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  • #16
    Originally posted by CordMcNally View Post

    You make great points but things happen. Grandpa may decide to help out that prince in Nigeria or may end up living for 10 more years in a $10k/month nursing home.

    OP may end up being a big spender and living paycheck to paycheck themselves.

    Mom may decide she deserves to spend more even though it looks like she may already be close to spending more than she takes home.

    A lot of things can happen. Why not set some foundations now to hold everything up in case some parts start to fall?
    I agree. That's why I suggested (as seems to be the unanimous recommendation so far) that she needs to continue working to at least 65. As long as she does that, it's hard to argue that she will be in trouble financially.

    At 65, she will *likely* have a >1million net worth. Assuming a 4% withdrawal rate, she can collect ~40k (pre-tax) + SS + medicare + support from her son, which would be greater than 50k. If she lives until 95 like grandpa, then maybe the son will have to help out. But given that the son is starting a career making 500k annually and already on this board, hesitant to even purchase a Honda CRV, I think he will have sufficient funds to contribute, if need be, for the final few years.

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    • #17
      Originally posted by Huggy View Post

      I agree. That's why I suggested (as seems to be the unanimous recommendation so far) that she needs to continue working to at least 65. As long as she does that, it's hard to argue that she will be in trouble financially.

      At 65, she will *likely* have a >1million net worth. Assuming a 4% withdrawal rate, she can collect ~40k (pre-tax) + SS + medicare + support from her son, which would be greater than 50k. If she lives until 95 like grandpa, then maybe the son will have to help out. But given that the son is starting a career making 500k annually and already on this board, hesitant to even purchase a Honda CRV, I think he will have sufficient funds to contribute, if need be, for the final few years.
      Yes, the son will be called upon to help out. The primary reason is the Mom wants to retire NOW. It would be different if she was asking advice and trying to stay independent. The is nothing wrong with supporting the Mom. Being single complicates the future impact of that decision.
      Personal choice. Each additional year of income is significant.
      https://www.wisebread.com/how-one-mo...employment.%22

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      • #18
        She needs to continue working until after grandpa passes and after the estate is settled. By then she may be over 65 and eligible for Medicare.

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        • #19
          I can relate to OP. Both of my parents have poor financial education although my mom's has improved through my persistent nagging. She's older than OP's mom and has less net worth. My dad's situation is far worse and compounded by poor health and an incompetent spouse.

          I think it's fair to say there is no perfect answer to this (or any situation). I'm assuming your mom also lives in the Midwest, which should have a relatively low cost of living.

          - What is her mortgage payment and payoff? Curious how renting would compare to what she has left.

          - As for helping out, that's a tough conversation with no "right" answer. For perspective, I met with my dad about a year ago to review his finances. We looked at a monthly budget and tried to trim any fat. Anytime he sent me a pic of his budget, I'd ask for missing items. If he replied with a vague number or "I don't know," I made him go back to find the exact number and recalculate everything. My point was he needed to be accountable and really see how much he was (probably still is) losing each month. Use your own approach, but your mom shouldn't be spending $50k (assuming post-tax dollars) on a $60k pretax salary. That's a negative number, and she needs to make some changes. As for a number, that's entirely whatever you're comfortable with. Obviously, don't go crazy and give like $50k per year. I think your suggested numbers are fair, but give that amount with the understanding that it's a gift and you may only be subsidizing current spending habits.

          - I would suggest a fee only financial advisor. It sounds like it truly is a second job, and I totally sympathize. If you two can easily have financial talks, try to approach the topic and strategy with her. You can pay for the one time advisor to get her started. Plus, that keeps you from being the "bad guy" if there are solutions she doesn't like.

          I agree with others that she's relatively ahead of things compared to most Americans. Major kudos to her for kicking some bad habits and improving her health. That's super difficult in general but especially at her age.

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          • #20
            One of her biggest financial issues may be the health care, I think it all depends upon her last years income or current income and what state you are in. She may qualify for a subsidy , but I would expect a policy to run around $1200-1500/month with a $6900 deductible.

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            • #21
              Thank you for all of the feedback. It's good to get some objective perspectives on my situation.

              A couple of points:
              - The 50k annual spending includes mortgage and homeowners association payments, which total about 1300/m (140k left on mortgage fixed at 4.1% 30 years, refinanced in 2018, obviously rates are better now)
              - She spends 800/m on Groceries
              - She drives a leased Honda CRV for 180/m
              - New monthly costs related to improving health = personal trainer costs 150/m, 2 massages 120/m, diet plan was 400/m (now 200/m) they mailed healthy snacks and pre-made healthy meals and she meets with a dietician over Zoom once weekly = 600/m total
              - She had three appliances (washer, dishwasher and refrigerator) all break down in the last 6 months and had a cat get sick with pancreatitis, admitted to pet hospital, cost 3k for 3 nights (I remember negotiating with the vets on my lunch break during my last few months of residency = second job)
              - She got divorced from my Dad when I was 20, Dad got the house and Mom got the 401k (hence 330k balance on 60k income); my Dad is financially secure, makes 75k/yr, maxes out all retirement accounts and "will work until he dies"; he's an only child and will get a seven figure inheritance from my other grandparents

              It's hard for me to get on her about the diet plan, personal trainer and massages because these have all allowed her to make an incredible health transformation by losing 50 lbs and getting off of cigarettes and opioids. I have been educating her on importance of making a budget and sticking to it by using Mint for several years. Generally speaking, she is more aware of her budget and will send me photos of receipts at CVS on how many coupons she used. But she has not taken the initiative to get onto Mint and categorize her transactions and stick to her monthly budget. I feel like she would be fine if it wasn't for these one time big expenses like appliances and pets getting sick, which together was a $5k hit.

              She doesn't like the culture of her work place. She feels its toxic, hence retiring by 62. Grandpa is 93, in good health, lives independently with his girlfriend. He's a veteran and takes social security + some of the dividends from his portfolio. I think his taxable income is 40k/yr, so he hasn't touched the principle. He has significant cardiovascular disease with an inoperable aortic aneurysm. He has a written will and an estate attorney. I'm told everything is extremely clear in this will, but haven't seen it myself.

              - How long will it take to "settle the estate" once he passes? Weeks, months, years?
              - Can I add my Mom onto my employers health insurance plan in a few years if she retires before 65?

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              • #22
                If she thinks her job is toxic, she could always start sending out resumes. Yeah, I know, age discrimination, but it seems like everywhere is hiring right now.

                why is she leasing? If you want to do something for her, buy out her lease.

                you can’t add her on to your health insurance unless you get married.

                pets are a big money pit. How many does she have? Will she get any more?

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                • #23
                  Originally posted by ddoc79 View Post

                  She doesn't like the culture of her work place. She feels its toxic, hence retiring by 62. Grandpa is 93, in good health, lives independently with his girlfriend. He's a veteran and takes social security + some of the dividends from his portfolio. I think his taxable income is 40k/yr, so he hasn't touched the principle. He has significant cardiovascular disease with an inoperable aortic aneurysm. He has a written will and an estate attorney. I'm told everything is extremely clear in this will, but haven't seen it myself.

                  - How long will it take to "settle the estate" once he passes? Weeks, months, years?
                  - Can I add my Mom onto my employers health insurance plan in a few years if she retires before 65?
                  A little scary that Grandpa lives with his girlfriend - not unusual to find a surprise when he will is probated that he might not have wanted to tell his kids f2f.

                  Your mom will, at the least, need to be a dependent for tax purposes (you provide>50% of her support) in order for you to add her to your health insurance policy and then the policy must allow it.
                  Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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                  • #24
                    Originally posted by jfoxcpacfp View Post

                    A little scary that Grandpa lives with his girlfriend - not unusual to find a surprise when he will is probated that he might not have wanted to tell his kids f2f.
                    "Grandpa. Need some advice. If you were me would u suggest I start saving to support Mom?"
                    Just an indirect question. Better asked after you get Grandpa a little tipsy.

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                    • #25
                      Originally posted by jfoxcpacfp View Post

                      A little scary that Grandpa lives with his girlfriend - not unusual to find a surprise when he will is probated that he might not have wanted to tell his kids f2f.

                      Your mom will, at the least, need to be a dependent for tax purposes (you provide>50% of her support) in order for you to add her to your health insurance policy and then the policy must allow it.
                      'Girlfriend' might be misleading. They've been together for 20 years after my grandma passed. To my understanding, she has quite a nest egg herself that she's leaving to her family. If my grandpa passes before her, she will get $20k and continue to live in the house that my uncle owns. But I haven't seen the will document myself, I get all of my information from my uncle, who helped draft the will with the attorney. So it is possible that she gets more than $20k. I have seen the financial statements of his entire portfolio, which adds up to $1.4mil right now and my uncle has told me my Mom will get around half.

                      Is there a way to avoid probate?

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                      • #26
                        Originally posted by Lithium View Post
                        If she thinks her job is toxic, she could always start sending out resumes. Yeah, I know, age discrimination, but it seems like everywhere is hiring right now.

                        why is she leasing? If you want to do something for her, buy out her lease.

                        you can’t add her on to your health insurance unless you get married.

                        pets are a big money pit. How many does she have? Will she get any more?
                        She had a car for 10 years previously that required about $3k of maintenance over the course of 1 year. It was a money sink so we decided to trade it in and get her a new car. When we did this over 1 year ago, she only had $4k cash in her account. At that time, I put a $1k down on the lease to lower her monthly payments to $189/m. It is definitely a consideration for me to buy her out of her lease. I am comfortable gifting her $5-10k per year to help her out in any way possible. I want the gifts to be impactful. I want her to "see" that I'm helping her and I'm not sure buying her out of her lease will achieve that goal. I think she will appreciate the momentum and "see" monthly deposits by me being deposited in her account.

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                        • #27
                          Originally posted by Lithium View Post
                          If she thinks her job is toxic, she could always start sending out resumes. Yeah, I know, age discrimination, but it seems like everywhere is hiring right now.

                          why is she leasing? If you want to do something for her, buy out her lease.

                          you can’t add her on to your health insurance unless you get married.

                          pets are a big money pit. How many does she have? Will she get any more?
                          She has two cats. She loves taking care of animals. It gives her purpose right now. One cat is healthy. One cat is unhealthy. I have had multiple conversations that she cannot afford another massive vet bill. She is very interested in Rover as a side gig. Rover is an app where you get hired to take care of people's pets when they are out of town. She would get a ton of satisfaction out of doing this. This would be a win if she could make $5k per year during retirement as a paid hobby.

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                          • #28
                            way too many variables here.
                            keep things very simple.
                            mom needs an income of some kind as long as reasonably possible.
                            don't count grandad money until it's in the bank
                            she's leasing, using a meal prep service, expensive trainer, etc etc.
                            this could become a real black hole for you.
                            help her understand that money from you is an absolute last resort after the 401k is gone, at which point all of the luxury stuff will have to stop.
                            if she needs to spend $1k/mo on training, meals, etc just to stay reasonably healthy then she cannot afford to retire, full stop.

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                            • #29
                              Your mom could also get a roommate or two.

                              Mad props to her for raising such a great kid.

                              Comment


                              • #30
                                Originally posted by ddoc79 View Post

                                'Girlfriend' might be misleading. They've been together for 20 years after my grandma passed. To my understanding, she has quite a nest egg herself that she's leaving to her family. If my grandpa passes before her, she will get $20k and continue to live in the house that my uncle owns. But I haven't seen the will document myself, I get all of my information from my uncle, who helped draft the will with the attorney. So it is possible that she gets more than $20k. I have seen the financial statements of his entire portfolio, which adds up to $1.4mil right now and my uncle has told me my Mom will get around half.

                                Is there a way to avoid probate?
                                Tricky ground. Your only interest in grandpa's estate is ensuring your mom is treated "fairly" (eye of the beholder) and your primary interest there is ensuring she does not become a financial burden to you. Not sure you have any real standing, unless grandpa asks; and then are you acting in his best interests, your mom's - or yours?

                                You should develop a sustainable financial plan for mom unless/until grandpa asks you or mom to become executor, shows you or her the documents, and you have a verbal commitment from all parties, girlfriend included, that this is grandpa's wish. Then look at estate documents with grandpa and his attorney, ensure a clear understanding and so on. This would avoid nasty surprises later.

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