Relatives do the dumbest things...

[Dash man]

My BIL retired from a union job last year after years of boasting how the union has taken care of him and he'll be set for life at 55 years old. He had been looking at homes on the Internet, hoping to find a good deal near a beach in Florida. Satisfied he could find something he's like, he decides to retire and promptly chooses to take half of his pension as a lump sum to pay for this house he wants to buy in Florida. After his shock at the high tax bill plus penalty he was hit with , he still goes down to Florida because of all the great deals he saw on the Internet. After a week of looking, he returns home in the grim realization that while you can get cheap houses in Florida, they need a lot of work and aren't in very nice areas. He realizes he can't afford to stay in his house in the northeast, so he rents it to his daughter just to pay the mortgage. Still not deterred about finding a place near the beach, he changes his focus on Delaware. He finds a triple wide that comes with a pontoon boat and a golf cart to roam around in. Afraid of someone else snatching away this great deal, he foregoes inspection and buys the triple wide directly from the owner that sits on a $780/month lot...owned by someone else. With the bulk of his lump sum distribution gone, and realizing this is still a stretch for him, he just knows his father and step mother will be happy to move in with them and contribute financially to help them out. He moves into the triple wide and within a week falls through the floor injuring his head and takes a trip to the ER. His father and step mother have no desire to move to Delaware after recently moving into a retirement home. After further inspection, the triple wide seller had arranged furniture to hide weaknesses in the floor and failed to mention that a small addition wasn't done up to code. The land owner is now threatening to have the triple wide condemned and force removal from his land. If he can convince the land owner to let him keep the triple wide where it is, it will take at least $10k to get it livable again. I feel sorry for my BIL, and more so for his wife, but all of this happened without any research or asking for advice from family. Some relatives do the dumbest things...
Any other good stories out there?

 

[hurricane harry]

nope, can't top that




hope he kept his dues up

 

[jjquantz]

Wow! Can't top that one. I've just got a BIL who owns 12 Volvos and still has to borrow a car from friends when he drives 700 miles to DC to go to his dentist.

 

[Bamaman]

I've never seen a $780 per month trailer park. Must be a really nice place. And whoever heard of someone moving all the way down to Delaware to retire--high tax state.

It's all a comedy of errors. Having a home paid for is the ace in the hole for someone retiring young. Or, their house should be mostly paid excluding cashing in deferred income (pensions.)

 

[frayne]

Sorry to say but you can't fixed stupid, end of story.

 

[Dash man]

I've never seen a $780 per month trailer park. Must be a really nice place. And whoever heard of someone moving all the way down to Delaware to retire--high tax state.

It's all a comedy of errors. Having a home paid for is the ace in the hole for someone retiring young. Or, their house should be mostly paid excluding cashing in deferred income (pensions.)

I was surprised at the cost too. I am a little familiar with the trailer park from when I lived in that area about 20 years ago. It has a canal with access to the Delaware coast and a golf course with fees included. It was nice back then but can't speak for now.
Delaware has no sales tax and low property taxes, but the income tax can sting.


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[FUEGO]

Thank god for unions. Some folks would be broke and destitute without them.

Oh wait...

I've had the "don't cash out your 401k because you'll end up with just a fraction of it after penalties, state and fed taxes" conversation many times with my in-laws. So far I've talked them all off the ledge, and they are all on track to have a decent retirement at 66 or 67 (20 years from now) from what will be a five or low six figure 401k. Just have to keep reminding them that, yes, it is in fact a good idea to keep retirement assets in the retirement account.

 

[Ed_The_Gypsy]

I am the dumbest of my relatives. I can hide it pretty well, but DW is beginning to catch on.

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[pb4uski]

He can always become a Hollywood scriptwriter... Dumb and Dumber 3.

 

[Sunset]

I cannot top that !

Although I was thinking about how DD went and asked a few relatives who are bad with money if she should buy an expensive SUV. Of course they said "Yes".
She didn't ask me as I think she would know the answer I would give.
She is still paying it off, and drives it on the weekends, lamenting about the high price of gas.

 

[braumeister]

Doesn't one of the genealogy websites offer an option where you can edit who you're related to?

 

[mystang52]

Doesn't top OP's story, but I have a distant friend who is currently living his retirement plan. In the interest of brevity, I'll just say that over the years we've had numerous personal finance discussions, and he's made innumerable colossally stupid decisions.
His last decision was buying a very nice home in a retirement community, except he couldn't afford it. So he took out a new 30 year mortgage. Sadly, his wife recently died and he sold the house, at a loss.
He's currently 68 years old. A whole back he told me his retirement funds will last him until he turns 72 or so, and maybe he'll die by then. He has 4 years to go, I guess. When he last called me, he was about to relocate to Florida to an apartment complex costing MORE per month than his current rent.

 

[Dash man]

Doesn't one of the genealogy websites offer an option where you can edit who you're related to?

He managed to grow his gene pool more than any of his siblings. One of his kids is doing well as a young nurse. Another followed in his union footsteps, but married a nurse and they're doing well. The third child, let's just say is struggling.


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[ERD50]

I wonder if the "the union has taken care of him and he'll be set for life at 55 years old" mentality played a role in this? Not a union issue specifically, but just the idea that 'someone else' will take care of you, so you never learn how to fend for yourself, never learn even the basics. So you are helpless.

-ERD50

 

[ABQ2015]

My older brother got laid off at 61 and couldn't find another job so took early SS and decided to live on his $400K or so savings. Much of his money was in an offshore oil drilling company but since the dividends were so good, he put most of his other money into it too. We had a conversation a couple of months before oil crashed on whether it would not be better to diversify but he's an accountant and I'm just the dumb younger sister in index funds. He works in oil so he knows what he is doing! This is an guy who lost his first nest egg in Enron so you would think that he would learn his lesson to diversify. Now he can't afford his mortgage and has to sell his house. Wants to move to the Philippines.

 

[Dash man]

I wonder if the "the union has taken care of him and he'll be set for life at 55 years old" mentality played a role in this? Not a union issue specifically, but just the idea that 'someone else' will take care of you, so you never learn how to fend for yourself, never learn even the basics. So you are helpless.



-ERD50

I have no doubt that is the case. His father was a union guy as is his brother. The girls would have nothing to do with union jobs, even though one is a teacher and refused to join the teacher union. The girls have all done better financially. DW and I are paying for her dad's independent living home until their house sells.


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[Music Lover]

I can't think of any family members that have done anything that bad, but I know of one co-worker who blew it.

4 years ago he pulled his pension from MegaGovt just before age 50 when it gets locked in, and of course took a bit of a tax hit. At the time he was 6 years away from a monthly pension, while not large, would have been more than enough to live on comfortably with his wife who also will be receiving a govt. pension. One of the reasons he pulled his pension was that his wife was going to continue working and they'd have the salary and benefits.

6 months after he pulled his pension his wife caught him cheating and they divorced. They had a large mortgage on their house and neither one could afford to buy the other person out so it was sold and they split what little was left. After all the dust settled and all the debts were paid, he was left with about $200k from his pension, an 8-year old car, and monthly rent of $1000. At age 50. He's now 54 and that $200k is quickly running out and he's been working minimum wage jobs (he has no transferable skills from the govt. job). Had he stayed at work, he'd now be 2 years away from a monthly COLA pension and set for life.

 

[Walt34]

The story hasn't ended yet but we can see the train wreck coming. SIL is a Big Spender, likes expensive stuff, lots of restaurant meals, and pricey vacations. BIL has a six figure income (with overtime) working in a power plant. They have about zilch saved and are $300k or so in debt including mortgage. His job is very physical and while he's in good shape he's also mid fifties and beginning to feel it so an injury or illness could take him out of the job. He also works 12-hour shifts in rotating shift work - very bad for your health. The power plant is coal fired so that may well be closed in the foreseeable future. She's a waitress and makes $35k/year at best. She has not been without a car payment for the last 15 years that I know of.

She wants to retire to Sarasota, FL which I am given to understand is NOT a low COL area. He will have a small pension from 20 years in the Army National Guard but I don't know if he gets one from the power plant.

Somehow I just don't see this ending well for them.

I'll save the story about my stupid idiot moron nephew for later....

 

[DROPOUT]

I'll save the story about my stupid idiot moron nephew for later....

Its later!!! I'm ready for it!!!

 

[travelover]

My BIL retired from a union job last year after years of boasting how the union has taken care of him and he'll be set for life at 55 years old. .........

It seems to me that the union delivered a good pension to him, the problem was that he took it as a lump sum and squandered it.

 

[Christine]

I think my uncle who is now about 60 could qualify. He is a kind man but with something like dyslexia only it affects his ability to manage money.

The one good thing he did was to become a teacher and keeping his work at the college where he first started working. So he will get his pension in a few years.

He started well by getting max student loans during all his education. Including a couple of extra years to complete all the exams. And sleeping on friends sofas since every year he went on holiday as soon as the new loan hit his account.

When he got his diploma he heard about the deal where the state will refund half his student loan payments each year if he agrees to teach in a college where they lack teachers. So he moved to this small remote town and started working. Only he did not send in the very simple application required for his student loan refund so he never got any.

So he started paying only half anyway "since the state should pay the other half". But as you know loans don't work that way. They start growing. So at 60 he owe more than when he started.

One good thing about moving to a small remote town is that you can afford buy a house much earlier. So his siblings and parents adviced him to do just that. But to him it was too much hassle. Around 15 years later they found oil nearby and the house prices skyrocketed and all his friends earned 20x or so on their houses. But he had no house. Only his rent skyrocketed.

I don't see him very often because he can't afford the plane tickets to come visiting and he is too proud to let his brother pay for him to come. I suggested to his brother I could go visiting him - but he said I'd better not - he is too ashamed of where he is living. Won't have his siblings visiting either.

But when I see him - years apart - he is the most easygoing and nice uncle you can imagine. And very smart and clever in his field. Just not with money. It's very strange this.

 

[youbet]

I wonder if the "the union has taken care of him and he'll be set for life at 55 years old" mentality played a role in this? Not a union issue specifically, but just the idea that 'someone else' will take care of you, so you never learn how to fend for yourself, never learn even the basics. So you are helpless.

-ERD50

I've noted the same thing from MegaCorp types, especially managers and professionals who toiled at the same company their entire careers. Used to MegaCorp policies and the provided benefits (pension, HI, 401k match, etc.) they seem lost when contemplating life in the real world, say when trying to open their own business, etc.

Not everyone, of course.

 

[youbet]

Our family genes don't seem to foster the types of behavior being related here. Lotsa friends and acquaintances who seem to have lost a french fry or two from their Happy Meal, but the relatives generally seem to be doing OK.

 

[Hermit]

I can't think of any family members that have done anything that bad, but I know of one co-worker who blew it.

4 years ago he pulled his pension from MegaGovt just before age 50 when it gets locked in, and of course took a bit of a tax hit. At the time he was 6 years away from a monthly pension, while not large, would have been more than enough to live on comfortably with his wife who also will be receiving a govt. pension. One of the reasons he pulled his pension was that his wife was going to continue working and they'd have the salary and benefits.

6 months after he pulled his pension his wife caught him cheating and they divorced. They had a large mortgage on their house and neither one could afford to buy the other person out so it was sold and they split what little was left. After all the dust settled and all the debts were paid, he was left with about $200k from his pension, an 8-year old car, and monthly rent of $1000. At age 50. He's now 54 and that $200k is quickly running out and he's been working minimum wage jobs (he has no transferable skills from the govt. job). Had he stayed at work, he'd now be 2 years away from a monthly COLA pension and set for life.

I agree that it wasn't the best of moves, but I can relate. At 35 I left the government employment with exactly 15 years of service. I pulled the money out of the retirement system (all 10K) and never looked back. I pulled the money out to make sure that bridge was burned. For some, including me, working for the government is not a good thing to do. And by the way, we purchased our first IRAs with that money.

 

[Dash man]

It seems to me that the union delivered a good pension to him, the problem was that he took it as a lump sum and squandered it.

I agree the pension benefit was good, but they let him down in how to manage it once he left the job. From my experience in Megacorp, we were offered plenty of information and planning tools to help us understand the best way to manage our benefits. The tax consequences of taking a lump sum from a pension payout or 401k distribution were prominent in the material. But my hard headed BIL never received any advice and plunged ahead with his actions. At least his health care is taken care of as long as he uses their limited network of providers.


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