Pretty much broke --- what would you advise?

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7eight9
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Pretty much broke --- what would you advise?

Post by 7eight9 » Thu Aug 08, 2019 8:40 pm

So today I had coffee today with one of my former coworkers. We all lost our jobs app. 5 months ago. She is old enough to apply for Social Security. Her husband already collects (he is app. 10 years older). He doesn't work.

She is currently collecting unemployment. Will last app. 4 more months. Job prospects are grim.

She has app. $20K in a high yield savings account. $30K in an IRA account (target retirement near term (2020?)). That is it. There is no more money. They rent.

She asked me what to do with the IRA. My recommendation was to move it to money market. In my opinion she shouldn't be taking any risk. Cash it out as needed next year. I'm not sure there is a better option.

Opinions?
Last edited by 7eight9 on Thu Aug 08, 2019 9:47 pm, edited 1 time in total.
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Sandtrap
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Re: What would you advise?

Post by Sandtrap » Thu Aug 08, 2019 8:47 pm

7eight9 wrote:
Thu Aug 08, 2019 8:40 pm
So today I had coffee today with one of my former coworkers. We all lost our jobs app. 5 months ago. She is old enough to apply for Social Security. Her husband already collects (he is app. 10 years older). He doesn't work.

She is currently collecting unemployment. Will last app. 4 more months. Job prospects are grim.

She has app. $20K in a high yield savings account. $30K in an IRA account (target retirement near term (2020?)). That is it. There is no more money. They rent.

She asked me what to do with the IRA. My recommendation was to move it to money market. In my opinion she shouldn't be taking any risk. Cash it out as needed next year. I'm not sure there is a better option.

Opinions?
HCOL or LCOL area?
Their monthly expenses?
Monthly rent?
His SS income?
His other income if any?
His savings?

Her SS if taken now?

An she work part time?

j
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Topic Author
7eight9
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Re: What would you advise?

Post by 7eight9 » Thu Aug 08, 2019 8:55 pm

Sandtrap wrote:
Thu Aug 08, 2019 8:47 pm
7eight9 wrote:
Thu Aug 08, 2019 8:40 pm
So today I had coffee today with one of my former coworkers. We all lost our jobs app. 5 months ago. She is old enough to apply for Social Security. Her husband already collects (he is app. 10 years older). He doesn't work.

She is currently collecting unemployment. Will last app. 4 more months. Job prospects are grim.

She has app. $20K in a high yield savings account. $30K in an IRA account (target retirement near term (2020?)). That is it. There is no more money. They rent.

She asked me what to do with the IRA. My recommendation was to move it to money market. In my opinion she shouldn't be taking any risk. Cash it out as needed next year. I'm not sure there is a better option.

Opinions?
HCOL or LCOL area? MCOL
Their monthly expenses?
Monthly rent? $1,400
His SS income? $1,100
His other income if any? $0
His savings? $0

Her SS if taken now? $1,200

An she work part time? She hasn't been able to find a job.

j
It is a pretty grim situation overall. I think ultimately they will have to move in with one of their daughters.
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Nate79
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Re: Pretty much broke --- what would you advise?

Post by Nate79 » Thu Aug 08, 2019 10:12 pm

If that's it then they need to move to a very LCOL area and drastically cut their housing expenses. They lived their life with no savings and retirement is going to be tough. Maybe both of them will need to go back to work even if it is at McDs.

ohai
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Re: Pretty much broke --- what would you advise?

Post by ohai » Thu Aug 08, 2019 10:21 pm

What else can anyone say? They need to work, minimum wage, drive a Uber, be a greeter at Walmart, whatever they need to survive. A $15/hour job for 40 hours a week is $2500 a month. Husband needs to come out of retirement and work a menial job if it comes down to it. They are poor people and need to take whatever they can get. Some people work until they are 70 something or older. This is why.

Cost cutting seems very difficult. I don't think it is realistic to live on below $20k a year or whatever that is.

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Re: Pretty much broke --- what would you advise?

Post by whodidntante » Thu Aug 08, 2019 10:42 pm

I've seen people who started a business in a similar situation and improved their outcomes. Preferably one that is not capital intensive. You'll find examples of such people at your local flea market, not that I suggest that specifically.

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Re: Pretty much broke --- what would you advise?

Post by phxjcc » Thu Aug 08, 2019 11:38 pm

You need to fill in some details.

I have friends and relatives living in low cost senior housing that have very low incomes.

One had zero reserves and lived on $1100 per month.

Considering FRA income for 2 can exceed $60,000/yr, saying all they have is SSA income places an upper boundary only.

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Re: Pretty much broke --- what would you advise?

Post by megabad » Thu Aug 08, 2019 11:51 pm

phxjcc wrote:
Thu Aug 08, 2019 11:38 pm
You need to fill in some details.

I have friends and relatives living in low cost senior housing that have very low incomes.

One had zero reserves and lived on $1100 per month.

Considering FRA income for 2 can exceed $60,000/yr, saying all they have is SSA income places an upper boundary only.
This. I am not sure "broke" is the right term when said couple could have as much as $60k income inflation adjusted for the rest of their lives. If income is lower, they could potentially qualify for multiple forms of assistance in addition to SS including property tax discounts and housing assistance. I would argue that folks at Social security age are much better able to deal with job loss than someone at say age 55. In other words, no need for this person to necessarily be down on themselves. Living beneath your means and obtaining available assistance is generally enough to prevent destitution in this case.

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celia
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Re: Pretty much broke --- what would you advise?

Post by celia » Fri Aug 09, 2019 12:48 am

Lots of people live on only their SS. The key is to cut your expenses so that the total is less than your income. They first need to start by finding less expensive housing to rent or share housing costs with someone else. They need to cook and eat their meals at home. Turn off utilities when not using them (lights, over-watering landscape). Hopefully they have a Medicare Advantage plan that covers their medical costs and they understand their benefits in the plan. For example, are drugs covered?

They should avoid touching their savings. They need that for a true emergency, not a supplemental "income" that lasts a few more months. The sooner they make and start living on their new budget, the better. They should even include some savings each month, even if only $100 more being saved.

sawdust60
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Re: Pretty much broke --- what would you advise?

Post by sawdust60 » Fri Aug 09, 2019 1:29 am

Lower cost, subsidized housing could be available -- the price dependent on income, such as 30% of family income.
Get a job or do various gigs: dog walking, house sitting, day care, meal preparation, shopping.
Conserve savings.
Perhaps delay taking SS to age 70. Run the Open Social Security calculator, but note that it will not consider the interaction with qualifying for subsidized housing, ACA, etc.
Plan for health insurance prior to Medicare. Understand income level needed for ACA or Medicaid, and how IRA withdrawals impact the income qualifications.

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oldzey
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Re: Pretty much broke --- what would you advise?

Post by oldzey » Fri Aug 09, 2019 1:33 am

Annutizing the 50K in savings might be a consideration, in addition to the prior suggestions.
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Dude2
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Re: Pretty much broke --- what would you advise?

Post by Dude2 » Fri Aug 09, 2019 1:43 am

I agree that MM is probably the way to go. It's paying well. No reason to tie up the 30k in bonds, even short term bonds, because the yield differences are negligible. This is money that could be needed immediately, not long term, greater than 5 year money where stocks might be an option. This isn't money that is going to be subject to the 3 or 4 % safe withdrawal policy, so a Target Retirement Income Fund isn't relevant. Yes, money market fund. Agreed. But, you say "cash it out". There is no reason to remove it from the IRA. Let it sit in MM tax-deferred, and draw it out as necessary.

Momus
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Re: Pretty much broke --- what would you advise?

Post by Momus » Fri Aug 09, 2019 1:49 am

If you are old, drive for Uber/lyft, you will make about $15/hr gross minimum before gas. That will tie you over until retirement age. It's better than nothing.

If you are young 20-30s, invest in yourself, take a student loan and go to school full time - nurse/PA, software engineering or do trades for more money.

I'm one of the cheapest person out there. I can survive with 15k/yr, even with extreme frugality, your saving will only last you 1-2 yr! You need a job NOW.

stocknoob4111
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Re: Pretty much broke --- what would you advise?

Post by stocknoob4111 » Fri Aug 09, 2019 1:55 am

$2600 is totally doable if you are frugal and in a LCOL.. their rent is not sustainable on that, but they can reduce that by 50% if they move some place with low cost of housing.

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Re: Pretty much broke --- what would you advise?

Post by FIREchief » Fri Aug 09, 2019 2:03 am

7eight9 wrote:
Thu Aug 08, 2019 8:40 pm
So today I had coffee today with one of my former coworkers. We all lost our jobs app. 5 months ago. She is old enough to apply for Social Security. Her husband already collects (he is app. 10 years older). He doesn't work.
Please tell us that you had coffee on your back porch and not at Starbucks. :shock:
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

TaxingAccount
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Re: Pretty much broke --- what would you advise?

Post by TaxingAccount » Fri Aug 09, 2019 2:14 am

.....
Last edited by TaxingAccount on Tue Aug 13, 2019 3:25 pm, edited 2 times in total.

Dude2
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Re: Pretty much broke --- what would you advise?

Post by Dude2 » Fri Aug 09, 2019 2:32 am

TaxingAccount wrote:
Fri Aug 09, 2019 2:14 am
7eight9 wrote:
Thu Aug 08, 2019 8:40 pm
Job prospects are grim.
Have you applied at McDonald's? They'll hire anyone. I doubt you did since most people only want to work in an office, work their 9-5, and set their out of the office reply. The only reason the job prospects are grim is because everyone wants to work in an office and nobody wants to do actual work. Go to any gas station and you'll see trash laying all over the parking lot, trash cans overflowing, paper towel dispensers empty, receipt paper empty. They're desperate for people but nobody wants to do the work.
I'm living overseas currently, and one striking difference between the US and elsewhere (2nd/3rd world) is the number of people that are employed to do a customer-service type job. In America we really optimize for the least number of people, and we try our best to automate and use robots if we can. It's a definite trend. I don't know if the reason for the trash overflowing, etc. is because they can't hire people, or if it is that the number of job slots are not allocated. A company will do the bare minimum, pushing the envelope of what they can get away with. This behavior is incentivized and rewarded. Our population is generally highly educated, and so, while anybody can pick up trash, it isn't why you went to school. We just don't have a surplus of low-educated people I think is more the issue. I'm sure we'll eventually develop some trash picking up robots.

But, that said, I do agree with the attitude that if you don't have work you need to do anything until something better comes along.

sharukh
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Re: Pretty much broke --- what would you advise?

Post by sharukh » Fri Aug 09, 2019 2:38 am

Just adding another option: may be move to Mexico or India. It is very easy to get by for just $750 a month

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Re: Pretty much broke --- what would you advise?

Post by rossington » Fri Aug 09, 2019 3:31 am

7eight9 wrote:
Thu Aug 08, 2019 8:40 pm
She is currently collecting unemployment. Will last app. 4 more months. Job prospects are grim.
I don't believe in this attitude.
Time to get any jobs even multiple jobs...help wanted signs are everywhere. Not time for excuses...unless a low standard of living is more desirable.
"Success is going from failure to failure without loss of enthusiasm." Winston Churchill.

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Re: Pretty much broke --- what would you advise?

Post by cheese_breath » Fri Aug 09, 2019 6:31 am

FIREchief wrote:
Fri Aug 09, 2019 2:03 am
7eight9 wrote:
Thu Aug 08, 2019 8:40 pm
So today I had coffee today with one of my former coworkers. We all lost our jobs app. 5 months ago. She is old enough to apply for Social Security. Her husband already collects (he is app. 10 years older). He doesn't work.
Please tell us that you had coffee on your back porch and not at Starbucks. :shock:
You beat me to it.
The surest way to know the future is when it becomes the past.

pkay
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Re: Pretty much broke --- what would you advise?

Post by pkay » Fri Aug 09, 2019 8:00 am

Sorry to hear about your former coworker.
I'd agree with not taking more risks with her IRA money.
Maybe she can look into a local church or nonprofit to work part time. or part time nanny? I'd understand it can be a more physically demanding job but she may be able to do it if healthy and can cook, reliable, etc. part time nanny is always high in demand for two full time working parents with young kids in school.

delamer
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Re: Pretty much broke --- what would you advise?

Post by delamer » Fri Aug 09, 2019 9:44 am

oldzey wrote:
Fri Aug 09, 2019 1:33 am
Annutizing the 50K in savings might be a consideration, in addition to the prior suggestions.
I disagree.

That would eliminate their cash cushion for any kind of emergency, like a car repair.

All the money should be kept savings or CDs.

Are they both Medicare-eligible or is health insurance going to be an issue?

iamblessed
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Re: Pretty much broke --- what would you advise?

Post by iamblessed » Fri Aug 09, 2019 9:56 am

It would work in a small town in the Midwest.

lukestuckenhymer
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Re: Pretty much broke --- what would you advise?

Post by lukestuckenhymer » Fri Aug 09, 2019 11:40 am

Unfortunately it sounds like par for the course for most American retirees. My girlfriend's mother is in a similar situation with little savings, but she owns her home and has no debt.
I would put the IRA in the highest yielding money market they can find. $2,600 a month in Social Security is very decent, in my opinion, but they are paying a little too much in rent. They need to move to a LCOL area immediately. As long as they're frugal, I think they will be all right. I hope they're both on Medicare.
Last edited by lukestuckenhymer on Fri Aug 09, 2019 11:52 am, edited 2 times in total.

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Re: Pretty much broke --- what would you advise?

Post by jeffyscott » Fri Aug 09, 2019 11:48 am

stocknoob4111 wrote:
Fri Aug 09, 2019 1:55 am
$2600 is totally doable if you are frugal and in a LCOL.. their rent is not sustainable on that, but they can reduce that by 50% if they move some place with low cost of housing.
Agree, my daughter has low income ($13 per hour) and a kid and pays $775 to rent a house in a medium size city. My son also has a modest income and bought a 1 bedroom condo for about $50K a couple years ago in a small city, that is a suburb of a larger city...his cost including condo fees and taxes is comparable to renting for maybe $500.

They either need to reduce housing cost or find a job.

There is like 3% unemployment, I wold think that anyone employable should be able to find some sort of job?
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Dave55
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Re: Pretty much broke --- what would you advise?

Post by Dave55 » Fri Aug 09, 2019 11:55 am

7eight9 wrote:
Thu Aug 08, 2019 8:40 pm
So today I had coffee today with one of my former coworkers. We all lost our jobs app. 5 months ago. She is old enough to apply for Social Security. Her husband already collects (he is app. 10 years older). He doesn't work.

She is currently collecting unemployment. Will last app. 4 more months. Job prospects are grim.

She has app. $20K in a high yield savings account. $30K in an IRA account (target retirement near term (2020?)). That is it. There is no more money. They rent.

She asked me what to do with the IRA. My recommendation was to move it to money market. In my opinion she shouldn't be taking any risk. Cash it out as needed next year. I'm not sure there is a better option.

Opinions?
I concur, money market account for the IRA.

Dave

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dm200
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Re: Pretty much broke --- what would you advise?

Post by dm200 » Fri Aug 09, 2019 12:11 pm

Dave55 wrote:
Fri Aug 09, 2019 11:55 am
7eight9 wrote:
Thu Aug 08, 2019 8:40 pm
So today I had coffee today with one of my former coworkers. We all lost our jobs app. 5 months ago. She is old enough to apply for Social Security. Her husband already collects (he is app. 10 years older). He doesn't work.
She is currently collecting unemployment. Will last app. 4 more months. Job prospects are grim.
She has app. $20K in a high yield savings account. $30K in an IRA account (target retirement near term (2020?)). That is it. There is no more money. They rent.
She asked me what to do with the IRA. My recommendation was to move it to money market. In my opinion she shouldn't be taking any risk. Cash it out as needed next year. I'm not sure there is a better option.
Opinions?
I concur, money market account for the IRA.

Dave
I might suggest moving the IRA to a credit union where she could purchase, perhaps, higher rate certificate (CDs).

Depending on all the details, it might make sense for her to apply for Social Security. Does she, or can she get Medicare now? I might also suggest a full review of Medicare (and medical related) choices that might be "better" and lower cost - such as the Medigap plan they may have and whether a Medicare Advantage plan might or might not make sense.

Frankly, this does not sound all that close to being "broke" - with both receiving Social Security and eligible for Medicare (or close, if she is not).

The housing/rent expense seems to be the biggest "challenge". Are there any satisfactory, lower cost housing options? Does that locality have or fund any low income senior type housing that they might qualify for? Are there any more "creative" things they might do - such as house sharing or renting a separate area (mother-in-law suite) in a normally single family home?

How is her health? What kind(s) of work is she both qualified to do and able to do? Does she drive? If so, maybe some kind of medical assistance for someone who, among other things, needs transportation to medical appointments, kidney dialysis, etc. Some such folks with health/medical needs just may want/need some basic help at home for a few hours a week.

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dm200
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Re: Pretty much broke --- what would you advise?

Post by dm200 » Fri Aug 09, 2019 12:14 pm

delamer wrote:
Fri Aug 09, 2019 9:44 am
oldzey wrote:
Fri Aug 09, 2019 1:33 am
Annutizing the 50K in savings might be a consideration, in addition to the prior suggestions.
I disagree.

That would eliminate their cash cushion for any kind of emergency, like a car repair.

All the money should be kept savings or CDs
.

Are they both Medicare-eligible or is health insurance going to be an issue?
Yes! My opinion as well.

Sometimes, as well, such older folks, even of very modest means and assets, have some financial "drain" from family members. If this is their case, I might encourage them to cut that down or off.

In our local jurisdiction, the Social Services folks are often able to assist such folks by connecting them with appropriate services and resources.

Even in low unemployment environments, it is difficult for such folks to find employment from the normal ways. You often (as I did) need to find a niche where you can be gainfully employed.

stocknoob4111
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Re: Pretty much broke --- what would you advise?

Post by stocknoob4111 » Fri Aug 09, 2019 12:27 pm

iamblessed wrote:
Fri Aug 09, 2019 9:56 am
It would work in a small town in the Midwest.
there are some low cost metros as well, for instance Atlanta has some low cost suburban areas. Florida also has some metros that has lower cost housing in the suburban areas, for instance in Tampa bay.

david99
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Re: Pretty much broke --- what would you advise?

Post by david99 » Fri Aug 09, 2019 12:30 pm

She should get a job in a department store or do customer service. There are plenty of jobs.

thx1138
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Re: Pretty much broke --- what would you advise?

Post by thx1138 » Fri Aug 09, 2019 12:30 pm

Yes move the IRA out of stocks and into something more stable. It is essentially an emergency fund at this point.

I wouldn't obsess too much about where it gets put. Every 1% of interest on that 30K is going to work out to a whopping $25/month. If they already have access to a MM or bond fund just do that rather than going through the hassle of trying to transfer the IRA to some credit union with a slightly higher CD. Although given how financially unsavvy they must be might be worth checking there aren't disastrous fees associated with it at present.

JoeRetire
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Re: Pretty much broke --- what would you advise?

Post by JoeRetire » Fri Aug 09, 2019 12:30 pm

7eight9 wrote:
Thu Aug 08, 2019 8:40 pm
So today I had coffee today with one of my former coworkers. We all lost our jobs app. 5 months ago. She is old enough to apply for Social Security. Her husband already collects (he is app. 10 years older). He doesn't work.

She is currently collecting unemployment. Will last app. 4 more months. Job prospects are grim.
Why are job prospects grim? At least in my locale, you could walk down the street, turn into virtually any shop, and get a job on the spot.
She has app. $20K in a high yield savings account. $30K in an IRA account (target retirement near term (2020?)). That is it. There is no more money. They rent.

She asked me what to do with the IRA. My recommendation was to move it to money market. In my opinion she shouldn't be taking any risk. Cash it out as needed next year. I'm not sure there is a better option.

Opinions?
Nothing she could do with the IRA is likely to make much difference.

Unless the can basically live solely on their Social Security benefits, she needs to find a job. Any job. He probably should as well.

supersharpie
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Re: Pretty much broke --- what would you advise?

Post by supersharpie » Fri Aug 09, 2019 12:33 pm

7eight9 wrote:
Thu Aug 08, 2019 8:40 pm
So today I had coffee today with one of my former coworkers. We all lost our jobs app. 5 months ago. She is old enough to apply for Social Security. Her husband already collects (he is app. 10 years older). He doesn't work.

She is currently collecting unemployment. Will last app. 4 more months. Job prospects are grim.

She has app. $20K in a high yield savings account. $30K in an IRA account (target retirement near term (2020?)). That is it. There is no more money. They rent.

She asked me what to do with the IRA. My recommendation was to move it to money market. In my opinion she shouldn't be taking any risk. Cash it out as needed next year. I'm not sure there is a better option.

Opinions?
They can move to Thailand, Chile, or any other number of foreign countries where you can live well on $2000/month.

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Re: Pretty much broke --- what would you advise?

Post by Jack FFR1846 » Fri Aug 09, 2019 12:34 pm

Back to work.....anywhere.

Everyone is hiring. I'm talking all the retail stores I walk by, restaurants, supermarkets....everywhere. I noticed today in a storefront where one store just moved out, flyers getting taped to the window offering delivery jobs. Don't be picky. Take the first job offered. If a better one comes along, take that one.
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MoneyMarathon
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Re: Pretty much broke --- what would you advise?

Post by MoneyMarathon » Fri Aug 09, 2019 1:17 pm

7eight9 wrote:
Thu Aug 08, 2019 8:40 pm
She asked me what to do with the IRA. My recommendation was to move it to money market. In my opinion she shouldn't be taking any risk. Cash it out as needed next year. I'm not sure there is a better option.

Opinions?
The choice is the same whether it's $30k or $300k. They should have a conservative allocation that's expected both to conserve the large majority of the principal and be better than a money market account. Something like 30% stocks / 70% bonds is a much safer option, when trying to protect against destitution and running out of money. There's nothing safer about using a money market account. It should run out sooner and puts them at higher risk.

They should probably also work, while they can.

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GerryL
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Re: Pretty much broke --- what would you advise?

Post by GerryL » Fri Aug 09, 2019 1:37 pm

If they haven't done it already, they need to figure out where their money goes each month and then come up with a budget. That will tell them how much they need to bring in to go forward. And/or what changes they need to make in their spending.

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Nestegg_User
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Re: Pretty much broke --- what would you advise?

Post by Nestegg_User » Fri Aug 09, 2019 1:41 pm

sorry MM.... any realistic allocation to stocks won't move the needle at all.... agree with the consensus that they should find money market or equivalent so as to retain some value (at this point, inflation is the least of their worries)

with his SS so low (1100), it's clear that he took it at 62 (like many) and is now about 72. But there's no mention of his health, which would determine if he could even go back to work in any capacity, although BOTH should be looking for any position at this point. (With his age, being past FRA, there wouldn't be any loss of his existing SS income.)

I would say NO to Uber or delivery jobs, since they need to steward the vehicle for as long as they can, and those type jobs would seriously increase the wear and tear on the vehicle. It's likely the last vehicle that they will have since they clearly couldn't afford to replace it.
I would check with local senior services to determine if they are eligible for free bus passes.... and use those to get to and from the jobs that they need to get and to get to any appointments that they might need to go to.

As for their IRA, they likely wouldn't have to pay any taxes on withdrawals with their low income. Normally I would have said to withdraw from IRA up to the exemption limit and put those into taxable account in CD's ... but given their financial acumen (and I suspect general attitude) I would suspect that they would spend any funds in a taxable account in short order. Better to have it harder to reach so as to be available in a true dire situation.

As for relocations, they would need to be able to pay for that (and foreign countries have both limits to income and access to care (some have age limits as well)... and they would need to be able to maneuver the obstacles that that would entail)...hopefully they would have some family that could help ( they both might not be healthy enough to move their belongings, or at least all of their belongings). They clearly need a cheaper place to live than they have; if she claimed now to raise their income to only 2300/ month... the rent would be over half and be unsustainable, given that they need food, etc (and possibly meds, as well, along with any copays for medical).

...other than that, they might start looking for that nice location "down by the river" :(

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Re: Pretty much broke --- what would you advise?

Post by owenmia » Fri Aug 09, 2019 1:56 pm

What is there social security income?

It seems they should bring in $3,000 combined and they will survive. What am I missing?

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CAsage
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Re: Pretty much broke --- what would you advise?

Post by CAsage » Fri Aug 09, 2019 1:56 pm

Check out Mr. Money Mustache website and start cutting costs hard. They need to get a real handle on their living expenses, and rent cannot be more than half of that. If they are uncomfortable with downsizing, perhaps a smaller apt would be preferable to the one room they will get with family. On the other hand, if the children have big places, and need help around the house with daycare this could be a win-win. A Granny flat would be ideal! While jobs are plentiful in big cities (because the housing is so expensive no one earning minimum wage can afford to live/work there)... that's probably not true in every small town. Consider daycare as a job, or what other seasonal/part time work might be available in their town? Cut costs, that's the first step. Downsize?

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rascott
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Re: Pretty much broke --- what would you advise?

Post by rascott » Fri Aug 09, 2019 2:04 pm

As stated...not working is not an option. She's got to find something. Even $1500/mo would go a long way.

$1400 rent on a $2300 income is not doable.

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Nestegg_User
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Re: Pretty much broke --- what would you advise?

Post by Nestegg_User » Fri Aug 09, 2019 2:07 pm

owenmia wrote:
Fri Aug 09, 2019 1:56 pm
What is there social security income?

It seems they should bring in $3,000 combined and they will survive. What am I missing?
He's already started his at 1100 and her's is given at 1200, if claiming now; that's a bit of a distance from 3000 (700 off).... that's why we say that at least one of them needs to get a position, if not both.

StandingRock
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Re: Pretty much broke --- what would you advise?

Post by StandingRock » Fri Aug 09, 2019 2:10 pm

Jack FFR1846 wrote:
Fri Aug 09, 2019 12:34 pm
Back to work.....anywhere.

Everyone is hiring. I'm talking all the retail stores I walk by, restaurants, supermarkets....everywhere. I noticed today in a storefront where one store just moved out, flyers getting taped to the window offering delivery jobs. Don't be picky. Take the first job offered. If a better one comes along, take that one.
Yep... every convenience store I go into lately has a "We're Hiring" sign taped to the door.

Mr.BB
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Re: Pretty much broke --- what would you advise?

Post by Mr.BB » Fri Aug 09, 2019 2:12 pm

She needs to hold off Social Security as long as possible.
He need to get a job (even part time)..since he is collecting SS there are limits on how much he can earn before they start penalizing him for earned income over a certain amount ( I think $15,000?)

And as mentioned in previous posts, there a lot of unanswered questions that need addressing before proper advice can be given.
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MoneyMarathon
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Re: Pretty much broke --- what would you advise?

Post by MoneyMarathon » Fri Aug 09, 2019 2:14 pm

Nestegg_User wrote:
Fri Aug 09, 2019 1:41 pm
sorry MM.... any realistic allocation to stocks won't move the needle at all.... agree with the consensus that they should find money market or equivalent so as to retain some value
Even with a starting date like 2000, leading into the worst period for stocks in recent history, and even with a dangerously high average emergency-fund withdrawal of $2000 a year, the 30% stock allocation / 70% bond allocation outlasts the 100% cash allocation.

Image

No, it doesn't solve their problems. Far from it.

But putting all their assets in a money market account increases their problems and increases their risk. Even if it doesn't sound like it matters to all the relatively well-to-do people on this board, it does matter to someone with $50,000 in liquid assets.

They still need to find work, or find some other solution (a combination of cutting costs and increasing income) to their big picture problem of needing to be able to live below their means.

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Nestegg_User
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Re: Pretty much broke --- what would you advise?

Post by Nestegg_User » Fri Aug 09, 2019 2:40 pm

If I knew that they didn't need the funds I would at least have put them in a short CD ladder (3 yr max, since at present doesn't seem to be any benefit for longer) to bring in better than money market... they cannot take the risk of equities... they are effectively right in SOR right now and can't afford a drop in their positions. (you have to look at all possible outcomes, a la Firecalc or the like, and not just average outcomes... hence SOR; while agreeing that "on average" your solution of 30% should be better...they still run out of funds at or before their joint life expectancy)

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Watty
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Re: Pretty much broke --- what would you advise?

Post by Watty » Fri Aug 09, 2019 2:41 pm

stocknoob4111 wrote:
Fri Aug 09, 2019 12:27 pm
iamblessed wrote:
Fri Aug 09, 2019 9:56 am
It would work in a small town in the Midwest.
there are some low cost metros as well, for instance Atlanta has some low cost suburban areas. Florida also has some metros that has lower cost housing in the suburban areas, for instance in Tampa bay.
Atlanta is getting to be more of a medium cost of living city and public transportation is spotty so having a car is pretty necessary.

The numbers can work very well here for middle class people with a job but not so much for low income people.

We cannot talk about politics here but it would be fair to say that the laws in Georgia and much of the south are not very friendly for low income people.

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dm200
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Re: Pretty much broke --- what would you advise?

Post by dm200 » Fri Aug 09, 2019 2:42 pm

rascott wrote:
Fri Aug 09, 2019 2:04 pm
As stated...not working is not an option. She's got to find something. Even $1500/mo would go a long way.

$1400 rent on a $2300 income is not doable.
Yes - the rent/housing is the expense that seems to be the most challenging.

MoneyMarathon
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Re: Pretty much broke --- what would you advise?

Post by MoneyMarathon » Fri Aug 09, 2019 2:44 pm

Nestegg_User wrote:
Fri Aug 09, 2019 2:40 pm
while agreeing that "on average" your solution of 30% should be better...they still run out of funds at or before their joint life expectancy
Realistically, they can't retire yet, which is another reason to be in something like 30% stocks / 70% bonds. If they're going to be trying to cover their expenses by a combination of working and social security, for now while it's still possible to work, there's really no point in just putting it into a money market account or CD ladder.

MoneyMarathon
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Re: Pretty much broke --- what would you advise?

Post by MoneyMarathon » Fri Aug 09, 2019 3:09 pm

they cannot take the risk of equities
can't afford a drop in their positions
This is near-term loss aversion without actually thinking correctly about the big picture.

With 30% in equities, the equities could take two consecutive 50% drops, rebalancing into equities both times, and they'd still have about 70% of the account value if the bonds held, even in that darkest hour. That would be a fantastic time to have some money in stocks, too. In 2008, the 30% total US stock / 70% total bond allocation only lost 6.29% of its value.

The worst case is that (for some reason) you have to pull out all the money in the year with the biggest loss, but that's not the biggest risk. The biggest risk is running out of money sooner when considering all the ways one can run out of money.

And it's much more risky to be all in cash, in terms of when to expect account depletion.

How many people recommending permanently 100% cash are themselves in 100% cash permanently? If they also held 100% cash, at least they'd be consistent & not just coming up with inferior plans that they're pushing for other people to use.

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dm200
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Re: Pretty much broke --- what would you advise?

Post by dm200 » Fri Aug 09, 2019 3:15 pm

One, almost certain, "fact of life" is that she cannot count on being employed (if she can get a job) forever. While getting a paying job can address the high (as a percentage of their income) rent - that is not "forever". So, seems to me that finding a lower cost of housing is critical.

Timing is also important. From senior folks we know in similar financial condition, even if your locality has more affordable senior housing, there is often a wait for it to become available. So, the sooner they can get on such lists - the better.

There was mention of possibly living with their daughter. Maybe (depending on all details) the time to do this is before their financial situation turns more severe. In other words, maybe with part of the savings/IRA - they might be able to arrange a much better joint housing arrangement with the daughter.
Last edited by dm200 on Fri Aug 09, 2019 3:17 pm, edited 1 time in total.

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