late in life with no retirement savings

[littlefish]

My fiance and I are in our 30s and well on the path to FIRE. However, my soon to be mother-in-law has a talent for spending, is currently renting in a HCOL area, has some credit card debt (that we are trying to convince her to pay off) and has no retirement savings. Through some past loans made to friends she is living off some passive income ($5000/month) but I fear this is not set in legal writing. She does some freelance work, but does not have an employer or steady income. She is in her mid-50s and has a nest egg of about $250,000 in a taxable account (which we would like to convert to a tax-deferred account).

Interested to hear people's recommendations on what to do in this scenario as we will likely be on the hook for her long-term nursing care. Clearing her debts, maxing out a Roth IRA, and investing her existing money will likely get her in the $600k-$700k range by the time she is 65. Investing in long-term care insurance (even without unlimited benefits) seems prudent as well. Once those arrangements are made, maybe buying her a condo would be worthwhile? Her "rent" paid to us would then go towards her retirement and we would acquire a slowly paid off investment property. She could also move in with us although I don't think any party wants that option. Other suggestions?

[Kamban]

Long term care insurance at her age might be non-affordable to her, given her sporadic and inconsistent income.

Agree with Roth or Solo 401K but suspect that unless she has the savings mindset she might not go for it.

How much will she draw from SS at 67. Does she have any other sources of income?

[adventure]

I'd read this thread, check out Miss Bonnie's post here.

There are likely other threads around here, but I'd first determine if your MIL has any interest in helping herself. And think really hard if you'd really like to be her landlord, too. Also, I'm not sure this adds up to me - who actually gets the money (or equity) ?!?

littlefish wrote:

Her “rent” paid to us would then go towards her retirement and we would acquire a slowly paid off investment property

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[G]

I think it is equally awesome and horrible that you are already thinking about caring for your future mother in law!

There are many variables in your questions. There is a pretty robust literature on long term care insurance; with your description of her assets, it would probably be worth just letting her burn up these and go to Medicaid. For her spend/save dysfunction, that new WCI course could be a good mother's day gift. For her lack of retirement savings, she has 10-15 more years to work (and to do contributions plus catchup eligibility) . As for you renting her an investment property it is unlikely the best financial decision. (I.e. will you be charging her market rates?)

Good luck.

[ChristopherMD20]

Following... Sorry no helpful advice. I've got a bunch of people in my life who are like your MIL. I don't have money yet so people aren't coming around now. You have a good heart. I hope people don't take advantage of it. I know what it is like to try to save the world before taking care of myself...

[MPMD]

I would first want to sit down with your fiancee and talk about how s/he feels about this and what the plan is.

people like this can become bottomless pits both emotionally and financially.

I would suggest you each outline the level of support you are willing to provide and compare notes. something as simple as her living with you for a period of time could be extinction-level stress on a relationship.

The tricky thing is sussing out what her expectations are and addressing them. This should be done but YOU SHOULDN'T BE INVOLVED DIRECTLY. if you are you're the future in-law corrupting her precious baby's mind. I think it's very reasonable for an adult child to say to a parent "I'm worried about your financial choices as you move towards retirement and want to discuss plans with you." If she is resistant it's worthwhile to lay out what the level of support will be.

[Donnie]

$250k isn’t exactly no retirement savings. Depending on expenses, how long the $5k/month of loan cash flow comes in, and future social security, she may be just fine. If she’s not worried, maybe you shouldn’t be either. She made it 55 years without your financial wisdom.

[Hank]

Your mother-in-law isn't completely screwed, but she will be if she doesn't take responsible steps over the next 10-15 years.  She should maximize her contributions to qualified funds over the next 10-15 years.  Since she's over 50, she gets to make catch up contributions.  She also could set up a sole employee 401(k) or SEP and fund it heavily.

She probably should work until 70 to get the most possible out of social security.  As for long term care, she's a candidate for Medicaid now.  If she saves aggressively over the next decade or more, she'll graduate to that uncomfortable range of $500K to $1M where you're too well off for Medicaid and not well enough off to self insure comfortably.  She has a well off child and child's spouse, so she might rely on you if the two of you are willing to support her.

[DMFA]

My mother died at age 65 still working with $75,000 in retirement savings.  Was just planning on getting by on SS.  I found that plan to be suboptimal.  Didn't really make a difference in the end, I guess...

[StarTrekDoc]

Same with Donnie.  She has $250k in savings despite her choices of lifestyle--that's pretty good for most mid-50s.  You can help around the edges, but it really should be your SO doing the lift unless specifically asked ---and be gentle about it.

Star with the wife and sit down with a plan.

[Hatton]

If she has $250k and SS that is more than average.  It is just low for the people who post here.

[Craigy]

Already planning to buy the mother-in-law a condo before you've even married the daughter?   8O

IMO just leave her be.  I would encourage her to keep working doing whatever she does as long as possible so hopefully she can keep building the nest egg and keep social security increasing.

Generally people don't start living more responsibly when someone comes in offering to rain money upon them.

But if you are looking forward to housing a mother-in-law... 

[VagabondMD]

I have posted previously on this topic. I am not a huge fan of bailing out in-laws (neither is my wife). Once you start, it is hard to draw the line and before you know it, you have another dependent, one that gets more needy and expensive over time.

[ajagannathan]

Agree with those above recommending to leave it alone.  Different story if it were your mother, not a future MOL.

[ITEngineer]

littlefish wrote:

Interested to hear people’s recommendations on what to do in this scenario as we will likely be on the hook for her long-term nursing care. Clearing her debts, maxing out a Roth IRA, and investing her existing money will likely get her in the $600k-$700k range by the time she is 65. Investing in long-term care insurance (even without unlimited benefits) seems prudent as well.

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How are you going to triple her money in 10 years? ($250k to $700k) That seems overly optimistic. But if you can do that I'll give you my money to invest