Search found 283 matches

by DC3509
Sun Aug 19, 2018 9:01 pm
Forum: Personal Investments
Topic: Elderly Relative Short on Money
Replies: 98
Views: 10441

Re: Elderly Relative Short on Money

I am actually very surprised at the number of responses that suggested she take some minimum wage job at McDonalds or a supermarket -- even though she can be a very good babysitter for the OP's family, and apparently does have some small decorating side gig. News flash: not everyone is cut out for working at McDonald's in their 60s, especially when that person has not otherwise worked most of their lives. It would be such a significant disruption to their lives that the idea is borderline insane. And my family has found ourselves in a similar situation -- my grandfather passed away very suddenly in his mid 60s when I was younger. My grandmother was in her early 60s and was now suddenly faced with less income, etc. She was technically able ...
by DC3509
Sat Aug 18, 2018 12:50 am
Forum: Personal Investments
Topic: Elderly Relative Short on Money
Replies: 98
Views: 10441

Re: Elderly Relative Short on Money

Two options I would consider: Invest age appropriately, have her withdraw 4%, your family and your brother in laws family make up the difference every month. Invest age appropriately. Let MIL withdraw what she needs every month, when the money runs out make up the difference. I think option 1 is the best, but make it be known that’s the plan. You’ll all get your money back when she passes. Don’t buy a SPIA, you’ll still end up subsidizing her anyway and they’ll be nothing to show for it at the end. If she wants to get a little job at the local library, women’s club, or something that’s fine too, but I wouldn’t make a no skill parent of mine work at 7/11 or McDonalds to avoid me and my sister each coughing up a couple $100 each a month... +...
by DC3509
Fri Aug 17, 2018 12:34 am
Forum: Personal Investments
Topic: Elderly Relative Short on Money
Replies: 98
Views: 10441

Re: Elderly Relative Short on Money

1. Point taken about "elderly." I should have titled it "retired relative..." 2. She has been working part time helping one of her friends plan parties and decorate for the last few years. I didn't include this in the initial post because her friend will be moving in a year or so and the job will go away. I think she makes $800 a month or so, so it will definitely help for the next year. 3. She spends a lot of time with my 3 children, and is very selfless and helpful with them. I think when her other job goes away, we will start paying her around $500 a month for help with child care. I don't think it makes sense for her to work for minimum wage in an unfulfilling job when she loves spending time with her grand kids, an...
by DC3509
Fri Aug 17, 2018 12:31 am
Forum: Personal Investments
Topic: Elderly Relative Short on Money
Replies: 98
Views: 10441

Re: Elderly Relative Short on Money

Why do people think the medical expense part of this is tricky? She is on Medicare. If she needs LTC it would be foolish to pay that out of the $290K. She would simply convert the $290K into a Medicaid complaint annuity, start taking the annuity payments, and immediately qualify for Medicaid. It is my understanding that annuity companies won't let you put most/all of your assets in an annuity. She also would not qualify for Medicaid as they have a 5-year look-back rule (ie, what did you do with the money you used to have). Both of these statements are incorrect. Medicaid-complaint annuities are special annuities sold to comply with Medicaid and are designed to convert all of your assets into immediate income. The five-year look-back does n...
by DC3509
Thu Aug 16, 2018 11:52 pm
Forum: Personal Investments
Topic: Elderly Relative Short on Money
Replies: 98
Views: 10441

Re: Elderly Relative Short on Money

Why do people think the medical expense part of this is tricky? She is on Medicare. If she needs LTC it would be foolish to pay that out of the $290K. She would simply convert the $290K into a Medicaid complaint annuity, start taking the annuity payments, and immediately qualify for Medicaid.
by DC3509
Thu Aug 16, 2018 11:34 pm
Forum: Personal Investments
Topic: Elderly Relative Short on Money
Replies: 98
Views: 10441

Re: Elderly Relative Short on Money

It looks like she might even have no federal liability at all. Is this a high cost of living area because that seems like high rent for someone in her situation? If her health is good, you might want to look into an immediate annuity for part of her funds. You will also need to plan for the likelihood of increased healthcare spending. How will she respond if you tell her that the math does not work? If she was confronted with needing to reduce rent, get rid of her car, or work part time, would she accept the reality of it? Alternatively, if she spends at the proposed rate now and ends up with just social security in 15 years, what would the plan be? I know this is all made more difficult by the divorce. So, changes may need to be made in s...
by DC3509
Thu Aug 16, 2018 11:01 pm
Forum: Personal Investments
Topic: Elderly Relative Short on Money
Replies: 98
Views: 10441

Re: Elderly Relative Short on Money

She is going to have to reconcile her desire to not work with her desire not to live in a place she considers a dump. Forget about the dividend plan. Bad idea and you can read probably hundreds of hours worth of discussion here about it (some people will disagree with my conclusion). What happens if she runs out of money? I suppose it could fall to you to take care of her since you're presumably married to her child? The nephew sounds like a wonderful influence here. If taking care of her is a realistic possibility, then I would really rethink this rent plan. You might not want to become more involved in this, which is perfectly understandable. But Fannie Mae has a program whereby adult children can buy a house for an elderly parent and th...
by DC3509
Thu Aug 16, 2018 10:52 pm
Forum: Personal Investments
Topic: Elderly Relative Short on Money
Replies: 98
Views: 10441

Re: Elderly Relative Short on Money

It looks like she might even have no federal liability at all. Is this a high cost of living area because that seems like high rent for someone in her situation? If her health is good, you might want to look into an immediate annuity for part of her funds. You will also need to plan for the likelihood of increased healthcare spending. How will she respond if you tell her that the math does not work? If she was confronted with needing to reduce rent, get rid of her car, or work part time, would she accept the reality of it. Alternatively, if she spends at the proposed rate now and ends up with just social security in 15 years, what would the plan be? I know this is all made more difficult by the divorce. So, changes may need to be made in s...
by DC3509
Tue Aug 14, 2018 8:52 am
Forum: Personal Investments
Topic: Inheritance investment
Replies: 8
Views: 1151

Re: Inheritance investment

Did you speak to an attorney about titling assets to sidestep Medicaid? Are you sure that keeping it in her name only will prevent that? +1, I had the same question. What if she is the one who needs LTC? The invest piece is much simpler but certainly less important than the Medicaid protection piece. You should talk to an elder law attorney -- but generally and without giving any legal advice, this sort of situation is what an irrevocable trust is designed to do. You create the trust, the assets are deposited into the trust, and after 5 years, Medicaid cannot touch it, no matter how much money is in there. This is a very smart thing to plan for, especially if she doesn't have a LTCI policy and doesn't otherwise want to spend all of her ass...
by DC3509
Mon Aug 13, 2018 3:01 pm
Forum: Personal Finance (Not Investing)
Topic: How to have “what if” discussion with retired parents?
Replies: 48
Views: 5515

Re: How to have “what if” discussion with retired parents?

Lets see your dad and mom made it to there 70s without the help of others (kids). My parents in there 80 manage all money on there own. Never talked about it. They have a will. Thats all we know. Wife's parents passed away in their 80s. They had a will. Never talked about money. Will split everything 50-50 between 2 kids. No problems. Not sure why kids think it is such a concern of theirs to be involved in the parents finances. I don't think I would want my kids telling me how to manage my money. It is a issue for you mom and dad to handle. Like they have done for all there lives without the kids. Because cognitive decline is real and does happen (typically without the individual being able to notice it), let alone the risks of an immediat...
by DC3509
Sun Aug 12, 2018 10:15 am
Forum: Personal Investments
Topic: Helping Parents with Retirement [Updated - have annuity questions]
Replies: 49
Views: 6834

Re: Helping Parents with Retirement

I am writing to encourage you as well. When my dad (involuntarily) retired last year, my parents had a major decision to make on how to invest the lump sum payout he got from his pension. My parents listened to me discuss Vanguard, Bogle, etc. but still wanted to just "talk" to the local financial advisor in town. The local financial advisor was just like any other local financial advisor -- advising them to buy into risky funds with high expense ratios. It really ticked me off -- my parents have modest means and here was someone obviously trying to rip them off. Luckily, my parents realized I was right and the financial advisor was wrong and they let me help them get everything setup with Vanguard where we have a very good system...
by DC3509
Sun Aug 12, 2018 1:44 am
Forum: Personal Finance (Not Investing)
Topic: How to have “what if” discussion with retired parents?
Replies: 48
Views: 5515

Re: How to have “what if” discussion with retired parents?

I agree that clear documentation of where the money is and how surviving spouse can access it if need be should be available to spouse. On the other hand, the kids have no such presumptive right to a roadmap of assets, account numbers, passwords etc. All these threads and articles one sees popping up now about “How to Have the Difficult Conversation With Mom and Dad” etc. rather leave me cold. Mom and Dad are generally doing fine financially without the kids’ help—in fact, their very success in accumulating financial assets is a key driver in stoking the kids’ solicitous interest. Smectym As the author of one (or several) of those threads, I strongly disagree that the people who have authored such threads are snooping into our parents fina...
by DC3509
Wed Aug 01, 2018 10:11 pm
Forum: Investing - Theory, News & General
Topic: Annuity vs investment
Replies: 40
Views: 3222

Re: Annunity vs investment

I've debated this over and over and posted on multiple threads on this subject, including some where I probably come off as anti-annuity and others where I come off as pro-annuity. I think the answer really depends on extremely individualized circumstances; but something an elder law attorney recently told me really stuck and probably counsels against it, at least for some people with modest assets but who are otherwise able to manage their money. When you buy an annuity, you are giving up whatever is in your bank account. It is gone. There is no way to get it back. When you are trying to plan retirement/long term health care/and the like -- especially if you have modest means -- as long as you have money in your bank account, you have opti...
by DC3509
Sun Jul 29, 2018 10:35 pm
Forum: Personal Finance (Not Investing)
Topic: An argument against self-insuring for long-term care
Replies: 214
Views: 13832

Re: An argument against self-insuring for long-term care

At what levels of income is LTCI a moot point? Let's say I expect to be able to generate $450 x 365 days = $164,250 a year in income. (Not that that's my number.) From what I have read, average skilled nursing care in a decent facility costs $250-$350 a day. That would seem to make the point moot for someone with a retirement income of $164,250 or greater. Plenty of margin. Obviously it's a different outcome for someone with an income of $64,250 ($176 a day). At some point, perhaps more or less than $64,250, one has little choice but to rely on Medicaid: cannot afford insurance, cannot afford the cost of the facility. Where can one find a complete discussion of the issue of LTCI? I haven't found one yet, despite seeing many discussions (no...
by DC3509
Sun Jul 29, 2018 9:57 pm
Forum: Personal Finance (Not Investing)
Topic: An argument against self-insuring for long-term care
Replies: 214
Views: 13832

Re: An argument against self-insuring for long-term care

DC3509 wrote: "That seems to me to be a curious choice when there is a government program that we all pay for through taxes that is available to assist with nursing home care, and there are lawful ways to shield assets and still qualify for the program. Is it a moral objection? That people don't fully grasp the nuances?" Have you made a tour of the local nursing homes that will accept what little Medicaid pays? More to the point, have you made a local tour of the places that have vacancies and accept Medicaid? If you have made the rounds and seen the nursing homes, are they honestly your first choice of places to live? Now, some are obviously much better than others, but getting in is the constant problem. My point isn't that you...
by DC3509
Sun Jul 29, 2018 2:18 pm
Forum: Personal Finance (Not Investing)
Topic: An argument against self-insuring for long-term care
Replies: 214
Views: 13832

Re: An argument against self-insuring for long-term care

That seems to me to be a curious choice when there is a government program that we all pay for through taxes that is available to assist with nursing home care, and there are lawful ways to shield assets and still qualify for the program. Is it a moral objection? That people don't fully grasp the nuances? I think it has neither to do with "nuances" or "moral objections". I think it has more to do with fear of the changes being made to our healthcare system. No one really knows how goest Medicare/Medicaid, but I think it's safe to say that such fears are feeding our interest in LTCI and so on. There is one main difference between LTCI and homeowners' and auto insurance: once you use LTCI, it is quite certain that you wil...
by DC3509
Sun Jul 29, 2018 12:02 pm
Forum: Personal Finance (Not Investing)
Topic: An argument against self-insuring for long-term care
Replies: 214
Views: 13832

Re: An argument against self-insuring for long-term care

If your plan is to self insure for long-term care you must do these things: 1. Decide which asset you will liquidate first to pay for care. 2. Decide which asset you'll liquidate 2nd, 3rd, 4th, 5th, 6th, etc... 3. Put the list in writing 4. Share the list with your loved ones and make sure they understand you don't want them to sacrifice their health (or careers) to become your caregiver. Is it really better for your heirs to liquidate all of your assets down to zero and hope you are dead or should you at least explore what options you may have with Medicaid? And if the answer is the former, then what happens at $0? What if you are still alive? Do your kids pay then? I know I have posted in a few threads about this lately, but it is a subj...
by DC3509
Sun Jul 29, 2018 11:52 am
Forum: Personal Finance (Not Investing)
Topic: Assisted Living Expenses
Replies: 45
Views: 5615

Re: Assisted Living Expenses

Newsflash: "Assisted" living care is overwhelmingly provided by family members. Only minority of people have the financial resources to afford the outrageous and inadequate care provided by institutions. You and I won't be able to afford it, and we're less and less likely to have family members nearby to provide it. It's time to stop moaning about it and figuring out what to do about it. For generations, the nation has relied on family members to keep aging loved ones in their homes. Today, many Americans are growing older without family nearby, offering a glimpse of what the future may hold for the cohort of Americans who are approaching retirement. The caregiving crunch comes at a time when Americans reaching retirement age are...
by DC3509
Sat Jul 28, 2018 11:58 pm
Forum: Personal Finance (Not Investing)
Topic: An argument against self-insuring for long-term care
Replies: 214
Views: 13832

Re: An argument against self-insuring for long-term care

And considering that the overwhelming majority of people who need LTC need it for fewer than five years, the 'reasonable upper limit' to the risk at today's prices may be around $500k. Even for a couple with a $2 million portfolio, that's manageable. And that assumes that they pay for it out of pocket, rather than using trusts to shield assets from Medicaid or a Medicaid-compliant annuity. I would look at it differently. A couple may retire at 60 with a $2M portfolio. By the time they're 85 and one of them needs LTC, that $2M portfolio may have been spent down to $1M or $500k. So let's say they this 85 year old couple has $500k in an IRA. What makes more sense -- paying for -- likely 20-30 years of LTC premiums at anywhere from $2-5K a yea...
by DC3509
Sat Jul 28, 2018 10:42 pm
Forum: Personal Finance (Not Investing)
Topic: An argument against self-insuring for long-term care
Replies: 214
Views: 13832

Re: An argument against self-insuring for long-term care

And considering that the overwhelming majority of people who need LTC need it for fewer than five years, the 'reasonable upper limit' to the risk at today's prices may be around $500k. Even for a couple with a $2 million portfolio, that's manageable. And that assumes that they pay for it out of pocket, rather than using trusts to shield assets from Medicaid or a Medicaid-compliant annuity. I would look at it differently. A couple may retire at 60 with a $2M portfolio. By the time they're 85 and one of them needs LTC, that $2M portfolio may have been spent down to $1M or $500k. So let's say they this 85 year old couple has $500k in an IRA. What makes more sense -- paying for -- likely 20-30 years of LTC premiums at anywhere from $2-5K a yea...
by DC3509
Sat Jul 28, 2018 10:36 pm
Forum: Personal Finance (Not Investing)
Topic: An argument against self-insuring for long-term care
Replies: 214
Views: 13832

Re: An argument against self-insuring for long-term care

I completely agree with point 3. Insurance is for long tail risk. I can easily afford a few years. A couple of decades is what I want to protect against. Where can you get such a policy for 4k/ yr? I don't think such a beast exists. I think he is being a bit dis-engineous in saying you need X, but then throwing out an attractive price that does not provide X. I would love to be proven wrong. The cost of long-term care insurance policy depends upon several factors: 1) your age at the time you apply for a policy 2) your health history 3) if you live alone or if you have a spouse/partner 4) the amount of benefits you buy 5) the company you buy it from (in some cases, some companies can cost 75% to 100% MORE than other companies) The average c...
by DC3509
Sat Jul 28, 2018 3:34 pm
Forum: Personal Finance (Not Investing)
Topic: An argument against self-insuring for long-term care
Replies: 214
Views: 13832

Re: An argument against self-insuring for long-term care

Here's what I don't understand about LTCI -- would people buy car insurance if there was a government program that insured your car if you didn't do so? Would people buy home insurance if there was a government program that insured your house if it burned down? I think we all know the answers. If you live in an area where there are nursing facilities that only accept private pay and do no accept Medicaid, and you anticipate living in a nursing home in such an area, then, yes LTCI can make sense. But those set of circumstances are not the circumstances for vast parts of the country, especially in LCOL areas. As I stated earlier -- in some states 3 out of every 4 nursing home residents are on Medicaid. In such areas, there is no difference be...
by DC3509
Fri Jul 27, 2018 6:55 am
Forum: Personal Finance (Not Investing)
Topic: An argument against self-insuring for long-term care
Replies: 214
Views: 13832

Re: An argument against self-insuring for long-term care

The reality is this: 2/3 of seniors who are sitting in nursing homes today are on Medicaid. In some lower cost of living states -- West Virginia, Mississippi, Georgia, etc. -- that number is much higher. There is a lot of fretting on these boards about LTC, and I am not sure it is really justified. There is a perception from some that all "Medicaid facilities" are dungeons whereas all "private pay facilities" are the Four Seasons. First, every nursing home is a fairly unpleasant place -- even the nicest ones. Beyond that, the vast majority of nursing homes -- especially in lower cost of living areas -- accept both Medicaid and private pay. The nursing care itself is the same. Things can be different around the edges -- p...
by DC3509
Wed Jul 25, 2018 8:13 am
Forum: Personal Finance (Not Investing)
Topic: Buy house for retired mother?
Replies: 72
Views: 6386

Re: Buy house for retired mother?

OP, welcome to the forum, and kudos for appreciating what your parents did for you. You probably know that some members like to play the “more frugal than thou” game; please ignore it, it’s their version of walking uphill to AND from school. I lean towards renting, for ease of transitioning, but I also understand what pull a parent’s dream can exert. Good luck whatever you do. Some thoughts -- 1.) The OP is essentially trying to do something very nice and generous for his mother who made true sacrifices for him and almost surely played a big role in him becoming the financial success he is today -- and yet a fair number of the people posting here go on these rants about how the mother must be spending too much money or if they were the mot...
by DC3509
Mon Jul 23, 2018 7:29 am
Forum: Personal Finance (Not Investing)
Topic: Buy house for retired mother?
Replies: 72
Views: 6386

Re: Buy house for retired mother?

Do you have siblings are and they comfortable with this situation? Regardless, I would let your mom buy the house and then give her a monthly allowance to cover the housing expense. You want to be in a position where you’re sending her money every month not having her send you money. Remember, if you own the house all of the issues are yours and you may or may not have the time or inclination to deal with them. If your mom owns the house she takes ownership of any problems that arise. You’ll likely end up paying for the issues, but not have to worry about the minutia. For example, if you own the house and the water heater leaks at 2am the call will be to you for you to deal with. If your mother owns the house and she calls at 2am you can s...
by DC3509
Sun Jul 22, 2018 9:28 pm
Forum: Personal Finance (Not Investing)
Topic: Giving money to adult kids
Replies: 23
Views: 4524

Re: Giving money to adult kids

gostars wrote: Sun Jul 22, 2018 8:50 pm I'm not well versed in this, but it seems like this is exactly the sort of situation a trust is designed to handle. You can set it up so that an outside person (lawyer, trusted friend or family member, etc.) administers the money on behalf of the kids, and only disburses funds to cover things approved in the trust document. You'd need to engage a lawyer to set it all up, but it seems like the cost of that wouldn't be an issue, and the peace of mind might be well worth the cost. As I understand it, money put in the trust would no longer be considered part of your assets and would be untouchable to the retirement facility.
This is exactly what a trust is designed to do. I recommend discussing with an estate attorney.
by DC3509
Sun Jul 22, 2018 8:03 pm
Forum: Personal Finance (Not Investing)
Topic: Buy house for retired mother?
Replies: 72
Views: 6386

Re: Buy house for retired mother?

Totally agree with the last two posters -- the prospect of a tragedy is why the mom should be doing Medicaid planning if she otherwise has very modest assets. Maybe you never need to actually exercise it because you are making close to a million and you decide to private pay -- or she never needs a nursing home. Great. But what if the ultimate rainy day happens and something happens to the OP, the money isn't there anymore, and mom never planned accordingly? Agree too as I said in my own prior reply about "Medicaid facility" -- there is a perception I think that all Medicaid facilities only accept Medicaid patients and are dungeons. Some are. But not all are, and some nice nursing homes, especially in lower cost of living areas, d...
by DC3509
Sun Jul 22, 2018 2:42 pm
Forum: Personal Finance (Not Investing)
Topic: Buy house for retired mother?
Replies: 72
Views: 6386

Re: Buy house for retired mother?

Gotchas? The mother says "I'll move when the jack booted sheriff shows up and clubs me over the head with an aluminum baseball bat". Maybe she doesn't want to leave. Maybe she can live just fine with 150% of the medium income for a family of 4 supporting just herself. Maybe even a new Jaguar lease every other year. I totally get this. I have a relative that lives on 167% of OP's mother, and does so even though they know they'd run out of funds long before they passed away. Had a Jag at one time. Wouldn't adjust spending regardless, even when told they weren't going to live in anyone's basement when the money was gone. Surprise gift from a relative now ensures that this absurd level of spending can go on for the rest of their life...
by DC3509
Sun Jul 22, 2018 2:19 pm
Forum: Personal Finance (Not Investing)
Topic: Buy house for retired mother?
Replies: 72
Views: 6386

Re: Buy house for retired mother?

OP, welcome to the forum, and kudos for appreciating what your parents did for you. You probably know that some members like to play the “more frugal than thou” game; please ignore it, it’s their version of walking uphill to AND from school. I lean towards renting, for ease of transitioning, but I also understand what pull a parent’s dream can exert. Good luck whatever you do. Some thoughts -- 1.) The OP is essentially trying to do something very nice and generous for his mother who made true sacrifices for him and almost surely played a big role in him becoming the financial success he is today -- and yet a fair number of the people posting here go on these rants about how the mother must be spending too much money or if they were the mot...
by DC3509
Sun Jul 22, 2018 11:50 am
Forum: Personal Consumer Issues
Topic: WSJ Article on Aging -- Scary Stuff..
Replies: 16
Views: 2445

Re: WSJ Article on Aging -- Scary Stuff..

I was able to access the article by googling the title and clicking on the link. This is the tip of the next phase of the baby boomer iceberg. Elderly care will become huge in the next 10-20 years. IMHO part of the solution is for families to step up but when you have no children, or no living relatives it becomes a societal problem. Totally agree. We just had an elderly relative die and she just went in about the best way possible; but the experience really got me thinking about my own parents, who literally had no plan whatsoever -- no wills, no medical directives, no power of attorneys, no thought as to how they would pay for long-term care if they needed it, no planning on how we can perhaps structure things now so as to improve their ...
by DC3509
Sun Jul 22, 2018 10:55 am
Forum: Personal Consumer Issues
Topic: WSJ Article on Aging -- Scary Stuff..
Replies: 16
Views: 2445

WSJ Article on Aging -- Scary Stuff..

All, The story is behind the firewall, but if you have access to it, and care about the whole aging debate, I strongly recommend reading the following story from yesterday's WSJ: https://www.wsj.com/articles/america-is-running-out-of-family-caregivers-just-when-it-needs-them-most-1532094538?mod=searchresults&page=1&pos=18 If this doesn't shock you to get serious about eldercare planning, nothing will. It is a grim, sad state of affairs for a lot of people. Those who are able and did purchase LTC insurance are in the vast minority (LTC is not even mentioned as a viable alternative for most of these people; the last person discusses it but had to give up the premium because it was too expensive). And I say "get serious" for ...
by DC3509
Wed Jul 18, 2018 12:30 am
Forum: Personal Finance (Not Investing)
Topic: A different take on retirement income: time segmentation
Replies: 179
Views: 17006

Re: A different take on retirement income: time segmentation

In Merton's interview -- which is well worth the full listen -- he basically says that not enough people look at annuities; everyone looks at what that total amount of the 401 (k) is -- not nearly enough people are thinking in terms of I make X income now, what can I do to get close to X income in retirement. Merton thinks that our 401 (K) statements should have a potential income annuity amount at the top -- not your total pot of money. He thinks the pot of money is meaningless to most people. It sounds like Merton is in agreement with Wade Pfau regarding annuities. However, for better or worse, most investors are not at all a fan of full annuitization. Perhaps they would be more in favor of doing so for their ESP if they used the method ...
by DC3509
Tue Jul 17, 2018 8:38 pm
Forum: Personal Finance (Not Investing)
Topic: A different take on retirement income: time segmentation
Replies: 179
Views: 17006

Re: A different take on retirement income: time segmentation

But what Merton says -- and I think there is a lot of merit to this is -- for the vast majority of people -- not people like us who sit around and think about these subjects and who read these message boards and follow personal finance as a hobby -- for most just "regular" people -- the actual size of a portfolio is meaningless. What they want is income. They have been used to getting a check for X their entire life; in retiree, they would like to get a check for X too. People don't look at their Social Security payouts and say "I have a total social security portfolio of X--- thousands" -- they say I get a check for X amount each month, So to your point -- if you can cover all of your essential spending through SS and ...
by DC3509
Tue Jul 17, 2018 6:16 pm
Forum: Personal Finance (Not Investing)
Topic: A different take on retirement income: time segmentation
Replies: 179
Views: 17006

Re: A different take on retirement income: time segmentation

What do you think of the theory that the SPIA allows for a more aggressive equity portfolio that likely will lead to more growth and likely more legacy? I don't buy it. Buying a SPIA is not likely to provide retirees with a meaningfully greater amount in their portfolio to allocate to equities. The payout ratio for a SPIA with an inflation-adjustment for a 65 year old couple is roughly 4% these days, which is close to the '4% rule of thumb'. Granted, the '4% rule' hasn't held with only nominal bonds in the past, but there's no need for a retiree to hold only nominal bonds any more. They can now buy TIPS, and with current real returns, they can guarantee about 27 years of inflation-adjusted spending, very close to the 30 year mark used with...
by DC3509
Tue Jul 17, 2018 1:49 pm
Forum: Investing - Theory, News & General
Topic: Robert Merton on NewRetirement Podcast
Replies: 46
Views: 6460

Re: Robert Merton on NewRetirement Podcast

The Wizard wrote: Tue Jul 17, 2018 9:48 am
DC3509 wrote: Tue Jul 17, 2018 9:17 am
...If you do partially annuitize -- let's say just a basic SPIA -- would you feel more confident then being aggressive with the remaining amount being invested? As long as the annuity plus social security covered basic expenses?
Yes indeed, regarding the remaining portfolio.
My annuities + age 70 SS will total well over $100k per year, easily double my basic expenses.

The need, willingness and ability to take risk apply to that remaining portfolio.
For now, I'm content to be around 60% stocks. Perhaps I'll let that drift upward as the market dictates, we'll see...
60% stock and what is the withdrawal rate?
by DC3509
Tue Jul 17, 2018 9:17 am
Forum: Investing - Theory, News & General
Topic: Robert Merton on NewRetirement Podcast
Replies: 46
Views: 6460

Re: Robert Merton on NewRetirement Podcast

Most of the comparisons I've seen here between a Megacorp or Government pension vs. the lump sum alternative, and a commercially available SPIA for the same lump sum amount, favor the pension. The spousal benefits available are better, and the commercial pension might consider your health while the employer pension will not. So the common conclusion is that if you are healthy and have a good chance of living a long life the employer pension is a good choice, if you have a life-shortening condition you might want the lump sum from the employer to leave more to you heirs. But for most people, they don't want to have to worry about any of this, they just want a reliable stream of income, and they focus their thoughts and energy into other asp...
by DC3509
Tue Jul 17, 2018 7:15 am
Forum: Investing - Theory, News & General
Topic: Robert Merton on NewRetirement Podcast
Replies: 46
Views: 6460

Re: Robert Merton on NewRetirement Podcast

I recommend it. I was just really struck on how he was trying to cobble together a system of retirement that would work for a lot of lower-income to middle-income retirees -- not necessarily BH, but I think his theories would actually intrigue this crowd more than the people they are designed to help because a lot of those people do not have the interest or abilities to master personal finance. He discusses reverse mortgages at length and gives excellent examples of situations where those are appropriate and why kids should not be talking their parents out of a reverse mortgage. The annuity discussion was also very interesting -- and I am someone who has generally not been a fan of annuities.
by DC3509
Mon Jul 16, 2018 11:49 pm
Forum: Investing - Theory, News & General
Topic: Robert Merton on NewRetirement Podcast
Replies: 46
Views: 6460

Re: Robert Merton on NewRetirement Podcast

I just came across this podcast today -- I thought it was excellent.

In particular, I was intrigued by his discussion of annuities -- not so much for myself, but for my parents who have modest assets, and really depend on social security (and who I fear my depend on Medicaid someday). I feel like there is very little discussion out there of how annuities can help or hurt people in this boat -- which is what Merton was trying to address. Would be interested in more opinions here.
by DC3509
Sun Jul 15, 2018 8:56 am
Forum: Personal Investments
Topic: Inlaws need $50k loan for new home, hard time finding lenders
Replies: 17
Views: 2807

Re: Inlaws need $50k loan for new home, hard time finding lenders

Your parents should investigate a Home equity conversion mortgage for purchase. This is a special type of reverse mortgage only available for people 62 or older. Basically -- your parents put a large downpayment on the new house -- usually about 60% but it can be much more if your parents want -- the FHA will write a HECM loan for the remainder. During the life of the HECM, you are not required to make any payments -- the monthly mortgage payment is added to the end of the loan. The HECM is paid off when you go to sell the house. Of course, the running balance may start to eat into your original downpayment amount, but there is little financial risk because if you are upside down at the end, the FHA makes up the difference. If you wanted to...
by DC3509
Thu Jul 12, 2018 8:49 pm
Forum: Personal Investments
Topic: How to help parents "see the light" with index investing?
Replies: 17
Views: 1923

Re: How to help parents "see the light" with index investing?

I agree with others who replied -- I wouldn't get too involved. I am involved in my parents finances, but that's because they do not understand (or care to learn) many things, and the alternative was not good. I do feel like I have done a lot of "good" since getting involved.

When my parents were deciding between "letting me help more" or hiring the local yokel financial advisor who was going to scam them, I sent them a Freakeconomics podcast that basically discusses everything that we discuss here -- including a great interview with John Bogle. I would highly recommend that podcast.
by DC3509
Mon Jul 09, 2018 10:04 am
Forum: Personal Consumer Issues
Topic: Continuing Care Community versus 55 + (no LTC and modest assets)
Replies: 61
Views: 4985

Re: Continuing Care Community versus 55 + (no LTC and modest assets)

I suggest googling statistics on the percentage of people who actually use nursing home care. I was shocked at how low it was. I don't have the exact numbers but it was something like more than 50% need no nursing home care, 30% are in less than 6 months, and 10% are in a nursing home for a long time. Yes it would suck to be the latter, but statistics are in your favor. IMO most of this depends on your opinion on end of life care. I think a lot of end of life care as wasteful and to be honest inhumane. I know this is an ethical issue, But as a nurse, I see a LOT of long term nursing home patients whose families IMO should have made the decision to make their family members hospice. Numerous admission for aspiration pneumonia, Keeping long ...
by DC3509
Sun Jul 08, 2018 9:55 pm
Forum: Personal Consumer Issues
Topic: Continuing Care Community versus 55 + (no LTC and modest assets)
Replies: 61
Views: 4985

Re: Continuing Care Community versus 55 + (no LTC and modest assets)

Renting where they currently live is not a real option -- very few rentals available and none are nice. One way I have thought of helping them in the new area is for me to buy the house outright and they pay me rent. I am trying to figure out how much they can afford now. I understand I can charge somewhat lower rent because they are a family member -- about 20 percent less than FMV. I have some other passive activity gains where I could offset the likely loss so this is preferable for me to cash gifts. There could be tax implications if you rent to family members at below fair market value. You should probably double check how that would affect things if you want to go that route. RM The IRS and tax court have permitted some rent below th...
by DC3509
Sun Jul 08, 2018 9:35 pm
Forum: Personal Consumer Issues
Topic: Continuing Care Community versus 55 + (no LTC and modest assets)
Replies: 61
Views: 4985

Re: Continuing Care Community versus 55 + (no LTC and modest assets)

Renting where they currently live is not a real option -- very few rentals available and none are nice.

One way I have thought of helping them in the new area is for me to buy the house outright and they pay me rent. I am trying to figure out how much they can afford now. I understand I can charge somewhat lower rent because they are a family member -- about 20 percent less than FMV. I have some other passive activity gains where I could offset the likely loss so this is preferable for me to cash gifts.
by DC3509
Sun Jul 08, 2018 9:07 pm
Forum: Personal Consumer Issues
Topic: Continuing Care Community versus 55 + (no LTC and modest assets)
Replies: 61
Views: 4985

Re: Continuing Care Community versus 55 + (no LTC and modest assets)

Update to my previous thread: With very little discussion, my parents have completely shutdown any discussion of a CCRC. I understand that sentiment from some of you which replied here. That view however doesn't resolve the very real short and long-term problems I still have. In the short-term, all of the houses they are looking at to live near my sister are more expensive than the one they are selling. It's not a huge difference, and I am coming around more and more that I will likely be the one that needs to help them if this will happen. I hope I can steer them in the direction of a 55+ active community as I think that's the best of all worlds. Hypothetically, I am OK with that.... but I really wish they would plan for the long-term pro...
by DC3509
Sun Jul 08, 2018 8:34 pm
Forum: Personal Consumer Issues
Topic: Continuing Care Community versus 55 + (no LTC and modest assets)
Replies: 61
Views: 4985

Re: Continuing Care Community versus 55 + (no LTC and modest assets)

Update to my previous thread: With very little discussion, my parents have completely shutdown any discussion of a CCRC. I understand that sentiment from some of you which replied here. That view however doesn't resolve the very real short and long-term problems I still have. In the short-term, all of the houses they are looking at to live near my sister are more expensive than the one they are selling. It's not a huge difference, and I am coming around more and more that I will likely be the one that needs to help them if this will happen. I hope I can steer them in the direction of a 55+ active community as I think that's the best of all worlds. Hypothetically, I am OK with that.... but I really wish they would plan for the long-term prob...
by DC3509
Sun Jul 08, 2018 1:21 pm
Forum: Personal Finance (Not Investing)
Topic: Borrow for BigLaw Partnership Buy-in?
Replies: 26
Views: 7757

Re: Borrow for BigLaw Partnership Buy-in?

OP -- I think only other biglaw attorneys can really appreciate the question. This is not something where you should be getting cute or asking what the upside is, etc. -- you know what the upside is, you become a biglaw equity partner and the right to share in the firm's profits. How about not being fired, or pushed out the door, like a lot of biglaw attorneys? Most attorneys would die for a job at a biglaw firm, let alone equity partnership at a biglaw firm. Don't overthink it. Take out the loan like almost everyone else does, pay it back, and you will be done with it before you know it. This is the typical example of a very "good" form of debt.
by DC3509
Fri Jul 06, 2018 11:18 pm
Forum: Personal Consumer Issues
Topic: Carpenter Bees- HELP!
Replies: 17
Views: 2804

Re: Carpenter Bees- HELP!

We had these recently. I am terrified of bees so was insistent that we deal with the problem immediately. Based on my reading and our personal experience, carpenter bees are couples -- the female borrows into the wood, lays her eggs, and then nurses the young, while the male basically flies around the outside and makes threatening movements towards humans and other animals. The ironic part is that for all of his bluster, the male can't sting; the female can, but she is usually too busy to worry about stinging you. Our exterminator said that if you get rid of the female, the male will also vacate the premises quickly and fly off to find another mate. That's exactly what was done for us -- the female and her nest were extinguished, the male s...
by DC3509
Wed Jul 04, 2018 1:49 pm
Forum: Personal Consumer Issues
Topic: Continuing Care Community versus 55 + (no LTC and modest assets)
Replies: 61
Views: 4985

Re: Continuing Care Community versus 55 + (no LTC and modest assets)

There have been a lot of great replies here -- thank you. To one question posed -- my parents are pretty social people, but have lived in the same town for almost 40 years. Almost all of their friends are people they befriended many years ago -- most through my sister and myself. For the cheaper 55+ place, they say they will just "make friends" -- I don't think they really appreciate how hard that can be when you are not in a place that fosters some social interaction. I think the overall consensus from this board isn't to leave the CCRC concept alone while they are still in somewhat good health, which I understand. But that still goes back to my original issue -- I was mainly interested in CCRCs because they provide care even if ...
by DC3509
Wed Jul 04, 2018 9:58 am
Forum: Personal Consumer Issues
Topic: Continuing Care Community versus 55 + (no LTC and modest assets)
Replies: 61
Views: 4985

Re: Continuing Care Community versus 55 + (no LTC and modest assets)

Reading these nursing home health inspection reports on the government website are pretty scary. One interesting thing I noticed for the CCRCs I was looking at in my sisters area -- all of them accept Medicaid. So I wonder if there really is a dramatic difference between these places and what you would find on the Medicaid market anyway. Circling back to another point I made earlier -- does anyone see any value in 55+ places that basically have no amenities other than shoveling snow? It seems like just over priced new home construction to me. There is a competing place down the road that has all of the bells and whistles -- clubhouse, pool, activity director, trips, etc. It is marginally more expensive but not dramatically so. I feel like t...
by DC3509
Tue Jul 03, 2018 6:32 pm
Forum: Personal Consumer Issues
Topic: Continuing Care Community versus 55 + (no LTC and modest assets)
Replies: 61
Views: 4985

Re: Continuing Care Community versus 55 + (no LTC and modest assets)

I should also say -- my parents are simply not good at planning these things. I need to think through these things or nobody will. They have already made a lot of financial mistakes (claiming SS at 62, no idea how much dads defined benefit pension was worth, no real plan about how much they need in retirement). I already averted a disaster last year when they almost gave all of their retirement savings to a high fee financial advisor. I have them in a simple 3 fund portfolio that I help manage. I put them in touch with a low cost attorney I trust who finally got them setup with wills, etc. They had none of this stuff. But I think getting this decision right is super important and I appreciate the opinions from fellow people here. Thank you...