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Old 05-31-2009, 06:39 AM   #121
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The dog walker idea is a great suggestion. My lady charges $15 per visit, and if I'm traveling that 4 visits per day. AFAIK, her only expense is some kind of insurance (don't know the premiums) and gas to/from the client's house. She spends 30 minutes here at each visit.

I've really enjoyed this thread. Her initial budget didn't look too bad to me except for the pet budget and the cleaning lady. It stinks to have to cut the budget so deeply that the important stuff must go. Glad to see that she is making progress.
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Old 05-31-2009, 09:04 AM   #122
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FD

I just read through this entire thread. You are a saint. It sounds like your MIL is making progress. (but will it be fast enough?)

Besides the obvious that has been suggested (W2R's budget) how about if MIL sells her house. Doubles her nest egg. Eliminates repairs, insurance & taxes. Move in with her friends in dire straights. Now the pets may have to be downsized too. And another line item downsized.

As well as continuing the the other fronts of guilting FIL, etc. I highly doubt MIL will look for a job. She may say that but it is an amorphous, cloudy thing out there. Not real. Doesn't sound like she has ever worked. She is not serious about it. But the dog walking deal has possibilities. Heck, there are pooper scooper routes around here. Get both sides of the deal so to speak!
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Old 05-31-2009, 10:21 AM   #123
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I'm thinking she has enough there for a Suze Orman special episode...
or one of these

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Old 05-31-2009, 04:45 PM   #124
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Pets: $6000 (she has quite a few of them)
Maid: $800
Newspaper: $200
Charity: $1500
Alarm system: $400
I just found $9k in easily-cut spending in her budget without even trying. How on earth does she spend $500/month on pets? That's ridiculous. Why does a retired person need a maid? I'm sure she can find time in her busy day to do her own laundry. Newspaper? Sure, it's cheap, but you can read the news on the web for free. Charity? I don't want to start a flame war here, but poor people can't afford to give money away. If she's retired, she should volunteer her time instead. Why does she need an alarm system if she's home all the time?

And that's without cutting questionable things like vacation, gifts, and the termites/pest control.

Don't let this woman drag you down with her.
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Old 05-31-2009, 10:09 PM   #125
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W2R edited the budget beautifully.

As previously mentioned your wife needs a role here. SIL is in a very weak position to tell MIL what to do.

Printout a firecalc run at her current spend rate and one using W2R budget probably a 25 year difference in survival rate. You MUST have this conversation while there is still something to talk about as 5 years from now it will be beyond rescuing. If you're willing to support her every want god bless you. If you intend to support your children and yourselves the sooner you tell her the better her ability to plan correctly. It appears that quiet and polite may be the worst course of action.
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Old 06-01-2009, 08:05 AM   #126
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This another expense I think should be cut. It is unrealistic for someone with her very small nest egg be paying 8% of her annual $20k income for this type of insurance.
I absolutely agree. There is no real reason for her to have this, what is she protecting? A nest egg for her heirs? No need.
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Old 06-01-2009, 08:44 AM   #127
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Why does a retired person need a maid? I'm sure she can find time in her busy day to do her own laundry.
She does have a 2500 sf house. That can take quite a while to clean...
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Old 06-01-2009, 09:24 AM   #128
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I absolutely agree. There is no real reason for her to have this, what is she protecting? A nest egg for her heirs? No need.
After talking to her about the need to keep her LTC policy, I found out that her biggest concern is ending up in a medicaid facility. A friend of hers had to go on medicaid after exhausting her own resources and the level of care dropped off a cliff apparently. So she does not want to protect her nest egg as much as she wants to protect her future quality of life.
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Old 06-01-2009, 09:34 AM   #129
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After talking to her about the need to keep her LTC policy, I found out that her biggest concern is ending up in a medicaid facility.
OK, that clears things up -- at least she understands the issue. To me, that is the only rational justification for her to keep LTCI -- understanding the situation and knowing that she needs to pay this in order to stay out of a Medicaid facility.

But that desire to stay at a non-Medicaid facility of her choice comes at a steep cost, and she has some tough decisions to make about what she's willing to give up in order to fund her desire to choose her own facility.
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Old 06-01-2009, 09:46 AM   #130
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OK, that clears things up -- at least she understands the issue. To me, that is the only rational justification for her to keep LTCI -- understanding the situation and knowing that she needs to pay this in order to stay out of a Medicaid facility.

But that desire to stay at a non-Medicaid facility of her choice comes at a steep cost, and she has some tough decisions to make about what she's willing to give up in order to fund her desire to choose her own facility.

And since I know very very little on this kind of insurance.... but have heard some horror stories... I think some research on what the insurance will actually pay is important..

I don't think they pay for a facility just because your MIL wants to go to one... I think she has to be incapacitated or something like that to get the insurance... I have heard that they on average only pay 6 months of benefits as the insured will die by then...

SOOO, maybe a lot of money being paid for very little benefit...

Remember, some people live a long time... my mother is 89 and in good shape... if she was paying this insurance, it would have been a terrible waste of money...
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Old 06-01-2009, 09:56 AM   #131
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LTC insurance may not be a great product, and she may not have the best policy, but it's one of the few items in her budget that might eventually protect FireDreamer's interests. His DW is not gonna be able to stand by and watch her mom go to a substandard facility if the time comes, and this care can be expensive ($150-$250 per day).

Compared to the maid, this might be money well spent.

Also, Mom can't live in two places at once. If she moves into a nursing home, she doesn't need the house and it can be sold to pay for her care for a long time. This would be an alternative to the LTC policy, but for it to work she has to understand that she can't take a reverse mortgage on the house to pay for a lifestyle that she can't afford. The house IS her LTC plan.

Another thought--is this one of those rare cases where an annuity would come in handy? Yes, they are a terrible investment. But, every month Mom will get a check--that's it. That's what she gets to spend. Since she isn't worried about leaving an inheritance and she could use the few extra bucks an annuity might give her every month (compared to a 4% withdrawal rate) it might be a good fit. And then FIREDreamer isn't on the hook for decades of investment advice (and held to blame when the market goes down). Best of all, Mom has a set monthly budget. There's no potential of her impoverishing herself with crazy spending over the next four years and then she comes to visit FIREDreamer for three decades.
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Old 06-01-2009, 10:15 AM   #132
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I find this thread so interesting! This is the nuts and bolts kind of discussion that drew me to this forum.
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Old 06-01-2009, 10:21 AM   #133
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Another thing that I would look into is life insurance on your FIL making her the beneficiary . I know it's creepy but statistically women outlive men.
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Old 06-01-2009, 10:34 AM   #134
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LTC insurance may not be a great product, and she may not have the best policy, but it's one of the few items in her budget that might eventually protect FireDreamer's interests. His DW is not gonna be able to stand by and watch her mom go to a substandard facility if the time comes, and this care can be expensive ($150-$250 per day).

Compared to the maid, this might be money well spent.

Another thought--is this one of those rare cases where an annuity would come in handy? Yes, they are a terrible investment. But, every month Mom will get a check--that's it. That's what she gets to spend. Since she isn't worried about leaving an inheritance and she could use the few extra bucks an annuity might give her every month (compared to a 4% withdrawal rate) it might be a good fit. And, FIREDreamer isn't on the hook for decades of investment advice (and held to blame when the market goes down). Best of all, Mom has a set monthly budget. There's no potential of her impoverishing herself with crazy spending over the next four years and then she comes to visit FIREDreamer for three decades.
I have discussed annuities with her and she likes the idea of a guaranteed, steady stream of income coming in each month. But she would only consider the full COLA option, and that means a much lower initial payout. In other words, it doesn't really address the current income gap she is facing and she would still have to cut her expenses significantly. But it would help automate her finances which would be a plus for all parties involved.

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).
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Old 06-01-2009, 10:39 AM   #135
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Another thing that I would look into is life insurance on your FIL making her the beneficiary . I know it's creepy but statistically women outlive men.
When she got divorced, I actually suggested she took a life insurance policy on FIL. Her financial future was so dependent on him that I thought it was the right thing to do. But the cost was prohibitive then, and she certainly cannot afford it now.
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Old 06-01-2009, 12:19 PM   #136
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Have you considered having her repay her SS payments at age 70 and take a "do over"? Run the math on it and see if it might be worth dumping some of her nest egg into that to get a bigger COLA'd annuitized payment from SS.
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Old 06-01-2009, 12:23 PM   #137
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When she got divorced, I actually suggested she took a life insurance policy on FIL. Her financial future was so dependent on him that I thought it was the right thing to do.
I would have been more worried that if something happened to him and he found himself a victim of foul play, this might make her a prime suspect.
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Old 06-01-2009, 12:47 PM   #138
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I would have been more worried that if something happened to him and he found himself a victim of foul play, this might make her a prime suspect.
I thought about that too . But they live so far apart that she would have had no problem coming up with an alibi...
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Old 06-01-2009, 12:57 PM   #139
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Have you considered having her repay her SS payments at age 70 and take a "do over"? Run the math on it and see if it might be worth dumping some of her nest egg into that to get a bigger COLA'd annuitized payment from SS.

Thanks, I will look into that. My worry is that she will have to use IRA money to repay the SS at age 70 and such a large one-time withdrawal will push her into the 25% tax bracket for that year and she would have to pay significant taxes on the withdrawal (right now, because her income is so low, she would pay no income taxes on her IRA withdrawals). So I'll have to take that into account.
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Old 06-01-2009, 01:32 PM   #140
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Have you considered having her repay her SS payments at age 70 and take a "do over"? Run the math on it and see if it might be worth dumping some of her nest egg into that to get a bigger COLA'd annuitized payment from SS.

I have an interesting question on this one that just popped into my head..

What are the income tax issues with this? As an example, you are taking SS and paying income tax on a lot of it since you have other income... now at age 70 you repay the whole amount and start to get a higher income... but you paid taxes on a lot of that income you just sent into the gvmt... since you can not go back more than 3 years to amend a return, do you just lose your taxes you paid on the prior years?
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