Help me figure out how to finance MIL's retirement

[harley]

This has been a great thread, and every time I thought of an idea someone else covered it in a later reply. So here I am with just one suggestion left.

How about [-]manipulating her into believing[/-] suggesting to her that she has been set up by ex-FIL to fail, and that he is laughing up his sleeve at her? He's maybe even working the retired/widowed woman pool now, and telling all his golf buddies how he burned her and how she's so dumb and worthless she's going to have to go live with the kids. Get her good and mad at him, and then let HER come up with ideas on how she can show that SOB that she can take care of herself. SHE CAN live on a reasonable budget, even without his money. SHE CAN get a job (P/T, F/T, pet sitting, whatever) and make her own way though the world. Hell, if she gets mad enough she may even be able to add to the nest egg, and leave DW some money. Wouldn't that just show him. Plus, she can outlive him and get additional revenge.

I'm not sure what her feelings are toward him, but if it was me, I would be mad! Another side effect of righteous indignation might be taking him back to court for a better settlement.

Y'all might be different, but I do my best work when I'm [-]totally pissed off [/-] personally motivated.

 

[FIREd]

I guess you are referring to my post, but yes, to me it looks like you are making this your problem (which is understandable, I just don't think it is really helpful). Time for "tough love", IMO.

It's not looking at it in a vacuum - just the opposite, I am looking at it with the benefit of a little distance and perspective. I understand that you will help your MIL so she is not eating cat food in her old age. But (as you seem to be aware), the best way to assure that is to get her to cut back her spending NOW.

And it sounds like asking her to cut back NOW isn't working too well. So all I'm saying is lay out the consequences to her factually, not emotionally. Show her that the best way to assure that you can help her later, is for her to help herself now, by cutting back.

It is a tough situation, and emotionally draining, I'm sure. You are fortunate that your wife is on board with you, it would be impossible w/o that. I have the opposite problem with my Mom, I sometimes have to encourage her to spend on herself. Not such a tough problem as yours.

You know, the answer is right in your post I quoted. There is only one solution:

1) You don't want to see your MIL destitute.
2) She is spending beyond her means (leading to #1).
3) You (understandably), don't want to make too much of a sacrifice in your own life-style, to support her excessive current spending.

All very reasonable, and the answer (which you seem to be aware of), is she needs to cut back her spending NOW. There is no "try" only "do". Otherwise, you end up at the bad side of #1 or #3.

Do you see any other way for it to play out?

-ERD50

Oh, I absolutely agree with you. The only option is for her to cut her expenses now or find a way to make some money. She knows she has no other option. DW and I have never even hinted that we would step in and help her financially, so hopefully she understands that she has to find a solution to her own problems. I have been very factual with her, showing her a number of simulations showing the impact of her current spending on the survivability of her portfolio, and I think that she got the message. She has already cut $6,000 out of her budget which is a good start but, as I wrote in previous posts, I also understand that it will take a little bit of time for her to accept the fact that, in two years time, she went from living an upper middle class lifestyle with few spending restrictions to one where a latte at Starbucks is a luxury she can't afford anymore. Right now she is looking at ways to increase her income rather than cutting her expenses further. I think it's worth investigating.

 

[FIREd]

This has been a great thread, and every time I thought of an idea someone else covered it in a later reply. So here I am with just one suggestion left.

How about [-]manipulating her into believing[/-] suggesting to her that she has been set up by ex-FIL to fail, and that he is laughing up his sleeve at her? He's maybe even working the retired/widowed woman pool now, and telling all his golf buddies how he burned her and how she's so dumb and worthless she's going to have to go live with the kids. Get her good and mad at him, and then let HER come up with ideas on how she can show that SOB that she can take care of herself. SHE CAN live on a reasonable budget, even without his money. SHE CAN get a job (P/T, F/T, pet sitting, whatever) and make her own way though the world. Hell, if she gets mad enough she may even be able to add to the nest egg, and leave DW some money. Wouldn't that just show him. Plus, she can outlive him and get additional revenge.

I'm not sure what her feelings are toward him, but if it was me, I would be mad! Another side effect of righteous indignation might be taking him back to court for a better settlement.

Y'all might be different, but I do my best work when I'm [-]totally pissed off [/-] personally motivated.

She IS mad. It's a mixture of feelings though. She feels like her ex owes her for basically destroying her life but at the same time she wants to show him that she can make it on her own. The reality is, she's still not over the guy. It was a long marriage which ended up very abruptly with few explanations and little closure.

That would have been me, I would have never signed that half-a$$ divorce settlement without consulting a lawyer first. But she feels like what is done is done and she doesn't want to reopen the wound I guess.

 

[jdw_fire]

I understand that you will help your MIL so she is not eating cat food in her old age. But (as you seem to be aware), the best way to assure that is to get her to cut back her spending NOW.

And it sounds like asking her to cut back NOW isn't working too well. So all I'm saying is lay out the consequences to her factually, not emotionally. Show her that the best way to assure that you can help her later, is for her to help herself now, by cutting back.

...

1) You don't want to see your MIL destitute.
2) She is spending beyond her means (leading to #1).
3) You (understandably), don't want to make too much of a sacrifice in your own life-style, to support her excessive current spending.

-ERD50

FD, i have not been able to tell for sure from your posts if you think she will get to the sustainable budget or not but it seems to me that if it isnt a certainty then the way to make it a certianty is to buy an annuity with her liquid assets. at present the way she is able to overspending the sustainable budget is by spending those assets, so if they were gone (used to purchase an annuity) she would not be able to overspend and she would have a guaranteed income for life. now as to whether that annuity needs to be COLAed will take some thought. if you think that her expenses will (in a real sense) go down in the future then no COLA may be needed. after all, those animals will eventually die.

i also wonder about the necessity of the medigap and LTC insurance. my mom has medigap coverage from her HMO that costs her nothing above the medicare part B premium. yes she has copays but they seem reasonable. as to the LTC insurance, it is for protecting assets, which if she gets the annuity, will not be large, since getting a reverse morgage may very well also be required in the future.

 

[samclem]

as to the LTC insurance, it is for protecting assets, which if she gets the annuity, will not be large, since getting a reverse morgage may very well also be required in the future.

No, as FIREDreamer mentioned, his MIL wants the LTCI so that she can get better (i.e. non-Medicaid) LTC if she eventually needs it. It seems to me that the two ways to accomplish that would be LTCI or keeping open the optionof a reverse mortgage on the house.

I agree that in this particular case an annuity might make sense, as it puts a limit on her spending and gets FIREDreamer out of the role of no-win roles of financial advisor and budget cop. He's considering an annuity, but wants to wait a few years as her monthly payout will be higher (due to lower expected longevity and higher interest rates). The risk: In a couple of years her nest egg has diminished so much that her payout is smaller. When she sees that number, she'll be even less likely to sign on for an annuity.

 

[jdw_fire]

No, as FIREDreamer mentioned, his MIL wants the LTCI so that she can get better (i.e. non-Medicaid) LTC if she eventually needs it. It seems to me that the two ways to accomplish that would be LTCI or keeping open the optionof a reverse mortgage on the house.

what i have heard is that once a person is in a particular LTC facility they aren't likely to get kicked out because they run out of assets (i.e. have to have medicaid start paying for them). maybe i have heard incorrectly

I agree that in this particular case an annuity might make sense, as it puts a limit on her spending and gets FIREDreamer out of the role of no-win roles of financial advisor and budget cop. He's considering an annuity, but wants to wait a few years as her monthly payout will be higher (due to lower expected longevity and higher interest rates). The risk: In a couple of years her nest egg has diminished so much that her payout is smaller. When she sees that number, she'll be even less likely to sign on for an annuity.

which is why i suggested getting the annuity now. i understand the desire to wait for better interest rates but if there is nothing left when those better interest rates appear then there wont be an annuity and there will be a second lifestye change.

 

[shoe]

When my FIL went into a nursing home in 1992 we had to have 6 months of private pay in order to get him into the facility we had chosen. Our understanding was that once he was unable to pay with his own funds he could stay under Medicare.

 

[Bestwifeever]

FireDreamer, you are doing a great job. Your suggestions will keep sinking in and she will find herself able to cut more expenses. I also think she is a lucky woman to have so many areas that she CAN trim--so many luxuries in my eyes that are relatively easy to do without.

I don't think the LTC policy premiums are a problem--but that pet budget! Oh my.

 

[honobob]

Firedreamer. you do not want to be the smuck to encourage your MIL to throw away her LTCI. It may very well be the only smart thing she did in planning for her future. I can't believe how cavalier so many people are here about throwing away this valuable retirement tool with so little information and I can't believe the flimsy excuses they give for not having LTCI and their misguided belief that the government will take good care of them for not planning for their own care. But that should be in a separate thread.

I would check her policy. I just checked my ten year old policy with CalPERS and my coverage amount has increased 48% although my premiums have only increased a little over inflation. If I were to buy the same coverage today it would cost me $360 a month. I pay about $131 a month. Break even point isn't very long and I've been able to wake up for 3650 mornings thanking God I'm not in a nursing home and knowing I'd be getting $192 tax free each and every day if I was. I'd take a low interest 30 year mortgage to pay the long term care if needed if she has a good policy. I'd rather die with 25 years left on a mortgage than spending down the property in 3 and being in a medicaid bed. When my father spent 5 months in a SNF he paid $5,000 a month. When he had medical care through medicare they physically moved him to a medicare bed even though they held his paid for bed. Even in the nice facility I found for him there was a noticeable difference in beds (location, location, location). I can only imagine what a medicaid bed would be like in a lesser facility.

YMMV IMHO Wake up and smell the coffee!

 

[honobob]

When my FIL went into a nursing home in 1992 we had to have 6 months of private pay in order to get him into the facility we had chosen. Our understanding was that once he was unable to pay with his own funds he could stay under Medicare.

Yay for the good old days. My father spent 5 months in a SNF when I first took over his care. He was supposed to die in six months and never live outside a nursing home. He spent about 9 years at my home. He finally had a medical problem and went back and forth between a SNF and the hospital. From day one the SNF (a different one) bothered me for his financial assets even though he had 90-110 days that medicare pays. Because I'm a Jr. they wanted me to prove that my home in CA and any bank accounts were not his! I provided his assets that would cover about a year of care even though I knew he would not live long enough to exhaust his medicare days. Hell, he was supposed to die 9 and a half years ago. Soooo...next time he went to the hospital they "dumped" him. Refused to take him back even though all his stuff was there, he had lots of medicare days left and proof of ability to pay for at least a year. An advocate at the hospital said this is very common. She got him into a rehabilitation center but it was evident that he would not recover so she arranged a new self pay home for him. He transfered in in the afternoon and died by 6:00am the next morning.

 

[FIREd]

Sam and jdw,

This is what I wrote:

Ideally, I would like her to live on SS + dividends from her portfolio + whatever she can pry out of FIL's hands for a few more years. Waiting a few years before annuitizing her portfolio could help increase the monthly pay out (she will be older + interest rates might be higher).

What I meant was that I would only postpone annuitizing her portfolio if, for the next few years, she was able to cover all of her expenses without drawing on her portfolio's principal. If she can pull it off for just a few more years, then she might be looking at a substantially higher annuity payout down the road (older age, probably higher interest rates, and possibly a larger porfolio due to market recovery). If it becomes clear that she won't be able to bridge the income gap without drawing on her portfolio's principal however, then I agree, annuitizing sooner rather than later would be the best option.

My fear is that if inflation really picks up, even a COLA'd annuity might suffer a permanent loss of purchasing power (the COLA on the annuity will probably be capped). So I would like to avoid annuitizing her portfolio too soon if at all possible.

 

[FIREd]

Firedreamer. you do not want to be the smuck to encourage your MIL to throw away her LTCI. It may very well be the only smart thing she did in planning for her future. I can't believe how cavalier so many people are here about throwing away this valuable retirement tool with so little information and I can't believe the flimsy excuses they give for not having LTCI and their misguided belief that the government will take good care of them for not planning for their own care. But that should be in a separate thread.

I would check her policy. I just checked my ten year old policy with CalPERS and my coverage amount has increased 48% although my premiums have only increased a little over inflation. If I were to buy the same coverage today it would cost me $360 a month. I pay about $131 a month. Break even point isn't very long and I've been able to wake up for 3650 mornings thanking God I'm not in a nursing home and knowing I'd be getting $192 tax free each and every day if I was. I'd take a low interest 30 year mortgage to pay the long term care if needed if she has a good policy. I'd rather die with 25 years left on a mortgage than spending down the property in 3 and being in a medicaid bed. When my father spent 5 months in a SNF he paid $5,000 a month. When he had medical care through medicare they physically moved him to a medicare bed even though they held his paid for bed. Even in the nice facility I found for him there was a noticeable difference in beds (location, location, location). I can only imagine what a medicaid bed would be like in a lesser facility.

YMMV IMHO Wake up and smell the coffee!

She has had the opportunity to visit someone in a Medicaid facility and she is determined to keep the LTC policy. She doesn't want to end her life in one of those. Her policy's premium has not increased significantly for some time now but I haven't looked at it yet to see what kind of coverage she has.

 

[Amethyst]

As usual, I come late to the thread, after everything has been said. Am I the only one who pities this "gentlewoman in distressed circumstances," as the Victorians might have put it? OK, so she is used to certain uncommon luxuries. This was the life she lived for decades, so naturally she clings to it.

I'd like to give her a pat on the back for cutting back in the first instance. I realize she HAD to do it; it must still have been hard, coming on the heels of getting dumped by her husband. I noticed that many of the budget items are about caring for someone other than herself (charity, gifts for friends, caring for her menagerie). Those things give meaning to life (sort of like how important grandkids are, to those who have them). It is often harder to give up things you do for others, than luxuries for yourself. I really hope she finds a way to earn some extra bucks so she can hang on to some of those things.

(Hey, I know, easy for me to say, I'm not the one who's been balancing her checkbook while she wrings her hands and looks helpless!) A 21-gun salute is due to FD and his wife for the care, time, effort and sheer patience they have been providing this slightly spoiled, but apparently rather decent lady for a long time (I noticed in an earlier thread that FD foresaw the train wreck coming more than a year ago).

On a practical note, what's the chance that she can learn home economics at the community college: it sounds like she has never learned the careful shopping, meal preparation and storage techniques that would let her eat well on less than 1/2 of what she is laying out now.

Best of luck to everyone involved.

 

[ERD50]

Am I the only one who pities this "gentlewoman in distressed circumstances," ....

While some pity might help (or maybe hurt?) emotionally, it isn't going to change the math.

You can pity me all you want for not having the physique to be an NBA star, but it won't change anything, I still won't be an NBA star.

I was never very good at the "pity" thing anyhow, so I will leave it to others .

But I do recognize this is emotionally draining for those involved, it is a tough problem to deal with. Personally, when I'm facing a problem, I prefer solutions to sympathy. This problem has a solution (she needs to live within her means), it "just" needs to be implemented. Someone needs motivation. Not sure pity will provide motivation, but I dunno.

-ERD50

 

[Amethyst]

Personally, when I'm facing a problem, I prefer solutions to sympathy.

Personally, I like it when someone expresses sympathy or empathy, whether or not they have a practical solution to offer. We're just different that way

I just figured I'd stick up for the MIL a little bit, since nobody else was.

 

[mews]

Amethyst, I find it interesting that I mentioned a class for her "money handling" - and no one picked up on it.

"Deal with it" is a lot easier when you are shown how to do that - and often people hear non-relatives better than family.

I do have sympathy for her - but, alas, naive won't feed the kitties!

ta,
mew

 

[FIREd]

As usual, I come late to the thread, after everything has been said. Am I the only one who pities this "gentlewoman in distressed circumstances," as the Victorians might have put it? OK, so she is used to certain uncommon luxuries. This was the life she lived for decades, so naturally she clings to it.

I'd like to give her a pat on the back for cutting back in the first instance. I realize she HAD to do it; it must still have been hard, coming on the heels of getting dumped by her husband. I noticed that many of the budget items are about caring for someone other than herself (charity, gifts for friends, caring for her menagerie). Those things give meaning to life (sort of like how important grandkids are, to those who have them). It is often harder to give up things you do for others, than luxuries for yourself. I really hope she finds a way to earn some extra bucks so she can hang on to some of those things.

(Hey, I know, easy for me to say, I'm not the one who's been balancing her checkbook while she wrings her hands and looks helpless!) A 21-gun salute is due to FD and his wife for the care, time, effort and sheer patience they have been providing this slightly spoiled, but apparently rather decent lady for a long time (I noticed in an earlier thread that FD foresaw the train wreck coming more than a year ago).

On a practical note, what's the chance that she can learn home economics at the community college: it sounds like she has never learned the careful shopping, meal preparation and storage techniques that would let her eat well on less than 1/2 of what she is laying out now.

Best of luck to everyone involved.

She is a very decent lady, very generous too. But I had to show her that she is too generous for her own good. Perhaps, she can learn how to give her time rather than her money and still feel fulfilled.

 

[FIREd]

Amethyst, I find it interesting that I mentioned a class for her "money handling" - and no one picked up on it.

"Deal with it" is a lot easier when you are shown how to do that - and often people hear non-relatives better than family.

I am sorry if I didn't acknowledge your suggestion. When I start a thread I try to keep up with it but sometimes there are just too many new posts for me to address them all.

But that's a great idea. I will look into it as the local college offers continuing education classes. Thanks.

 

[ERD50]

Personally, when I'm facing a problem, I prefer solutions to sympathy.

Personally, I like it when someone expresses sympathy or empathy, whether or not they have a practical solution to offer. We're just different that way

Which is why we each posted what we did. It'd be a boring, boring world if we all were exactly the same.

I'm sure that FD can make use of both forms of input. It's all good.


-ERD50