Help me figure out how to finance MIL's retirement

[jimnjana]

I'd have her drop the LTC insurance, sell the house and move into an apartment. She doesn't appear to have the ability to pay for much maintenance and up-keep of the house. LTC insurance rates for her will only go higher as she ages, making them unaffordable considering her projected income.

Jim

 

[charlie]

I think she should keep the LTC insurance as long as possible. Why
throw it away before the need is obvious? LTC insurance helps
protect FIREdreamer's assets in the event MIL needs it sometime
in the future. Think about it!

As for higher LTC costs as she ages, I don't think this is true as a
general case. My LTC purchased through GE (now Genworth) has
only recently increased for the first time in 15 years. As somebody
mentioned, LTC insurance would be much more expensive for her
to purchase now than when she did so at an earlier age.

Cheers,

charlie

 

[NW-Bound]

My mother, a widow, lives alone in a 1,700 sqft home that is paid for. Her annual expenses are around $20-22K. She has everything that she needs, and all the food she cares to eat. And yes, she likes to shop for clothes - they overflow the closets of the 3 bedrooms in the house, and then some. What I am trying to say is that she probably could be fine with less.

I do not know her budget, but suspect it is similar to what W2R proposed. I feel sorry for people like FireDreamer who have to deal with financially ignorant people.

A friend of mine complained about his non-working wife's spending. According to him, she spends $2K a month on miscellaneous things that are simply not accounted for. I found that hard to believe, but he said it was sadly true. When I told my wife, she suggested that the wife could be on drugs, or had a boyfriend. Of course I couldn't tell my friend that. Perhaps his wife may just be squandering money on stupid things which add up. It's a mind-boggling mistery to me, but then she is not my wife. A highly-paid tech worker, he has very little assets to show for his income.

 

[ziggy29]

I think she should keep the LTC insurance as long as possible. Why throw it away before the need is obvious? LTC insurance helps
protect FIREdreamer's assets in the event MIL needs it sometime
in the future. Think about it!

How so? This sounds like a commissioned insurance salesman's pitch (even though presumably you're not one).

If MIL runs out of assets, she can receive long term care through some government assistance at various levels; other people are not obligated to throw their own assets into it unless they insist on long term care of their own choosing. Depending on circumstances, the ability to choose your own caregivers may or may not justify the expense. But it's flat out wrong to imply that he would automatically be on the hook for the cost of her care if MIL runs out of money. IMO, it's a common scare tactic I've heard used from time to time.

 

[charlie]

Ziggy29, I am 75 years old, retired at 59 from a mid level engineering job.
I am not an insurance salesman. So back off!

As for protecting FIREdreamer's assets, of course he is not "required"
to support MIL in a nursing home, but perhaps he might feel obligated
for the sake of his wife's feelings. As for me, I want some say as to
how and where I spend my end days and I don't want my children to
worry about how that time is financed. Thus LTCI for me. To each
his own.

Cheers,

charlie

 

[Bimmerbill]

Hmm, interesting pickle you are in. Would she sell the home and move into a small condo or apartment? That would reduce utils and maint. Maybe get some cash in the bank?

Either way, I am sure its hard for someone to suddenly have to change the way they live.

Good luck to you and your DW.

 

[ziggy29]

Hmm, interesting pickle you are in. Would she sell the home and move into a small condo or apartment? That would reduce utils and maint. Maybe get some cash in the bank?

Either way, I am sure its hard for someone to suddenly have to change the way they live.

I'm sure it's a hard thing to accept, but yeah, it looks like being willing to sell the house and rent (or trade down into a small condo) would probably be a huge boost to the cash flow -- not only in reducing expenses (particularly property taxes, home insurance and maintenance) but also by injecting cash back into her balance sheet.

 

[DangerMouse]

A friend of mine complained about his non-working wife's spending. According to him, she spends $2K a month on miscellaneous things that are simply not accounted for. I found that hard to believe, but he said it was sadly true. When I told my wife, she suggested that the wife could be on drugs, or had a boyfriend. Of course I couldn't tell my friend that. Perhaps his wife may just be squandering money on stupid things which add up. It's a mind-boggling mistery to me, but then she is not my wife. A highly-paid tech worker, he has very little assets to show for his income.

Actually it would be quite easy to blow thru $2k a money on uncounted miscellaneous without really trying. Think books, magazines, getting nails done every week, going out for lunch, take the car to the car wash can cost $40, a bit of shopping, buying gifts that aren't really necessary, some new makeup and going to the drugstore you can spend $100 in a heartbeat with no real effort. I spent $80 this morning at Target buying a couple of door mats and a pyrex dish so $2,000 would not be that difficult to do.

 

[FIREd]

Selling the house and moving to an apartment might be complicated because of the pets and she will never agree to give them up. Unless I follow LOL!'s suggestion and off the pets one by one (just kidding!), I believe that she will categorically refuse to move. That's why I like the roommate idea (DW likes it a lot too).

As far as annuities, I will leave the option on the table. If interest rates are up substantially in a few years, we might convert part of her nest egg if it can significantly increase her income.

 

[jimnjana]

I think she should keep the LTC insurance as long as possible. Why
throw it away before the need is obvious? LTC insurance helps
protect FIREdreamer's assets in the event MIL needs it sometime
in the future. Think about it!

As for higher LTC costs as she ages, I don't think this is true as a
general case. My LTC purchased through GE (now Genworth) has
only recently increased for the first time in 15 years. As somebody
mentioned, LTC insurance would be much more expensive for her
to purchase now than when she did so at an earlier age.

Cheers,

charlie

you do have a point if firedreamer felt the need to pay for MIL nursing care, but as ziggy pointed out, MIL would be able to get govt support. I'm all in favor of someone paying their own way if they can afford to do so. In her case, if he is lucky enough to have her cut back, she still cannot afford her home (she's not putting anything away for maintenance). Also, likely that she will live a long life, LTC will get increasingly expensive, with LTC, the past is not a good guide for the future in terms of rate increases. When FEDLTC plan jacks their rates 25%, for those under 65, I can only imagine what other plans will be asking their policy holders to pony up. At any rate, she simply doesn't appear to be a candidate for LTCI, but if it lets firedreamer sleep better, and he is willing to cover the costs in the future for the insurance then go for it.


jim

 

[shoe]

I wonder if your MIL would get her TV fix on Hulu?

 

[ziggy29]

Selling the house and moving to an apartment might be complicated because of the pets and she will never agree to give them up.

That's $6000 a year! Are there *that many* critters or does she just pamper them half to death? If this can't be cut back much, I'm afraid I see little hope.

 

[NW-Bound]

FireDreamer, I don't want to scare you but your MIL is doomed. She might be beyond help. You may better think of how to not get dragged down with her. You need to talk with your wife to work out between yourselves. This has the potential to strain the marriage.

 

[FIREd]

I wonder if your MIL would get her TV fix on Hulu?

I doubt it. Her internet connection seems very slow to me so I don't know how well Hulu would work for her. But that's the thing, there are so many free stuff on the internet nowadays that one could probably find endless sources of entertainment with a simple computer and an internet connection. I know that If I was in her situation, I'd ditch the newspaper and cable for sure.

 

[ziggy29]

I doubt it. Her internet connection seems very slow to me so I don't know how well Hulu would work for her. But that's the thing, there are so many free stuff on the internet nowadays that one could probably find endless sources of entertainment with a simple computer and an internet connection. I know that If I was in her situation, I'd ditch the newspaper and cable for sure.

That's always an important consideration before cutting an entertainment expense. You want to make sure it's not going to be replaced by activities that are even more expensive.

 

[FIREd]

That's $6000 a year! Are there *that many* critters or does she just pamper them half to death? If this can't be cut back much, I'm afraid I see little hope.

There are about 11 critters. Most are rescue, older and with some health problems. The "good" news (from a budget POV) is that a year rarely goes by without at least one them dying from old age. I also convinced her not to replace the pets as they die, so the number of critters will go down rapidly. In five years she'll probably have only have 3-4 pets left. The bad news is that as pets get older they require more expensive care and food (senior diet). But right now she buys very expensive specialty food and this is one area where I think she could cut back. My 18 year old cat did just fine on generic food and I think her pets will too.

 

[W2R]

There are about 11 critters. Most are rescue, older and with some health problems. The "good" news (from a budget POV) is that a year rarely goes by without at least one them dying from old age. I also convinced her not to replace the pets as they die, so the number of critters will go down rapidly. In five years she'll probably have only have 3-4 pets left. The bad news is that as pets get older they require more expensive care and food (senior diet). But right now she buys very expensive specialty food and this is one area where I think she could cut back. My 18 year old cat did just fine on generic food and I think her pets will too.

I wonder if she will take any of your warnings of impending financial problems seriously, as long as she is able to persuade you to let her keep all 11 critters. I would urge you to insist that her present assets can only support $600/year for her pets, and that if she needs more for them she can use rent from her roommates, salary from a part time job, or whatever. That would motivate her to find a way to increase her income.

 

[FUEGO]

That healthy food for the pets will only serve to prolong their lives and expenses. Cutting back to unhealthy cheap pet food should assist with unexpectedly long pet longevity.

I don't recall seeing anyone else mention one obvious solution: get a sugar daddy.

 

[Rustic23]

As you know there is no easy answer to this problem. However, I would create a budget like W2R's, even worse. Maybe down to 18 grand or so. Then figure out where the real hot spots are. My guess the pets and the house i.e. neighborhood are two. I would cut the pets back even more. Sit down and try to get her to agree to a two year trial, settle for one year. Play off adding things back to the area she desires most, pets and such, but everything is compared. 'If you want to keep the paper, you will have to get rid of two of the cats' Everything has a price, and you can't afford everything. I also would not have this conversation without my wife there. Also, have an grim estimate of where she will be when the money runs out. The old fram filter, 'pay me now or pay me later'.

The house is another option. If you purchase the house from her now, i.e. take over the payments, insurance and such, but you get ownership now. This really drops her assets down and allows you to drop the LTC. If the house is free and clear, then you may be buying an asset cheap. She becomes the bank and you pay her. As you listed no house payment, you all could agree on almost any payment. I have not really thought this part out, but it seems like an asset your wife would get now rather than later. As long as it is good shape, your retirement funds are protected. Heck, you can always use a little real estate in you portfolio.

Good Luck.

 

[Bikerdude]

You might as well face it, sooner or later she's moving in with you. Take this time to add a MIL apartment with separate entrance to your home. Or if not doable, sell both homes and buy one that accommodates her (again keeping her separate). Use her home sale money for the improvements. Then she can keep her LTC insurance to protect the rest.

 

[FUEGO]

You might as well face it, sooner or later she's moving in with you. Take this time to add a MIL apartment with separate entrance to your home. Or if not doable, sell both homes and buy one that accommodates her (again keeping her separate). Use her home sale money for the improvements. Then she can keep her LTC insurance to protect the rest.

It may be time for a preemptive strike against this happening (unless it is desirable). Buy or borrow one of those cheap pop-up camper trailers and proudly park it out back of your house. Excitedly call her over to your house on Christmas, Mother's Day, or her birthday, and show her the new in-laws suite that you kindly bought for her to live in if she ever needs a place to stay. Ensure her that she is more than welcome to stay as long as she likes. In the pop up camper out back.

 

[crazy connie]

If she has 11 critters, I can almost guarantee she will not be able to take in a boarder or two. I would not want to live in a home with that many. Here my son has a python that stays in his room, a cat that is old and lives upstairs, and Maggie the Princess English Bulldog. When any move out or on there will be none till I am old enough to want to stay home all the time!

 

[tmm99]

I think the main thing that is needed is for her to realize her financial situation - realize that money won't suddenly appear on her doorstep just because she is accustomed to her lifestyle. I get the feeling she is refusing to accept the fact that she is now responsible for her actions (with no bailout) and she will have to suffer the consequences of any financial actions (or non-actions in her case). I say this because she doesn't seem to be receptive to the help you are trying to offer.

To me, the best thing to do is to let her assume all her financial responsibilities. I don't know if your wife will agree, but I would tell her not to expect any financial help from you or from your wife. (After all, she has enough money to manage on her own and she is choosing to overspend and there is no reason someone else has to pick up the tab.) (You may end up helping anyway, but your MIL should not expect it and should not plan her budget with that in mind. She is on her own like everyone else.)

You could still break down the numbers for her (her budget/her asset breakdowns and when she would run out of money if she followed her spending patterns.). She needs to face that and realize what she is facing. From what you said, she never was involved in the family finance and she is still playing by the same old rules ("someone else always taking care of it." rule.) I say this because you mentioned that she tries to justify her spending even to you (as if you were her husband who brings back the bacon, who can say "OK, I will give you more money.") If she asks for help in how she could rebudget, then give her advice - options she can pursue etc, but she herself needs to feel nobody is going to bail her out. - It's time for her to rise up to the occasion. Maybe she is still counting on the alimony to arrive on her doorstep, I don't know.

OK, I may sound tough, but my take is she is responsible now for her finance, not you or anybody else and she can do this. I hope she will end up feeling empowered with the notion that she is now in the driving seat for her life.

I did my mom's budget lately and she has enough, as long as she doesn't overspend. Fortunately, my mom realizes that she cannot count on me for any overspending and she lives within her means. I am putting aside some money for her every month, but that is not part of her budget - just gift money. If my mom was like your MIL, I will not help her at all. I live within a tighter budget than your MIL's easily, so I don't see why I should help at all.

 

[FIREd]

I think the message is clear: It's time for MIL to get real. Her situation is unsustainable and she has to make drastic changes. Period. No more excuses. DW and I are willing to help, but she would have to drop her expenses considerably before we would consider stepping in. Right now we just don't feel like she is making nearly enough sacrifice.

As for MIL moving in with us. That's a big no-no. DW would go insane within a week.

 

[FIREd]

I don't recall seeing anyone else mention one obvious solution: get a sugar daddy.

We are working on that...