Review my parents' humble retirement with me

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davibi02
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Review my parents' humble retirement with me

Post by davibi02 »

Hi All,

My parents are approaching retirement and asked for my input on their status. I'm elated they've asked because I've assumed things were not rosy for a while but didn't want to step on their toes. Thankfully they own their home outright and just have a smallish car debt. DF's IRAs are with Primerica which looks like a high-fee "multi-level marketing" deal so I'm advising that they roll them to Vanguard and will discuss what AA they're comfortable with. They feel behind and want to see some larger gains, but they are NOT optimistic about future stock performance so the AA ratio will be a roundabout conversation.

Both are not ready to stop working and plan to work until 70. An inheritance of $40,000 is expected in the next couple years.

A note on health care: DF is on a few meds, but generics exist. DM is on very expensive meds, 28 pills a day - at least $3,200/mo if they didn't have insurance.

Ideal (but perhaps unrealistic) outcome: They would like to move to a retirement community before faculties are too far gone. My grandmother's experience living alone through declining mental/memory issues has left them wanting to integrate into a new way of life before obstinance sets in.

Income
DF - Gross $3,200/mo
DF - SS $1,300/mo
DM - Gross $4,500/mo
Total - $9,000/mo
They also received 0.5% ownership in a ballteam. Last three years were not income-generating, but it has been in the past. Maybe this should be thought of as an asset. (Previously, it paid out $1,400, 3x a year.)

Expenses
House/Car Insurance - $170/mo
Monthly bills (water/gas/electrical/trash/internet/cell) - $410/mo
Gas - $250/mo
Car Payment - $180/mo (and an additional $200/mo to principle)
Giving - $520/mo
Property Tax - $250/mo
Groceries - $600/mo
Restaurants - $300/mo
Funny Money - $160/mo
Family - $150/mo obligation, but often more
Total - $3,190/mo

Savings
$400/mo to a separate savings account they've set aside for 'health costs'. It's just a normal savings account so I'll advise to open an HSA if possible.
$1300/mo to their savings account which is for the roof, and emergency fund.

Assets
Home - fully paid off, Zillow estimate is $330,000
Ball Team - 0.5% ownership, perhaps worth $75,000

Emergency funds: $28,000 in savings, much of which they plan to use for housing improvements like a new roof. The remainder will act as an emergency fund which should get them through four months if the roof cost is "worst case". They also have a separate savings account they mentally segregate for "health costs" - $3,000 ($400/mo)

Debt: $8,300 car loan at 2.69%

Tax Filing Status: Married Filing Jointly

Tax Rate: 22% Federal, 4.25% State, 0.75% City

State of Residence: Michigan

Age: DM - 66, DF - 66

Total Portfolio
His ROTH IRA - $10,555
His IRA - $16,000
Her 457 - $19,866 (Still looking into the allocation so this amount is not included in the breakdown below.)
Her VEBA - $8,200 (Not able to find detailed information on this so it's not included.)

Total of His ROTH IRA and IRA $26,500
36.5% Invesco Equally-Weighted S&P 500 Class A (VADAX) 0.53%
23.7% Invesco Asia Pacific Growth Fund (ASIAX) 1.46%
31.6% Invesco Equity and Income Class A (ACEIX) 0.78%
8% Invesco American Value Class A (MSAVX) 1.21%

His Roth IRA at Primerica $10,554.60
44% Invesco Equally-Weighted S&P 500 Class A (VADAX) 0.53%
27% Invesco Asia Pacific Growth Fund (ASIAX) 1.46%
21% Invesco Equity and Income Class A (ACEIX) 0.78%
7% Invesco American Value Class A (MSAVX) 1.21%

His IRA at Primerica $16,006.24
23% Invesco Equally-Weighted S&P 500 Class A (VADAX) 0.53%
21% Invesco Asia Pacific Growth Fund (ASIAX) 1.46%
47% Invesco Equity and Income Class A (ACEIX) 0.78%
9% Invesco American Value Class A (MSAVX) 1.21%

Her 457
$19866.11 - (Still looking into the allocation.)

Contributions
$275/mo to His Roth IRA
$62/mo to Her 457

Pensions
DF - Social Security started at age 66 - $1,300 (currently directed to the roof/emergency savings account)
DM - Social Security not yet. Thinking to wait for 70.
DF - TRS PLAN 3 - $27,000 (Lump, not enough service credit to be eligible for a benefit. I am recommending rolling to Vanguard if possible.)
DM - WA SERS 3 - $303/mo (Hasn't signed up yet. I am advising to. $338 for no spousal benefit, $303 for 66% survivorship benefit.)
DM - MI PERS - $735/mo (Hasn't signed up yet. Estimate is for 70yr old retirement with 100% survivorship benefit.)

My thoughts:
1. DM ask employer if they have an HSA instead of using a 'normal' savings account.
2. Roll DF primerica IRAs to vanguard 3-fund.
3. Roll DF TRS lump to vanguard.
4. Open IRA for DM at vanguard.
5. DM start her WA SERS3 retirement.
6. Up savings on the vanguard IRAs to $1,000/mo ($12,000/yr)
7. Beyond that, up contributions to DM 457 as much as possible, and review investment choices.

Questions:
1. Contributions to ROTH seems weird to me. Should they instead contribute to non-ROTH?

2. Any reason DM wouldn't wait until 70 to take social security?

3. Any reason DM shouldn't begin her SERS3 benefit?

4. Is a retirement community out of the question?

5. What other advice would you provide if these were your parents?

Thanks, all, for your assistance. My parents are lovely humans and I want to help them be as secure as possible in their humble retirement.
Last edited by davibi02 on Mon Jul 19, 2021 12:39 pm, edited 1 time in total.
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retired@50
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Re: Review my parents' humble retirement with me

Post by retired@50 »

davibi02 wrote: Mon Jul 19, 2021 12:11 pm Tax Rate: 16% Federal, 4.25% State, 0.75% City

State of Residence: Michigan
Are you certain about the Federal rate?
I'm not aware of a 16% Federal bracket. Maybe 12% or 22%.

Check here: https://www.nerdwallet.com/article/taxe ... x-brackets

Just update your original post with the corrected rate.

Regarding Social Security claiming strategies, plug the relevant information into this tool (linked below) to get some ideas about what might work best.
SS tool link: https://opensocialsecurity.com/

I'd be careful about getting involved with the Health Savings Account (HSA) as these sorts of things typically require a High Deductible Health Plan (HDHP) which may or may not be suitable for them with the given medical issues you mentioned.
Link (See section 6): https://www.bogleheads.org/wiki/Health_savings_account

Roth contributions could be the right answer, it really depends on their current tax bracket, and whether or not that will change in the future. If they are only paying 12% Federal now, I might be inclined to use Roth. If the current rate is higher (like 22%) then a tax-deferred contribution to a traditional plan would probably be best.

Regards,
This is one person's opinion. Nothing more.
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davibi02
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Re: Review my parents' humble retirement with me

Post by davibi02 »

retired@50 wrote: Mon Jul 19, 2021 12:21 pm Are you certain about the Federal rate?
I'm not aware of a 16% Federal bracket. Maybe 12% or 22%.

Roth contributions could be the right answer, it really depends on their current tax bracket, and whether or not that will change in the future. If they are only paying 12% Federal now, I might be inclined to use Roth. If the current rate is higher (like 22%) then a tax-deferred contribution to a traditional plan would probably be best.
Thanks, fixed. They're in the 22% bracket. I appreciate your response.
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MrBobcat
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Re: Review my parents' humble retirement with me

Post by MrBobcat »

My thoughts:
1. DM ask employer if they have an HSA instead of using a 'normal' savings account.
Being they're both 66, I'm assuming they're both enrolled in Medicare? If they are enrolled in Medicare then they won't be able to do and HSA.
HomeStretch
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Re: Review my parents' humble retirement with me

Post by HomeStretch »

Agree about rolling over all the high-ER IRAs to a low-cost provider such as Vanguard, Fidelity or Schwab to reduce your parents’ investment costs.

Once you have determined your mom’s SS benefit, the question to answer is whether their retirement income will fully cover their retirement expenses. Their monthly expenses of $3190 needs to be adjusted to exclude work-related expenses and include income taxes and healthcare costs.

My guess is that retirement income may not fully cover retirement expenses and they will need to use portfolio withdrawals to cover the gap. Try to back into the annual savings contributions they need to make between now and retirement in order to have enough to fully fund net expenses.

To increase their monthly savings contributions, take a close look at their monthly expenses. ~20% is going to charitable and family giving. My suggestion is they cut that back to $0 and redirect 100% of that money to their savings.

If you really think the ball team ownership is worth $75,000, consider selling it (if possible) and add the proceeds to their retirement savings.

Your parents have a lot of equity in their home. Can they reduce their monthly expenses with alternate housing? A reverse mortgage may be a future option if they run short for living expenses or long term care.
Jack FFR1846
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Re: Review my parents' humble retirement with me

Post by Jack FFR1846 »

Get rid of the weirdness and illiquidness and high cost garbage.

That means doing whatever they can to liquidate the IRA positions, then transfer the accounts to Vanguard/Fidelity/Schwab, whoever you want of the 3.

Sell the baseball team stakes.

DW is currently executor of her aunt's estate. She passed in December and even with run of the mill insurance policies, beneficiary status on various accounts and way old savings bonds never put in her name (they're in DW's grandparents' names), it is hours and hours and hours of her time and hours of billable hours for the lawyer. Lose as much weirdness as possible for heirs' sakes.
Bogle: Smart Beta is stupid
cbs2002
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Re: Review my parents' humble retirement with me

Post by cbs2002 »

I'd create a budget for age 70 assuming they are not working now. Figure out the cost of medical coverage once they go on Medicare and make sure that's included.

For between here and there:

The great thing is that they own a home outright and expenses are way under income. Good news! Working until 70 if both are healthy and happy would be great. I hope that is possible.

My read it that they are at about $440K NW today, not including the team ownership which I cannot comment on. They could save 30-40K/annually for the next 3-4 years IF all the chips fall their way, which is a big if at that age. So they could end up in the 500K NW area. They need to preserve their savings and generate income, not risk investing for return. I'd probably just put all retirement assets into a Vanguard retirement income fund(s).

Guaranteed income at 70 is $2300/mo + mother SS - is that right? So more than $3K/month? Firm up this number. Use the open SS calculator to determine what is optimal. That's not bad.

You'll want to look at how MI treats IRA income. This could argue in favor of using a traditional IRA to defer federal tax and state tax now if the state tax on withdrawal would be lower than on gross income today. If it's the same it's probably irrelevant.

I'm a big fan of charitable giving but giving away $6K/year in their situation is not wise. This is very personal I understand.

Costs of living in a retirement community are wildly variable, so best to choose a few reasonable candidates and start getting quotes to see if it's realistic. Also consider whether you would be willing to backstop those costs should something change out of anyone's control.
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JoeRetire
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Re: Review my parents' humble retirement with me

Post by JoeRetire »

davibi02 wrote: Mon Jul 19, 2021 12:11 pm Both are not ready to stop working and plan to work until 70.
That's great. Are they healthy enough to do so?
A note on health care: DF is on a few meds, but generics exist. DM is on very expensive meds, 28 pills a day - at least $3,200/mo if they didn't have insurance.
It's fortunate that they have insurance. I assume they are not yet on Medicare, since I don't see it listed in "Expenses"? I don't see other healthcare insurance listed their either.
Ideal (but perhaps unrealistic) outcome: They would like to move to a retirement community before faculties are too far gone.
Have they priced out such a move? Goals are nice. But they are better when you know the financial details. Otherwise they are more like wishes.
Age: DM - 66, DF - 66

Total Portfolio
His ROTH IRA - $10,555
His IRA - $16,000
Her 457 - $19,866 (Still looking into the allocation so this amount is not included in the breakdown below.)
Her VEBA - $8,200 (Not able to find detailed information on this so it's not included.)
Yikes! What happened here?
Pensions
DF - Social Security started at age 66 - $1,300 (currently directed to the roof/emergency savings account)
DM - Social Security not yet. Thinking to wait for 70.
It may have been a mistake for dad to have already started collecting social security.
Check out https://opensocialsecurity.com/

It might make sense for dad to suspend his benefits until 70 and start mom's at her full retirement age, or vice versa. It depends on the size of each of their benefits, along with a few other inputs (like expected longevity). The tool will tell you.
This is particularly important for your parents, since they have virtually no retirement assets. They should strive to maximize their guaranteed, tax-beneficial, spouse and survivor-beneficial, inflation protected income stream.
2. Any reason DM wouldn't wait until 70 to take social security?
Check with https://opensocialsecurity.com/
4. Is a retirement community out of the question?
Not necessarily. The equity in their current home may help get them in. Start researching now.
Just remember: it's not a lie if you believe it.
Nebraska_Drought
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Re: Review my parents' humble retirement with me

Post by Nebraska_Drought »

I second the idea of a "now" budget and a "@ 70" budget. This will give them an idea of what their expenses will be (car debt should be gone) and if their current and future income streams will cover it.

The ball team is interesting. I am guessing that one of the other owners would/could buy them out? How was the value you put on the team ownership derived?

Family obligations? Their only obligations should be to themselves. This needs to end with that money directed towards their future retirements (not knowing the details of this, it may sound harsh but I still believe in "paying yourself first" before extending funds to other places where you get zero return on them).

As others have noted, charitable giving is a large chunk of their monthly expenses. This needs to be thought over as they need to start thinking of themselves going forward or they may very well be in need of the charity they are contributing to.

It is great that they are looking to you for help. Most all of what you have said you are doing is ideal, IMO.
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davibi02
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Re: Review my parents' humble retirement with me

Post by davibi02 »

@retired@50, @MrBobcat
Thanks for feedback on HSA, you saved me a research dead-end!

@MrBobcat, @JoeRetire
I know nothing about medicare, so I appreciate everyone's responses. Both parents are signed up for medicare part A. My understanding from them is that part A does not cost anything. They said they'll sign up for B and D six months before they retire. They "have a guy" advising them on this topic. (Who I'll certainly be digging more into.) Mom has the option to buy into health care in retirement from two prior jobs, but she thinks the costs may be prohibitive, similar to COBRA. I've asked her to do more research on this so we can dial in our target.

@retired@50, @JoeRetire
I'll work with them on digging into OpenSocialSecurity. I didn't realize one could suspend benefits after starting them! Mom is anticipating good yearly raises, but Dad is not so I think it's wise for Mom to wait but we'll do the math.

@HomeStretch, @cbs2002, @JoeRetire, @Nebraska_Drought
They've both been dedicated to generosity/serving/giving, and I think their low net worth is partly related to this. Salary has never been a motivation for either of them, and they effectively sacrificed their wage earning years to low-paying careers helping others. Ignorance and avoidance certainly have also played a part. I'm just glad we're finally discussing it! Working on the 'now' and '@70' budgets will be a tricky thing, but I appreciate the advice to take care of themselves first. Mom is frugal, but dad has a history of (small) impulse spending sprees I fear won't be easily wrangled.

@HomeStretch, @Jack FFR1846, @Nebraska_Drought
The ballteam was an inheritance. The 75k valuation is an educated guess based on another owner selling their stake.

Additonal Action Items:
8. Mom research medical options from prior jobs.
9. Opensocialsecurity research.
10. Budget for Now (be serious, particularly about giving/family) and @70 (include healthcare and subtract work expenses).
11. Research retirement community pricing, and set expectations regarding unit size on their budget, etc.
12. Investigate selling ballteam.

You're all awesome. Thank you for weighing in.
delamer
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Re: Review my parents' humble retirement with me

Post by delamer »

Here’s some information on continuing care retirement communities: https://www.aarp.org/caregiving/basics/ ... ities.html

It may be that such an arrangement is a possibility for your parents, if they use their current home equity is an entrance fee and their income covers the monthly fees. Or they could go to a place without an entrance fee and draw down the equity from the house sale to help cover the monthly fees.

As the article notes, there are many different arrangements, costs, and levels of service. All they/you can do is investigate places that appeal to them and get details on costs.

My mother lived in a CCRC for 15 years in an independent apartment and then spent the last 6 months of her life in their skilled nursing facility. It was a good arrangement for her after my father died. Their home equity covered the entrance fee, and her pension, Social Security, and investments more than qualified her to cover the monthly fees.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. | | Alexandre Dumas, fils
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davibi02
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Re: Review my parents' humble retirement with me

Post by davibi02 »

delamer wrote: Mon Jul 19, 2021 10:02 pm Here’s some information on continuing care retirement communities: https://www.aarp.org/caregiving/basics/ ... ities.html
Thanks for the link and relaying your mother's experience. We'll check it out!
kelvan80
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Re: Review my parents' humble retirement with me

Post by kelvan80 »

Is that a realistic budget? What have they been doing with the surplus previously? Seems like a large difference between what they bring home and what they are spending on paper.
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davibi02
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Re: Review my parents' humble retirement with me

Post by davibi02 »

kelvan80 wrote: Tue Jul 20, 2021 6:57 pm Is that a realistic budget? What have they been doing with the surplus previously? Seems like a large difference between what they bring home and what they are spending on paper.
We haven't done a budget yet. I agree it's lacking in detail, and I'm concerned there are some more things hiding in the weeds. Income - expenses+savings = something doesn't add up! We had our first serious conversation about what will be needed from them and things of course it didn't go smoothly. Reading between the lines, they aren't including what they "do for others" in the numbers they gave me. For example, groceries for themselves was included, but food they buy for others wasn't brought up. I fear the "surplus" isn't going in their coffers.

We'll speak again in two days and my very specific plan for them thus far is:

IMMEDIATE
1. Maximize income:
Mom start SERS3
Stop additional payments on car ($200/mo go to IRA instead)
Side Job(s) if possible

2. Build and FOLLOW a FIRM budget. (I will get them set up with a budget software I like: YNAB.)

3. Contributions:
DAD - 403b at 6% for 3% FREE match (I found out he has a plan available and isn't contributing yet.)
Open Vanguard non-ROTH IRA for Mom
Rollover Primerica IRAs x2 and Dad's TRS to new Vanguard IRAs.

4. After IRA 12k ceiling is reached for 2021, contribute to 457 and 403b, as much as possible (TBD after thorough budgeting)

5. I will talk to my adult siblings and let them know Mom and Dad are in worse shape than maybe we've realized and the familial "obligations" are hindering their chances of a decent retirement. I expect they'll be understanding, but my parents will still need to be convinced of this because giving is definitely their "love language". I doubt my siblings have a clue.

*Mom agreed to give the above a shot. Dad is... noncommittal thus far. In four months, we will review their progress and have agreed that they'll let me be a pushy jerk then, if they need it.

RESEARCH
1. Mom research post-retirement medical plan options from prior jobs.

2. Opensocialsecurity research (should dad suspend?)
https://opensocialsecurity.com/

3. Research retirement community pricing. Realistic and specific.
https://www.aarp.org/caregiving/basics/ ... ities.html

4. Build an "@70" budget including healthcare and retirement community costs.

5. Investigate selling ballteam.


I reiterate my appreciation to everyone who has chimed in!!!
Tracker968
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Re: Review my parents' humble retirement with me

Post by Tracker968 »

Didn't you write that their gross income is $9k per month? I am in the process of moving my mother into a senior apartment in MN. Nice one bedroom apartments with kitchen and large living/dining room are only about $2500 per month. There is no buy-in cost in most places. It seems that your parents could afford that with their cash flow. Their other assets could be used if and when they need to move to assisted living down the road. In my mother's case she has waited too long to move out of her house, so won't be able to take advantage of many of the amenities the senior living center has to offer.
kelvan80
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Re: Review my parents' humble retirement with me

Post by kelvan80 »

So they may benefit from a little bit of Dave Ramsey if you think they'd be into it. At least then they'd understand the budget on paper on purpose kind of talk. My parents and your parents sound ALOT alike but yours are in a much better retirement situation. I'd actually pay that car off with the first two month's "surplus" if it's really there so they can wipe that debt out completely. Did I miss why your Mom would open up a non-Roth IRA? Definitely get the match going for Dad as soon as possible as that's leaving free money on the table.
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JoeRetire
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Re: Review my parents' humble retirement with me

Post by JoeRetire »

davibi02 wrote: Mon Jul 19, 2021 9:18 pm They've both been dedicated to generosity/serving/giving, and I think their low net worth is partly related to this.
That's nice. Seems like now is the time to stop all that, so that they aren't forced to live on the generosity of others (you?) after retirement.

If down the road they somehow have extra funds after accounting for all their future expenses, they can again resume being generous.
Just remember: it's not a lie if you believe it.
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djpeteski
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Re: Review my parents' humble retirement with me

Post by djpeteski »

I would sell the ball team stake, but value it at less than 21K not 75K.

If the income was consistent you would have: 1300*3 = 4200

20% valuation: 21,000

If someone offered them 20K, I would take it. It is a cool luxury, but the last thing they need is inconsistent income or requirements for additional investments. Myself, I would be tempted to buy just to say I was part of an ownership group. Others may be willing to pony up a lot more money to have that "flex".
Freetime76
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Re: Review my parents' humble retirement with me

Post by Freetime76 »

Hello, I have a few comments, maybe a little different from the nuts and bolts advice:

1. I’d keep the charitable giving at 10% under the assumption that it adds meaning and connection to their lives (be it church, favorite charities or coins in the Salvation Army buckets). (If it’s pushover, guilt giving scrap it.) Community connection is its own kind of wealth especially when it creates a small army of people who help look out for them when they need it. I would cut the monthly handouts to family, but you do need to include gifts and cards somewhere.

2. My gut feeling is “they are ok” (income less than expenses and not drowning in debts plus some savings), BUT this is an excellent opportunity to simplify. It will be easier for them to manage and plan. Consolidate accounts, choose low cost holdings that do not need to be watched and eliminate the drag of fees that don’t add value (I.e. fund xyz may be great now, but do we really want to monitor it for the next 15 years to know when it starts to stink up the place? No. We do not. :D Make it easy with investments that don’t need monitoring.).

3. Housing. You might read and share a book called Age In Place, by Lynda Schrager. This book is circulating around our family, and the author dares to say that most can stay in their homes with preparation. It is less expensive, and avoids the uprooting isolation (and cost) that some find moving at a late age. Lots of photos and real stories as examples. My mom and I are going through it. I’m posting it to say that your parents may not *need* a retirement community, if they wish to stay where they are (or move to a smaller place that isn’t *senior* living). Your parents make me think of this book because you mentioned their lifetime sacrifices in care and money as part of giving, and it may be a help to them. Anyway, wherever they decide to live, the book has loads of simple solutions to do now, before a fall or problem happens (before obstinance sets in!)

4. Money-wise, I’d try to be living on income and adding to savings/retirement accounts while they’re working. When they have to start taking RMDs, take the minimum. If they’re staying in their home, try to get repairs and big ticket items taken care of while they have an income (pay for them, not on a loan).

5. Also, a friend told me that the best thing she did to stay young was to keep working. The worst was to move near the grandkids - lol - no schedule, no reason to get up and dressed in the a.m., and no friends to see at lunch :wink: . If they want to keep working and contributing - super! (Good on them for liking their work.)

ETA: If they haven’t shopped for homeowners/auto insurance or cell phone plans in a while, you might suggest they look into it (since they’re changing up everything else :happy).

[Too funny that they’re making a housing decision “before obstinance sets in”. Please tell me they chose those words, because I’m telling my mom about it (I read her Bogleheads sometimes, and “obstinacy” is a topic :sharebeer ).]
Please spell out new acronyms. Thank you.
GuyInFL
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Re: Review my parents' humble retirement with me

Post by GuyInFL »

JoeRetire wrote: Mon Jul 19, 2021 1:35 pm It might make sense for dad to suspend his benefits until 70 and start mom's at her full retirement age, or vice versa. It depends on the size of each of their benefits, along with a few other inputs (like expected longevity). The tool will tell you.
This is particularly important for your parents, since they have virtually no retirement assets. They should strive to maximize their guaranteed, tax-beneficial, spouse and survivor-beneficial, inflation protected income stream.
+1
Suspension definitely makes sense to me with him in the 22% tax bracket. They will likely be in a lower bracket once they retire and by suspending it, they will have increased SS.
dknightd
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Re: Review my parents' humble retirement with me

Post by dknightd »

It sounds like you have things well under hand. Or at least will soon. Good job! I'm glad they asked for your help, it is so much easier that way.

I wonder, did they ask for your help, to help you figure out your own situation? That might be something I would do. As a caring parent.

It is surprising to me they have so little saved. They otherwise seem to be responsible and caring people. But I suspect they will be fine financially and still be responsible and caring people. My guess is you learned that from your parents :)

Some random thoughts.
Your Dad should at least do 401k contributions up to the company match as long as he is working! It is a shame he's been giving up that money for perhaps many years. But that is water under the bridge.

With SS definitely use the site linked above. It is brilliant. And free. But you will need to know your Mom's and Dad's PIA. For most working couples, having the less paid claim at FRA and the higher paid claim at 70 is a good way to go. It seems like their guy has already suggested that to them, or they figured it out themselves. It is probably worth you finding out who this "other guy" is. And talk to them. They could be a useful ally.

Charitable donations are always a tricky thing. My mom and I agree. Give as much as you feel comfortable with. If you do not feel comfortable giving any more, then it is time to let others take over. I do not want to be a charity recipient. But that means I can not contribute anymore than I can afford. It is somebody else's turn when I have no excess dollars.

The back of my envelope says they will be fine. They have a paid off house. Some SS and pension income.

People have suggested figuring out a now budget, and an after 70 budget. To that I would add figure out what happens if one of them dies first. For us that only works if the higher earner claims SS at 70, and all pensions and annuities are taken dual life.

I do not know enough about living in a retirement community. It seems very complicated. And would require I move. It might have to happen one day.

Edit: getting your siblings involved in the discussion is a very very good idea.
Last edited by dknightd on Wed Jul 21, 2021 7:59 am, edited 1 time in total.
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backpacker61
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Re: Review my parents' humble retirement with me

Post by backpacker61 »

davibi02 wrote: Mon Jul 19, 2021 12:11 pm
Pensions
DM - WA SERS 3 - $303/mo (Hasn't signed up yet. I am advising to. $338 for no spousal benefit, $303 for 66% survivorship benefit.)

My thoughts:

5. DM start her WA SERS3 retirement.

Questions:

3. Any reason DM shouldn't begin her SERS3 benefit?
Will this benefit continue to increase if your mother delays filing for WA SERS3?

I qualify for a small pension, and it will continue growing until I file for it.

I am required by the IRS to begin receiving it before April 1 of the year after the year I turn 72, but it continues increasing each month I delay filing for it up to that point.

That would be worth doing, IMHO.
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Re: Review my parents' humble retirement with me

Post by Wiggums »

JoeRetire wrote: Wed Jul 21, 2021 5:08 am
davibi02 wrote: Mon Jul 19, 2021 9:18 pm They've both been dedicated to generosity/serving/giving, and I think their low net worth is partly related to this.
That's nice. Seems like now is the time to stop all that, so that they aren't forced to live on the generosity of others (you?) after retirement.

If down the road they somehow have extra funds after accounting for all their future expenses, they can again resume being generous.
I have no doubt that your patents are wonderful, loving, caring people. Don’t let your parent’s bury their head in the sand. You must be able to account for the income and expenses in order yo help them.

I have the same issue with my in-laws. My wife had to make it clear to her parents that no one in the family had the resources to bail them out. My in-laws need to dramatically cut their giving. They think by not telling anyone, it will all work out. They came close to being homeless, but an aunt left then a small condo. My in-laws want to make money decisions, but are horrible at money management.

Good luck to you.
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Re: Review my parents' humble retirement with me

Post by dknightd »

That is the best thing about charitable contributions. You do not have to make them. It is elective.
If you value a bird in the hand, pay off the loan. If you are willing to risk getting two birds from the market, invest the funds. Retired 9/19. Mortgage payed off 5/21. I have some 0% loans to pay off.
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Re: Review my parents' humble retirement with me

Post by delamer »

Wiggums wrote: Wed Jul 21, 2021 8:01 am
JoeRetire wrote: Wed Jul 21, 2021 5:08 am
davibi02 wrote: Mon Jul 19, 2021 9:18 pm They've both been dedicated to generosity/serving/giving, and I think their low net worth is partly related to this.
That's nice. Seems like now is the time to stop all that, so that they aren't forced to live on the generosity of others (you?) after retirement.

If down the road they somehow have extra funds after accounting for all their future expenses, they can again resume being generous.
I have no doubt that your patents are wonderful, loving, caring people. Don’t let your parent’s bury their head in the sand. You must be able to account for the income and expenses in order yo help them.

I have the same issue with my in-laws. My wife had to make it clear to her parents that no one in the family had the resources to bail them out. My in-laws need to dramatically cut their giving. They think by not telling anyone, it will all work out. They came close to being homeless, but an aunt left then a small condo. My in-laws want to make money decisions, but are horrible at money management.

Good luck to you.
I’ve seen this problem with other elders. They want to continue to live the way they always have, but won’t/can’t acknowledge the burden that puts on other people. They think they are independent but they are really not. If Meals on Wheels brings your dinner, your grandson cuts your lawn, your son drives you to your doctors’ appointments, and your daughter cleans your house every week, you aren’t living independently just because you’re in your home of 40 years.
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Re: Review my parents' humble retirement with me

Post by Jablean »

SS - I think your dad is fine, he didn't receive until 66 and he's the lower income spouse.
IRAs - are you including the extra $1000 a year for each person for 55+ catchup?
Medicare - find out more about why not signing up for more than A - how are her drugs getting paid for? Her "cobra" may be best, do some searching on what drugs Medicare covers and/or Medicare Advantage plans. Formulary changes every year but need to know if the drugs are at least covered somewhere now.
Budget software - I'm betting you might use it, them not so much. Probably easier to set up automatic transfers once their checks hit their bank/credit union. Get that money out of their checking account.
Her 457 - is this still active can her percentage be upped? and/or knock dad's 401k to full instead of just 6% to get their cash flow stashed away before they see it as spendable.
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Re: Review my parents' humble retirement with me

Post by David Jay »

Jablean wrote: Wed Jul 21, 2021 1:24 pmHer 457 - is this still active can her percentage be upped? and/or knock dad's 401k to full instead of just 6% to get their cash flow stashed away before they see it as spendable.
This is a great idea.
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Re: Review my parents' humble retirement with me

Post by Jack FFR1846 »

Is the giving something that is to something they believe in?

I'm asking because when a relative was in a horrible accident and we looked after her finances for a while, we found in going through past checks that she literally wrote a check to every so called charity that found her address and sent a flyer. What I found was that she contributed to both the "Save the Owls Fund" and also the "Kill the Owls Fund". Not real funds, but opposites. Political things as well, sending money to Republican candidates and to Democrat candidates in the same race. If the same amount had gone to her church that she had been in since a child, I could see it. But she was wasting vast amounts of money. None of her donations had 10 seconds of thought put into them.
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Re: Review my parents' humble retirement with me

Post by celia »

I wouldn’t suspend dad’s SS. I would have him cancel it and pay back what he’s received so far. From his full retirement age (66.5?) until 70, the amount of their monthly SS benefit will increase 8% each year they wait!!! Where else can you get a guaranteed rate of growth that will benefit you for the rest of your life!!! When he re-starts SS, his monthly benefit will be at least 24% more than it is now.

BOTH parents should start maxing out their contributions to employer plans. The more they automatically save now, the more they will have in retirement.

To tighten up their budget, they should write down every single thing they spend money on including things withheld from their paychecks. Try to account for every dollar. There appears to be some serious ‘leakage’ somewhere. Tell them you don’t care so much WHERE the money goes as much as the AMOUNTS. Just the act of writing it down and saving receipts in order to see the current spending patterns can help them reign in their spending.

Also, take someplace like the supermarket and ask them to do this for a few months: as they are putting things on the conveyor belt, have them separate 1) their own food from 2) food for others and 3) non-food items. Pay for each category separately and leave with 3 receipts. If they can do that for 3 months, they will start to see how much they are spending in these 3 separate categories.

Toss each pay stub and receipt in an envelope for the month and then it will be easier to create an as-is budget. You can’t make the spending better if you don’t even know where you are starting from.
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Re: Review my parents' humble retirement with me

Post by HeelaMonster »

celia wrote: Wed Jul 21, 2021 6:20 pm ..... To tighten up their budget, they should write down every single thing they spend money on including things withheld from their paychecks. Try to account for every dollar. There appears to be some serious ‘leakage’ somewhere. Tell them you don’t care so much WHERE the money goes as much as the AMOUNTS. Just the act of writing it down and saving receipts in order to see the current spending patterns can help them reign in their spending.....
Agree this is a useful exercise, and important to get a realistic handle on actual expenses. There may be a benefit in having them do this "manually" (i.e., item-by-item, in real time), as described here... if it helps with "behavior modification" or serves as a wakeup call, for example.

But if this proves cumbersome or unworkable, we found it to be very easy to track our monthly expenditures and assess our budget heading into retirement, as follows... In our case, ALL of our expenses ultimately come out of our checking account, either through auto-withdrawals (e.g., utilities), direct checks, or paying off credit card. Thus, it was easy to sit down with monthly bank statements, record the total debit amount, and back out any unusual, onetime expenses that would not continue as part of our routine spending in retirement (e.g., contributions to IRAs, reimbursed travel, gifts, and so on). You could also capture total credits (income) at same time, though we did not bother (since none of that would continue in retirement, from those same sources). It took maybe 15 minutes to tally debits for an entire year. After repeating for three years, and seeing how remarkably consistent expenses were over that time, it gave us good confidence in amount needed to support retirement... and made it easy to pull the trigger, when time arrived.

Good luck to you and parents!
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Re: Review my parents' humble retirement with me

Post by davibi02 »

Tracker968 wrote: Tue Jul 20, 2021 9:35 pm Didn't you write that their gross income is $9k per month? I am in the process of moving my mother into a senior apartment in MN. Nice one bedroom apartments with kitchen and large living/dining room are only about $2500 per month. There is no buy-in cost in most places. It seems that your parents could afford that with their cash flow. Their other assets could be used if and when they need to move to assisted living down the road. In my mother's case she has waited too long to move out of her house, so won't be able to take advantage of many of the amenities the senior living center has to offer.
Yes, 9k/mo income while working. They'll be down to about $3,500 once they've both stopped working. Thanks for sharing your mom's experience.
kelvan80 wrote: Tue Jul 20, 2021 11:49 pm So they may benefit from a little bit of Dave Ramsey if you think they'd be into it. At least then they'd understand the budget on paper on purpose kind of talk. My parents and your parents sound ALOT alike but yours are in a much better retirement situation. I'd actually pay that car off with the first two month's "surplus" if it's really there so they can wipe that debt out completely. Did I miss why your Mom would open up a non-Roth IRA? Definitely get the match going for Dad as soon as possible as that's leaving free money on the table.
Ooh, I think holding paying off the car as a "carrot" is a great idea. My mom is very averse to the idea of debt and "allowing" her to pay off the debt may be a nice motivator to stick to the rest of the plan. :)
The reason for non-ROTH for my mom's IRA is that their retirement income is small enough to be in a lower tax bracket than if she paid the taxes now on a ROTH. I don't doubt I've missed something though, if you have another thought.
JoeRetire wrote: Wed Jul 21, 2021 5:08 am
davibi02 wrote: Mon Jul 19, 2021 9:18 pm They've both been dedicated to generosity/serving/giving, and I think their low net worth is partly related to this.
That's nice. Seems like now is the time to stop all that, so that they aren't forced to live on the generosity of others (you?) after retirement.

If down the road they somehow have extra funds after accounting for all their future expenses, they can again resume being generous.
Yup! I agree. I know I won't be able to talk them out of a 10% tithe, so I won't even try, but everything else needs to be a thing of the past. Thankfully it sounds like my sibling with kids is in agreement after a cursory heads up, so I have some allies in the "grandparent" arena. Non-family giving will probably still be a hang up we'll have to work through.
djpeteski wrote: Wed Jul 21, 2021 5:34 am I would sell the ball team stake, but value it at less than 21K not 75K.

If the income was consistent you would have: 1300*3 = 4200

20% valuation: 21,000

If someone offered them 20K, I would take it. It is a cool luxury, but the last thing they need is inconsistent income or requirements for additional investments. Myself, I would be tempted to buy just to say I was part of an ownership group. Others may be willing to pony up a lot more money to have that "flex".
It certainly is a cool luxury! I live in another state and they send me an unlimited-use card that gets me into any minor league game for free, park for free, sit wherever I want. I feel like a VIP!
I'm unfamiliar with the 20% valuation. Can you tell me more about how you came up with 21,000? Thanks!
Freetime76 wrote: Wed Jul 21, 2021 6:46 am Hello, I have a few comments, maybe a little different from the nuts and bolts advice:

1. I’d keep the charitable giving at 10% under the assumption that it adds meaning and connection to their lives (be it church, favorite charities or coins in the Salvation Army buckets). (If it’s pushover, guilt giving scrap it.) Community connection is its own kind of wealth especially when it creates a small army of people who help look out for them when they need it. I would cut the monthly handouts to family, but you do need to include gifts and cards somewhere.

2. My gut feeling is “they are ok” (income less than expenses and not drowning in debts plus some savings), BUT this is an excellent opportunity to simplify. It will be easier for them to manage and plan. Consolidate accounts, choose low cost holdings that do not need to be watched and eliminate the drag of fees that don’t add value (I.e. fund xyz may be great now, but do we really want to monitor it for the next 15 years to know when it starts to stink up the place? No. We do not. :D Make it easy with investments that don’t need monitoring.).

3. Housing. You might read and share a book called Age In Place, by Lynda Schrager. This book is circulating around our family, and the author dares to say that most can stay in their homes with preparation. It is less expensive, and avoids the uprooting isolation (and cost) that some find moving at a late age. Lots of photos and real stories as examples. My mom and I are going through it. I’m posting it to say that your parents may not *need* a retirement community, if they wish to stay where they are (or move to a smaller place that isn’t *senior* living). Your parents make me think of this book because you mentioned their lifetime sacrifices in care and money as part of giving, and it may be a help to them. Anyway, wherever they decide to live, the book has loads of simple solutions to do now, before a fall or problem happens (before obstinance sets in!)

4. Money-wise, I’d try to be living on income and adding to savings/retirement accounts while they’re working. When they have to start taking RMDs, take the minimum. If they’re staying in their home, try to get repairs and big ticket items taken care of while they have an income (pay for them, not on a loan).

5. Also, a friend told me that the best thing she did to stay young was to keep working. The worst was to move near the grandkids - lol - no schedule, no reason to get up and dressed in the a.m., and no friends to see at lunch :wink: . If they want to keep working and contributing - super! (Good on them for liking their work.)

ETA: If they haven’t shopped for homeowners/auto insurance or cell phone plans in a while, you might suggest they look into it (since they’re changing up everything else :happy).

[Too funny that they’re making a housing decision “before obstinance sets in”. Please tell me they chose those words, because I’m telling my mom about it (I read her Bogleheads sometimes, and “obstinacy” is a topic :sharebeer ).]
Thanks for your thorough and thoughtful response.
1. We sound like we're on the same page! Hopefully they acclimate to their new reality in terms of financial generosity.
2. Again, we're speaking the same language, thanks. Glad to hear you get a sense that "they are ok" and won't be eating Alpo in retirement. :)
3. I'll check out Age In Place! I know my mom is pretty driven by the idea of moving into a retirement community and not staying in their home. They've only been there since maybe 2012 and I bet that helps. And yes, my mother used the word "obstinance"! Her experience with her own mother now in her late-80s has been an eye-opener. Grandma is lonely and confused and HATES any change so my mom wants to be in a place where these things can be better mitigated before she's too crotchety to leave.
4. Great advice.
5. My folks had some time off at the beginning of COVID and they both realized they are not ready to stop working. They like their work, and having a "point" to living. Both are working in jobs that really flex the mind and are doing great mentally.
GuyInFL wrote: Wed Jul 21, 2021 6:59 am
JoeRetire wrote: Mon Jul 19, 2021 1:35 pm It might make sense for dad to suspend his benefits until 70 and start mom's at her full retirement age, or vice versa. It depends on the size of each of their benefits, along with a few other inputs (like expected longevity). The tool will tell you.
This is particularly important for your parents, since they have virtually no retirement assets. They should strive to maximize their guaranteed, tax-beneficial, spouse and survivor-beneficial, inflation protected income stream.
+1
Suspension definitely makes sense to me with him in the 22% tax bracket. They will likely be in a lower bracket once they retire and by suspending it, they will have increased SS.
Thank you. This helped me understand the reasoning for suspending.
dknightd wrote: Wed Jul 21, 2021 7:46 am It sounds like you have things well under hand. Or at least will soon. Good job! I'm glad they asked for your help, it is so much easier that way.

I wonder, did they ask for your help, to help you figure out your own situation? That might be something I would do. As a caring parent.

It is surprising to me they have so little saved. They otherwise seem to be responsible and caring people. But I suspect they will be fine financially and still be responsible and caring people. My guess is you learned that from your parents :)

Some random thoughts.
Your Dad should at least do 401k contributions up to the company match as long as he is working! It is a shame he's been giving up that money for perhaps many years. But that is water under the bridge.

With SS definitely use the site linked above. It is brilliant. And free. But you will need to know your Mom's and Dad's PIA. For most working couples, having the less paid claim at FRA and the higher paid claim at 70 is a good way to go. It seems like their guy has already suggested that to them, or they figured it out themselves. It is probably worth you finding out who this "other guy" is. And talk to them. They could be a useful ally.

Charitable donations are always a tricky thing. My mom and I agree. Give as much as you feel comfortable with. If you do not feel comfortable giving any more, then it is time to let others take over. I do not want to be a charity recipient. But that means I can not contribute anymore than I can afford. It is somebody else's turn when I have no excess dollars.

The back of my envelope says they will be fine. They have a paid off house. Some SS and pension income.

People have suggested figuring out a now budget, and an after 70 budget. To that I would add figure out what happens if one of them dies first. For us that only works if the higher earner claims SS at 70, and all pensions and annuities are taken dual life.

I do not know enough about living in a retirement community. It seems very complicated. And would require I move. It might have to happen one day.

Edit: getting your siblings involved in the discussion is a very very good idea.
Thank you for your response, it was helpful and kind. My folks see me as financially wise and reached out for my help because they know I have a bit of a nerdy side when it comes to this stuff. I don't make a lot of money, but I think I'm in great shape for my age and income, especially with my late-ish start on retirement. I don't claim wisdom, but with the help of people like you on this forum I'm doin' fine. In fact, this has spurred my siblings into having me take a peek at their status after we've cleaned up a few fires for my folks!
backpacker61 wrote: Wed Jul 21, 2021 7:59 am Will this benefit continue to increase if your mother delays filing for WA SERS3?

I qualify for a small pension, and it will continue growing until I file for it.
Unfortunately not in my mother's case. We tried a few variations in the pension calculator and it stayed the same. If she delays, she will simply receive retro payments back to when she reached retirement age.
Wiggums wrote: Wed Jul 21, 2021 8:01 am I have no doubt that your patents are wonderful, loving, caring people. Don’t let your parent’s bury their head in the sand. You must be able to account for the income and expenses in order yo help them.

I have the same issue with my in-laws. My wife had to make it clear to her parents that no one in the family had the resources to bail them out. My in-laws need to dramatically cut their giving. They think by not telling anyone, it will all work out. They came close to being homeless, but an aunt left then a small condo. My in-laws want to make money decisions, but are horrible at money management.

Good luck to you.
Thanks for sharing your story. Their heads were buried in sand until this week for sure. It's definitely a case of "don't look and it's not there" sort of thing which makes me sad because it feels like a lot of wasted time and opportunity. But, better late than never. I'm feeling positive about their ability to be frugal and make changes to help situate them for retirement. They lived on peanuts for a LONG time, and I think they can flex those muscles again.
Jablean wrote: Wed Jul 21, 2021 1:24 pm SS - I think your dad is fine, he didn't receive until 66 and he's the lower income spouse.
IRAs - are you including the extra $1000 a year for each person for 55+ catchup?
Medicare - find out more about why not signing up for more than A - how are her drugs getting paid for? Her "cobra" may be best, do some searching on what drugs Medicare covers and/or Medicare Advantage plans. Formulary changes every year but need to know if the drugs are at least covered somewhere now.
Budget software - I'm betting you might use it, them not so much. Probably easier to set up automatic transfers once their checks hit their bank/credit union. Get that money out of their checking account.
Her 457 - is this still active can her percentage be upped? and/or knock dad's 401k to full instead of just 6% to get their cash flow stashed away before they see it as spendable.
Thank you! A lot of good stuff here.
SS - You are correct. I think the only reason to suspend (based on GuyInFL's comment I replied to above) is to reduce income tax now. I'll have to crunch some numbers to see if it's worth it.
IRAs - I wasn't! Thank you.
Medicare - I'll add these points to our research list, thanks.
Budget software - We're doing a run-through of the software tomorrow to see if mom likes it. I suspect she won't, but we'll see how it goes. :)
457/403b - I'm 99% sure she can up her contribution, but we'll find out soon. Dad's 403b... great idea to bump it up as much as possible. My thinking was to max out IRAs first, but I think I need to make it more simple on them so it's just on autopilot.
Jack FFR1846 wrote: Wed Jul 21, 2021 5:19 pm Is the giving something that is to something they believe in?
Thankfully, yes. Sorry to hear about your relative. Same thing happened with my grandma so we (my uncle and mom) had to take control of her account and only keep "enough" in the checking account so it stopped disappearing to some shiester with a good phone pitch or clever letterhead. :(
celia wrote: Wed Jul 21, 2021 6:20 pm I wouldn’t suspend dad’s SS. I would have him cancel it and pay back what he’s received so far. From his full retirement age (66.5?) until 70, the amount of their monthly SS benefit will increase 8% each year they wait!!! Where else can you get a guaranteed rate of growth that will benefit you for the rest of your life!!! When he re-starts SS, his monthly benefit will be at least 24% more than it is now.

BOTH parents should start maxing out their contributions to employer plans. The more they automatically save now, the more they will have in retirement.

To tighten up their budget, they should write down every single thing they spend money on including things withheld from their paychecks. Try to account for every dollar. There appears to be some serious ‘leakage’ somewhere. Tell them you don’t care so much WHERE the money goes as much as the AMOUNTS. Just the act of writing it down and saving receipts in order to see the current spending patterns can help them reign in their spending.

Also, take someplace like the supermarket and ask them to do this for a few months: as they are putting things on the conveyor belt, have them separate 1) their own food from 2) food for others and 3) non-food items. Pay for each category separately and leave with 3 receipts. If they can do that for 3 months, they will start to see how much they are spending in these 3 separate categories.

Toss each pay stub and receipt in an envelope for the month and then it will be easier to create an as-is budget. You can’t make the spending better if you don’t even know where you are starting from.
More food for thought on suspending/cancelling my dad's SS! Thanks. I'd be happy to help them pay back what they've taken since Dec 2020 if that helps convince him. I'm super happy my mom was waiting. Her thinking was that she gets regular raises and wanted to capitalize on that. My dad occasionally gets a pittance of a raise so he jumped in early thinking it wouldn't increase much, not realizing there was an 8% yearly increase for waiting.

Regarding receipts... I think I got through to my dad relating it to weight loss. He lost a TON of weight a few years ago and I said "you can't watch your diet without counting the calories, right? Well, you can't watch your budget without counting the dollars."
HeelaMonster wrote: Wed Jul 21, 2021 9:10 pm
celia wrote: Wed Jul 21, 2021 6:20 pm ..... To tighten up their budget, they should write down every single thing they spend money on including things withheld from their paychecks. Try to account for every dollar. There appears to be some serious ‘leakage’ somewhere. Tell them you don’t care so much WHERE the money goes as much as the AMOUNTS. Just the act of writing it down and saving receipts in order to see the current spending patterns can help them reign in their spending.....
Agree this is a useful exercise, and important to get a realistic handle on actual expenses. There may be a benefit in having them do this "manually" (i.e., item-by-item, in real time), as described here... if it helps with "behavior modification" or serves as a wakeup call, for example.

But if this proves cumbersome or unworkable, we found it to be very easy to track our monthly expenditures and assess our budget heading into retirement, as follows... In our case, ALL of our expenses ultimately come out of our checking account, either through auto-withdrawals (e.g., utilities), direct checks, or paying off credit card. Thus, it was easy to sit down with monthly bank statements, record the total debit amount, and back out any unusual, onetime expenses that would not continue as part of our routine spending in retirement (e.g., contributions to IRAs, reimbursed travel, gifts, and so on). You could also capture total credits (income) at same time, though we did not bother (since none of that would continue in retirement, from those same sources). It took maybe 15 minutes to tally debits for an entire year. After repeating for three years, and seeing how remarkably consistent expenses were over that time, it gave us good confidence in amount needed to support retirement... and made it easy to pull the trigger, when time arrived.

Good luck to you and parents!
Thanks for your input. Hopefully mom clicks with the budget software I have in mind, and dad can adjust his behavior to collect receipts, etc. But if not, we'll give your routine a try!



Sorry for the long post, but thank you dearly to all who have replied. I love this forum!!!
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Re: Review my parents' humble retirement with me

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davibi02 wrote: Mon Jul 19, 2021 12:11 pm
A note on health care: DF is on a few meds, but generics exist. DM is on very expensive meds, 28 pills a day - at least $3,200/mo if they didn't have insurance.
One thing that might be worth looking into is buying meds through a Canadian mail-order pharmacy. It is hugely less than U.S. retail price, and may even be less than insurance. It takes a while to get though all the red tape with your first order. Figure on about 6 weeks. But, once you're up and running, its easy, cheap and efficient. Here's one provider I've used. https://www.mapleleafmeds.com/
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Re: Review my parents' humble retirement with me

Post by djpeteski »

davibi02 wrote: Wed Jul 21, 2021 10:32 pm
djpeteski wrote: Wed Jul 21, 2021 5:34 am I would sell the ball team stake, but value it at less than 21K not 75K.

If the income was consistent you would have: 1300*3 = 4200

20% valuation: 21,000

If someone offered them 20K, I would take it. It is a cool luxury, but the last thing they need is inconsistent income or requirements for additional investments. Myself, I would be tempted to buy just to say I was part of an ownership group. Others may be willing to pony up a lot more money to have that "flex".
It certainly is a cool luxury! I live in another state and they send me an unlimited-use card that gets me into any minor league game for free, park for free, sit wherever I want. I feel like a VIP!
I'm unfamiliar with the 20% valuation. Can you tell me more about how you came up with 21,000? Thanks!
When evaluating a business, one often applies 20% discount rate to the income. Other factors come into play, but it is a good starting point.

If a person has a business for sale, that produces 1K per year income, how much would you pay for that? Since I am pretty much "guaranteed" 10% from the market, it has to be more than that. So typically 20%. So I would pay about 5K for a business that produces 1K per year consistently and does not require much management involvement.
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davibi02
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Re: Review my parents' humble retirement with me

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Outer Marker wrote: Thu Jul 22, 2021 5:41 am One thing that might be worth looking into is buying meds through a Canadian mail-order pharmacy. It is hugely less than U.S. retail price, and may even be less than insurance. It takes a while to get though all the red tape with your first order. Figure on about 6 weeks. But, once you're up and running, its easy, cheap and efficient. Here's one provider I've used. https://www.mapleleafmeds.com/
Thanks for the idea. I looked for her most expensive med on there and don't see it, but I'm certainly open to looking for the others once I get a list.
djpeteski wrote: Thu Jul 22, 2021 5:50 am When evaluating a business, one often applies 20% discount rate to the income. Other factors come into play, but it is a good starting point.

If a person has a business for sale, that produces 1K per year income, how much would you pay for that? Since I am pretty much "guaranteed" 10% from the market, it has to be more than that. So typically 20%. So I would pay about 5K for a business that produces 1K per year consistently and does not require much management involvement.
Concise explanation! Thank you.
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