/medicaid -depending on income- be used to pay for some of it?) Would she go to a retirement community? Does she have a close friend that could move in with her to offset the cost of her house or to try to pay it off before she retires? How many years before retirement are you looking at?

[scm1011]

My mother is 72 and saved nothing for retirement. She owned her condo outright and sold it last year to live off the equity plus her $1200 social security. She has a horrible spending problem and I've been trying to reign it / help her budget / make a plan for the last decade with zero luck.

When she sold her condo she gave me the $160k she cleared to invest / manage and I've managed to put her on a budget that way. Its still very little to live out the rest of her days on in HCOL (her meager 1 bedroom is $1500 a month). She works 2 days a week at minimum wage for spending money. She'll do that as long as she's able. She knows that moving in with us is never an option (for the same reasons as yours) and if she runs out of money I will not bail her out. Harsh, but I've been trying to prepare her for this reality for years and she has not been receptive.

She buys the kids lavish clothes / gifts (most recently she bought my 3 year old an $80 Ralph Lauren sweatsuit) that I promptly return and add the money back to her account. So, I'm doing what I can but will not be responsible for her poor decisions.

[imojoebunny]

Your mom won't be worse off than a lot of retires. She will have to move, or run through her savings, and then have to move somewhere even cheaper, long term. There is a reason that a lot of retirees move to smaller towns and retirement areas. It is a lot cheaper to live. We have a cabin in a town popular with retirees. Many people move there from other places, and live on less than $36K a year in household income. It isn't a baller lifestyle, but they are comfortable and there are groups that do things together and help each other out. They cash out of their houses in more expensive cities, and can buy a decent place for as little as $150K or rent for under $1K per month. The average household income for retirees, many of which have two people is $48K. The average income in this town is $30K.

She might be willing to rent a room, which could allow her to stay in her home, and also, provide another person to help out with chores, and such and/or continue working, part time, in a different job. I have a friend who got a job at a grocery in her mid 60's, after having her own small business for years, when her husband of 40 years left her and ran through their accumulated retirement savings before dying. She has a long time roomate in her home, who has a den and bedroom on the lower level, so they really only share the kitchen and laundry. She recently retired from her grocery job at 78 years old, and should be ok staying in her now paid off home, with only social security and the rent. Dream retirement, it isn't, but she is happy and enjoying life.

[Cappy]

Dec 16, 2019 11:21:18 GMT -5 spearmintleaf said:

Cappy why are they like this???

I know, right?! I ask myself this all of the time. Boomer optimism? Denial? No idea. 

[sloan]

If she has 9 years left of working I would have a really time reconciling that she’s not willing to make any changes now and comfortable sticking you with some of her retirement costs. I don’t know how to get her to see that and make changes, but I’m frustrated on your behalf.

At the very least I’d want to work out what her $3000/mo (which isn’t shabby!) budget looks like in retirement and what she’s spending now and get her on board with making gradual changes to get down to that number (or that number plus the expected difference in housing costs) at a rate of like 10%/year. My worry would be that if she’s spending say 5k/month now that suddenly switching to 3k/month all at once will feel impossible for her and that you’ll end up covering a lot more than you anticipate. Plus obviously anything she cuts now gives her a stronger buffer for actual retirement.

[k3am]

This thread makes me very happy that my mom has been planning her retirement and eventual (but hopefully not anytime soon!) death for years now. She's been retired for.. 6-7(?) years now, and I have zero concerns that I'll be in a position of needing to assist her in her retirement. My mom is solidly middle class at best, but she's downright frugal. We actually had a to have a come to Jesus talk to her about the fact that we would rather her spend $15k of "our inheritance" on remodeling her bathroom so that she didn't need to risk falling getting into a tub.

DH's parents seem to be the same way themselves, although we know they've leveraged their home (no idea to what extent, but I don't think too substantially) in order to free up cash. But they are comfortable enough that they haven't needed to discuss finances with any of their children.

[goldengirlz]

Dec 16, 2019 11:21:18 GMT -5 spearmintleaf said:

Cappy why are they like this???

Do you watch The Patriot Act? Hasan Minhaj covered this topic this past weekend.

Part of the issue has been the shift from pensions to 401ks. Many, MANY people thought their companies would take care of them in retirement and then got the rug pulled out under them in the 1980s and ‘90s. As much as the Boomers drive me crazy, I have some sympathy on that point. Our social safety net is atrocious.

THAT SAID, they had 30-40 years to get with the program. AND AND AND Millennials will likely be the ones to bail them out — we’re a massive generation. Unfortunately, the generations coming up behind us could well be much smaller. So if we bail out our parents, instead of planning for our own future (both on a societal as well as personal level), who’s going to help us? And we might not even have a solvent Social Security at that point.

Tl;dr: Everything sucks and no one should feel smug about this.

[njohnson1972]

OMG! This sounds like my mother. I love her, but she can't save a penny. I swear if she has an extra $5, she has to spend it. She gets $1,000/month in SS. She helps with my kids, so I bought her a house (used $30,000 I inherited from my father for the downpayment) and pay $400/month. I also pay for her car at $400/month. I pay for her meals when we eat out. I give her $1,000 for Christmas. I pay for her if we go on trips. She pays for her own utilities, medicare (though mostly covered by medicaid), and car insurance. I even put her name as the beneficiary on my work paid life insurance policy so that the house gets paid off should I die first. She did everything she could for me, but she never learned to save.

One thing on the SS estimate, the $2,500 is based on today's value. By the time she is 70, it will be a little bit higher with inflation increases.

[Deleted]

LMAO that 3K is meager. That's less than my take home pay after retirement, health insurance, savings and taxes are paid and I live in M-HCOL. I would definitely be blunt with her about you having to support her and that she needs to make plans now so she has a nest egg.

I told my financial advisor how much I give my mom a year (she's still working). I told him I would not change it and that it would increase with her retiring. After retirement, she will likely need to work as a substitute teacher in our local school system to make ends meet. Her lack of finances give me a lot of anxiety. I know and am planning on supporting her thru the rest of her life. Likely eventually paying her housing costs like you are thinking of.

I just watched the Patriot Act on this yesterday and it spoke volumes to me. I don't even know what I will do. Find a place that has a MIL suite and set firm rules about coming over to the main house? Pay for her apartment at a 55+ community? I'm not sure what I'd do if she were to become permanently disabled and needed assistance.

[sillygoosegirl]

Is the mortgage itself $1800/month, or is that PITI? And is it fixed interest rate? If she's not willing to move out of the house now, do you think she will ever be willing?

After 9 years of inflation adjustments, it's likely that $1800/month will only be about half of her income. Which isn't great, but also isn't impossible either, if it includes taxes and insurance and her transportation costs aren't awful.

I wouldn't run out and buy a condo for her any time soon (the fees on condos can be insane), but you've got 9 years to talk her into more sensible housing, so I'd work on getting her to warm up to that idea. If she isn't willing to move now, it seems likely it's going to be a hard sell in the future too. Talk up the benefits of having an elevator rather than stairs, no exterior yard work or maintenance, living in a location where it's an easy and affordable bus or Uber ride to places she'd want to go, so that if there comes a time she can't drive, she won't need to.

If she really doesn't want to move ever, and isn't motivated to save, maybe you can talk her into paying off her mortgage on a different schedule. If she added maybe $500/month toward the principal on payday, she might be able to pay it off in 10-12 years and not have a mortgage in retirement. For many people that's much more motivating than saving.

[jlt19]

Well we're on the other side of things, in that MIL was warned for 10+ years about her potential future and did nothing.

Divorced in 2000, owned a nice $300k massive house outright in a LCOL. Got $100k/yr alimony for 11 years. Refused to work. Refused to save. Refused to not spend money on shit & gamble, all while running up cc debt.

2013 finally saw some light and sold the house. Budgets were created with a job being part of it. Nope, refused to work.

Made it one year in a different LCOL town renting a house (apartments aren't big enough for all her shit) then moved to Colorado with a "friend". That lasted 2 years then she moved back to town #2 and in with SIL. Finally after a year there, she got a job. At Academy sports, making min wage I assume.

After three years of trashing SILs basement, never offering to watch kids, pay any bills, clean up after dinner, and SILs marriage almost falling apart, she rented another house.

We're one year into that and as we learned on Xmas Eve, she's apparently a raging alcoholic who still blames everything on FIL (20 years later).

She's nearly 70. I have no clue what will happen when she can't work. I don't want to help. But I also don't want it all to fall on my two SILs. I have no sympathy left in me. SIL (whom she lived with) is convinced she's a narcissist. Not like the arrogant kind, but the everything revolves around her kind. There is NO getting through to her. Many have tried. All have failed.

Wow, apparently I needed to get some stuff out! Point is, I commiserate with you. Parents are a real mind fuck.

[Accountingcat]

I commiserate with you. I'm basically figuring out the same thing with my mom. I think you are on the right track...

Option 1: Buy a cheap condo/house that you can afford and treat her like a tenant. No destroying the housing and pay utilities and/or low measly rent to you. This is the route I'm planning on doing too. I'm going to make my mom pay $200/month to me and I'm using it as a reserve fund for repairs or updates as needed. I figure even if I lose money in the sale of the condo in 20 years, it's still gotta be cheaper than rent or the other options.

Option 2: Research senior apartments now. I've found a few around me that are affordable on SS but the wait lists can be 3+ years long. Some work on a reduced rent and lease and some have a buy in. From what I've saw the buy in is around $200k but it's guaranteed living and care for remainder of her life. Ours have levels of care so she could start in an independent apartment and slowly move into full time nursing care as needed.

I do think you have to have the conversation with her that she will have to move and follow your plan or be homeless.

[fryjack2]

Its so tough to try to talk some financial sense into someone who doesn't want to hear it. I'm not sure what I would do in your shoes.

My own mother makes questionable financial decisions but accepts no help of any sort ( we mostly offer advice because she lives like a pauper by choice) from anybody.  Her plan is to just walk into the ocean in Alaska once she becomes any kind of "burden".  I 100% believe she would do that. Won't tell anyone anything and just disappear one day. 

[scout8]

I wouldn't do anything now. Her retirement is still several years away. The amount she will be getting in retirement is a decent amount, just not enough for those house payments. It's certainly not meager. At that point, she will either have to sell the house or she won't make the payments and the bank will foreclose. She will then be forced into finding a lower cost place to live. It isn't as if she is going to be homeless with $3000/month income.

[niq]

Any idea how much equity she has in the house at this point?

If you could get her to sell and move into one of the senior apartments, she'd be in decent shape. At that income she probably doesn't even need the Housing Authority buildings with super cheap rent but long waitlists. She could probably afford the ones targeted at medium income retirees, those are $1000-1500/month here, average 1BR rent is $2K.