Could Retire, But Doesn't Know It

[Elbata]

I have a friend that still works. Part-time at Starbucks. Mostly for the health-care but also the money that she earns.

She's 62 and wishes she didn't have to work, being so careful with each dollar.

Here's what I know about her net worth:
$1.4MM her share of rental properties managed by her brother
$875K home that son rents (5 years left on note, don't know balance)
$875K condo she lives in (paid off)
$600K in Roth acct.
Another property she owns, clears $200/mo profit
Has pension coming--I encouraged her to research it and the last I've heard is that she followed up with that recommendation, talked to finance guy at the company and they could not find anything on her about her pension.
SS--is eligible, but delaying.

I'm not sure what she gets from the $1.4MM that is her share of the rental properties. But just the $1.4MM and the $600K Roth, gives her $80K/yr using an SWR.

She's not familiar with SWR and she's not drawing from her assets.

I know there are people who continue to work because they like it. But she's in a position to where she keeps working because she thinks she has to, but clearly can afford not to work.

 

[Teacher Terry]

Maybe you can help her understand that she doesn’t need to work anymore.

 

[brokrken]

The only liquid asset I see is the Roth. She probably doesn't want to kick her son out of his place, she needs her place to live in and if she's a partner with her brother on those rental places, he may not want to sell. She may need to have her brother buy her out, sell the rentals or sells one of the houses (or takes out a HELOC on them).

 

[Red Badger]

Maybe you can help her understand that she doesn’t need to work anymore.

+ 1.

Alternately, maybe get her to peruse this forum.

 

[Aerides]

I would maybe point her to a few things (like this forum, bogles, etc.,) and then butt out. If I assume this friend is at least of average intelligence, then she can figure it out if she really wants to. Not want she says she wants. You can't really know her spending either.

It could very well be far more psychological than it seems on the surface. If she's outwardly asking you "please give me concrete help so I can retire" then...maybe...but lacking that, I'd stay well clear of the topic. You already know more about her finances than I do of anyone in my family - and we're pretty close and talk about money freely.

 

[travelover]

No good deed goes unpunished. I'd tell that she could probably retire and that you would be glad to provide more information, then butt out.

 

[ivinsfan]

I have a friend that still works. Part-time at Starbucks. Mostly for the health-care but also the money that she earns.

She's 62 and wishes she didn't have to work, being so careful with each dollar.

Here's what I know about her net worth:
$1.4MM her share of rental properties managed by her brother
$875K home that son rents (5 years left on note, don't know balance)
$875K condo she lives in (paid off)
$600K in Roth acct.
Another property she owns, clears $200/mo profit
Has pension coming--I encouraged her to research it and the last I've heard is that she followed up with that recommendation, talked to finance guy at the company and they could not find anything on her about her pension.
SS--is eligible, but delaying.

I'm not sure what she gets from the $1.4MM that is her share of the rental properties. But just the $1.4MM and the $600K Roth, gives her $80K/yr using an SWR.

She's not familiar with SWR and she's not drawing from her assets.

I know there are people who continue to work because they like it. But she's in a position to where she keeps working because she thinks she has to, but clearly can afford not to work.

you don't know what payments or expenses she has on those rentals

maybe her son has issues and can't/won't pay market rent on the house and she can't/won't sell it.

she needs a place to live and doesn't want to move or downsize...

roth good ..sounds like it's her only cash nest and in her early 60s she might not want to drain it.

200 a month not really much money...


So I kind disagree with the comment she clearly doesn't have to work....

 

[HI Bill]

Is she a widower who did not manage her own finances to get to where she is? If so, her lack of understanding is undertstandable. If she was a driving force in the wealth accumulation, then she may not actually want to stop working, despite what she says. Anyway, if this were my friend (and she was amenable to help), I'd evaluate her spending, evaluate her income, consider asking her to sell the property generating $200/mo income, and then (most likely) help her restructure her finances so that she sees her income stream and realizes that she can retire. Maybe it's time for you or another person to help her manage her finances...it looks like they are managing her!

 

[slowsaver]

I have a friend that still works. Part-time at Starbucks. Mostly for the health-care but also the money that she earns.

She's 62 ...

I'm amazed to hear that Starbucks hires people that age, and gives health benefits for part time work! Sounds like a good company.

 

[Walt34]

I'm amazed to hear that Starbucks hires people that age, and gives health benefits for part time work! Sounds like a good company.

There are still some good companies out there.

About 10 years ago we were repainting FIL's house and the paint-mixing lady at Home Depot said she got health insurance for working 20 or more hours per week. She said she was a single mom and was very happy to be working there since they were flexible with her hours to deal with child care issues.

 

[CardsFan]

I'm amazed to hear that Starbucks hires people that age, and gives health benefits for part time work! Sounds like a good company.

Yeah, when you can convince people to pay $5+ for a cup of coffee, you need employees that can cater to that, and you need to keep them by paying them well.

 

[Elbata]

No good deed goes unpunished. I'd tell that she could probably retire and that you would be glad to provide more information, then butt out.

The "no good deed..." comment is apropos. And I will be butting out.

I'm surprised she came to me with the info that her former company had no info about her retirement (which she's been counting on). On a previous talk with her, (and I don't know how company retirements work), I asked her when her retirement kicked in and she didn't know. I then casually mentioned that isn't that something she might want to check into.

When I look at her situation, (at a quick/superficial glance) it looks to me that her NW is ~$4MM. For her to say she's tired of having to be so careful with her money (to me) doesn't jive with reality.

But I'll butt out, though I'm curious about her retirement. Most likely she'll be content to keep working at her job and stay with the status quo.

 

[Teacher Terry]

You should definitely help her look at her bottom lines.You will be doing her a huge favor

 

[marko]

Some people just lack imagination. They can't envision life without having a job.

DW's friend is 67 and still works full time "only because I need the healthcare insurance". When reminded that she's on Medicare she just turns off and changes the subject.

 

[pb4uski]

... DW's friend is 67 and still works full time "only because I need the healthcare insurance". When reminded that she's on Medicare she just turns off and changes the subject.

That will teach you to confuse the situation with facts.

 

[Dtail]

Some people just lack imagination. They can't envision life without having a job.

DW's friend is 67 and still works full time "only because I need the healthcare insurance". When reminded that she's on Medicare she just turns off and changes the subject.

How true. The doctor we just saw said how can you retire in your 50's? I asked him do you really wish to retire in your 50's, or do you just love your work too much? He realized perhaps that is the reason, not the finances.

 

[jollystomper]

maybe her son has issues and can't/won't pay market rent on the house and she can't/won't sell it.

This is a key point. I am hearing this more and more from friends who seem to be in a position to retire. They feel they need to keep working to support one or more children in a particular situation. Several of my former co-workers specifically cited that to me as their reason for continued working. One other co-worker just retired this month because a granddaughter with an extend illness died a couple of months ago, and he was working to help his sons family with related medical bills, which are now settled.

Sometimes a person who seems to have enough for their own needs is looking beyond their needs to the needs of others, and not making a retirement decision for that reason.

 

[Katiek]

I second the concerns about getting too detailed with her retirement since she may have motivations that she's not telling you (or perhaps even admitting to herself). However, it does seem that while she has an impressive net worth, a lot of it may not be very liquid.



If she really wants help, maybe you could help direct her to a fee only, hourly financial planner who could help come up with an income strategy. You could offer to be a "sounding board" for recommendations, but she's going to have to ultimately take control of her situation if she wants to make any changes.

 

[REWahoo]

I have a friend who is 72 and still working due to it being the lesser evil. The thought of being home all day with a domineering and demanding spouse makes continuing to work look pretty good.

 

[haha]

Maybe not everyone equates retiring with winning the Nobel Prize? I have been retired many years. I have a very pleasant condo in a charming neighborhood in an excellent city. I have a lovely girlfriend. I have what I take to be plenty savings/income. But it is not really clear to me that an early retirement is one of life's most important goals.

Maybe the jobs I am remembering no longer exist, but some of them seemed like they would be pretty good even for a non go-getter like me. I did some of them when I was young, and they were more fun than work then.

If I were the type to take on a social project, it would very likely not be talking people into retiring.

Ha

 

[Conundrum]

I suppose you could help a bit. If you really want to give a great gift give her a list of good starter financial education books. She needs to understand what’s going on with her money. If she doesn’t have a reasonable grasp on that and her annual expenses the likelihood of a failed retirement increases markedly. Just my two cents.

https://www.bogleheads.org/wiki/Books:_recommendations_and_reviews#start-up_Books

 

[Fedup]

I gave up talking anybody into taking retirement. The last person I was helping was my secretary, she’s still working today. She is about 67. She has a huge pension, but she is not retirement because she doesn’t know where to go. Having one month vacation a year is pretty darn good.

 

[HI Bill]

I have a friend who is 72 and still working due to it being the lesser evil. The thought of being home all day with a domineering and demanding spouse makes continuing to work look pretty good.

My dad retired at 58 when he had a 5-way bypass. My mom, for the same reason cited above, continued to work until she was ~65, then divorced at 68!

 

[HI Bill]

Maybe not everyone equates retiring with winning the Nobel Prize?

Absolutely correct! I have bosses at my office who retired after completing their government service (earning full retirement), then came to the private sector. One, who's 68, is leading a whole floor of engineers and scientists! He doesn't seem to be plannig to retire anytime soon, despite annual declarations that the next bit contract win will allow him to step down!

 

[omni550]

The "no good deed..." comment is apropos. And I will be butting out.

I'm surprised she came to me with the info that her former company had no info about her retirement (which she's been counting on). On a previous talk with her, (and I don't know how company retirements work), I asked her when her retirement kicked in and she didn't know. I then casually mentioned that isn't that something she might want to check into.

When I look at her situation, (at a quick/superficial glance) it looks to me that her NW is ~$4MM. For her to say she's tired of having to be so careful with her money (to me) doesn't jive with reality.

But I'll butt out, though I'm curious about her retirement. Most likely she'll be content to keep working at her job and stay with the status quo.

The bolded part above caught my interest.

It might behoove your friend to pursue this a bit more. She was counting on a pension coming...but just now found out there isn't one? Does she have any human resources docs from when she was employed that describe the pension plan? Or pension accrual documentation from when she worked there? Any docs that she receives annually from the former employer that mention how much of her former employer's pension is fully funded? etc?

Two stories:
1) I worked for an employer for 15 years early in my career, accruing a pension benefit. About 5-10 years after I left their employment, and having made two 1000-mile career moves for two other employers, I wondered if my old employer, who had been acquired by another company in the meantime, might have lost track of me.

I wrote to the acquiring-company's HR dept, giving my name, job description, employment location, dates of employment with old employer, my SS#, etc., and asking them to verify my pension details (amount and when payable). Luckily they found my record right away and sent me a letter with all the details I had requested. That ensured that at least they knew I existed. At 65, I started receiving their pension just as they described.


2) I was named Power of Attorney for my bachelor uncle in Canada when he was in his late 80s. He had worked a blue-collar foundry job for about 30-35 years. When I got involved, I realized he wasn't being paid a pension for those many years he had worked even though he had earned one. I spent the better part of a day on the phone, literally calling every entity I could think of and find a phone number for (former employer, the pension fund, government agencies, the bank holding the pension funds, his bank, etc). After hours on the phone, we eventually figured out the problem. It was something to do with when the accounts were first digitized. His unusual last name had been misspelled somewhere in the system, so his pension account was effectively not linked to him and his SIN (Canadian version of SS #). After I got that straightened out, his pension money started flowing, including the ~15 years of pension arrears.

Absolutely no one is more interested in your friend's pension being paid out than she is. I would encourage her to keep pursuing this a bit more, if there's a reason to believe that there are monies due her. I don't know where unclaimed pension funds go in your state, but that might be worth checking into, too.

omni