Mom just retired, with no savings...

[Wyniia]

Hello, I am… trying to help my mother.

She retired this year, age 63, no savings and $4000 debt (paid off now). She currently lives with me to cut expenses and I want to get her back on her own feet but am unsure what to invest her social security in at her age and circumstances. Any suggestions? During Covid I keep 100% in savings but we need a more realistic plan moving forward.
Thank you, Wyniia

 

[Dtail]

Welcome Wyniia.
How much is her SS payments and what are her expected expense levels?

 

[Amethyst]

Practically speaking, 63 is too early to retire with just SS to live on.

Is she still able to work? I realize health issues can force people to retire; it happened to my Dad. But he still found a light-duty job to bring in extra money.

 

[athena53]

And what is she doing for health insurance? It's wonderful of you to want to help your mother but maybe she needs to go back to work.

 

[Wyniia]

Welcome Wyniia.
How much is her SS payments and what are her expected expense levels?

She earns $1400. No Debt. Has emergency fund $2000. Barely enough to live off of. I want to invest in something for about a year so that it can produce a small income like compound interest, however I know that's good for someone my age. Would it make sense for a 65 year old?

 

[Wyniia]

Practically speaking, 63 is too early to retire with just SS to live on.

Is she still able to work? I realize health issues can force people to retire; it happened to my Dad. But he still found a light-duty job to bring in extra money.

I totally agree, but she has been struggling finding work for years now. And now with Covid honestly we're afraid sending her to work. Thank goodness she has health insurance through the military for life.

 

[Amethyst]

That health care is a huge boon.

Sorry about her struggles. It can be hard if someone's skills and personality don't line up with what others want. Dad's job would've been ideal for a pandemic - he was the night manager at a rich old people's condo, was mostly by himself in the main office, barely interacted with the day staff, and mainly had to change old ladies' light bulbs and such. He could fix almost anything, and for his age was good-looking and well-groomed.

How much of her $1400 is she able to put away? Are you fronting for food, housing etc. so she doesn't have to spend? I don't think "compound interest" exists any more; you may be thinking of dividends?

I totally agree, but she has been struggling finding work for years now. And now with Covid honestly we're afraid sending her to work. Thank goodness she has health insurance through the military for life.

 

[gerntz]

If she gave her SS back & waited more years for a larger payment, and she continued to live with you, she would become your dependent & I think eligible for your work benefits including medical. You could also claim her on your tax return.

 

[38Chevy454]

OP and others may think I am being an A-hole, but your mother has no right to be retired and living at your house. She needs to work more, give back any SS she took and delay that for several years to increase the amount. Her financial situation is not able to support retirement. At least not without living (freeloading) at your house.


Maybe you don't mind having her around, that is your choice. But for her to just decide to be retired and live on low SS income alone is not a good plan. There is nothing about savings in her budget, she will need all of her money to live. At your house she may have some excess, and that should be put towards an emergency fund first. Then any additional can be put toward savings.

 

[Buckeye]

Hello, I am… trying to help my mother.

She retired this year, age 63, no savings and $4000 debt (paid off now). She currently lives with me to cut expenses and I want to get her back on her own feet but am unsure what to invest her social security in at her age and circumstances. Any suggestions? During Covid I keep 100% in savings but we need a more realistic plan moving forward.
Thank you, Wyniia

With her income, you now have a permanent house guest. I'd put the money in the bank to save up to build on a MIL suite. She should sign up for low income housing but she could be on the waiting list for 20 years.

 

[UnrealizedPotential]

Is your Mom widowed? If so, what did her husband do while employed? Any possible pensions, or other benefits that may be lurking out there from her former spouse that are unknown? Any old papers laying around like life insurance or maybe a bank account somewhere that might lead to unknown sources of income?


You didn't mention any of this, so I had to ask. Yes, I know this may be unlikely, but if you are not sure , the situation with your Mom is desperate enough not to leave any stone unturned.



Military for life benefits? From her spouse? Any possibility of pension benefits?

 

[pacergal]

I am sorry your mom is in this predicament. Blessings to you for being willing to help her.
She has health care via military, but no military pension or income?
If SS $1400 is all she has, I do not see a way for her to be living independently, unless she is able to qualify for low income housing. And as Buckeye said, it could be a long wait list.

 

[pb4uski]

She earns $1400. No Debt. Has emergency fund $2000. Barely enough to live off of. I want to invest in something for about a year so that it can produce a small income like compound interest, however I know that's good for someone my age. Would it make sense for a 65 year old?

Sorry to be the bearer of bad news, but with today's low interest rates about 1% is the most you can expect in anything that is relatively safe... that's only $20 on $2,000. If you accept more risk and invest in stocks with a one year time horizon you might end up losing money. According to Vanguard, from 1926-2019 stocks lost money in 25 of 94 years (27% of the time)... and with equities near all-time highs the risk of loss in th next year is probably even higher.

Time for a different plan.

Perhaps she can find a similiarly situated friend and share a two-bedroom apartment. The reality is that she can't afford to retire now and needs to find a job.

My son has had numerous assignments through temporary help agencies that ultimately led to jobs. That may be a place to start.

 

[cathy63]

I know this was not your question, but when you file your tax return for 2020, I recommend looking into claiming your mother as a dependent. Her SS is so low that it won't count as income for determining whether she's a dependent. Also, if you are not married and you are supporting your mother, then you can file as Head of Household instead of Single, even if she doesn't live with you. You could save quite a lot on your own taxes, and it would even be worth amending your prior years' tax returns if you've been helping her out for a while now.

As far as what to do with her money, she will have to invest in the stock market to have any hope of increasing her funds significantly. Interest rates are so low that compounding won't help her money grow fast enough to make a difference. She could open an account at Fidelity or Vanguard and put half her funds in an investment that concentrates on dividends and income. Something like Fidelity® Equity-Income Fund (FEQIX) or Fidelity® Dividend Growth Fund (FDGFX) might work.

 

[RetiredAt55.5]

Talking about investing some SS money into the stock market seems premature without knowing more info. Primarily, how soon might this money be needed. The OP needs a game plan for her mom.

Opinions vary, but many will recommend not investing in the stock market for money needed in less than 5 years or so. Or be prepared to possibly lose a fair portion of whatever you invest there.

 

[Chuckanut]

She should sign up for low income housing but she could be on the waiting list for 20 years.

Possibly. Probably. But sign up anyway. Things change. Get on the list ASAP. You can always say NO later on.

 

[mountainsoft]

I totally agree, but she has been struggling finding work for years now. And now with Covid honestly we're afraid sending her to work. Thank goodness she has health insurance through the military for life.

Are there small jobs she could do working from home? Making and selling crafts, blogging, etc.?

Since mom is depending on you, what happens if you should die? Do you have life insurance that would go to her? Would she get the house? I'm guessing you're not married or have kids?

Depending on where you live, if she could find cheap rent (say $600 or so), she might be able to survive on her own with extreme penny pinching. $1400 won't go far these days. As other's mentioned, apply for low income housing (long wait), or look for room mate situations where two or more seniors share housing costs.

My mom is sort of in a similar situation. She has about $160K in savings from the sale of her house, and gets $1800 from social security. But she lives in assisted living with almost $5000 per month in expenses. Once her savings runs out (about 4 years from now) her only option will be to apply for Medicaid assistance. We will be retired by then and won't be able to help out financially.

 

[Sunset]

OP - The best and highest return your mother can get is only available within 1 yr of taking SS.
If she is within 1 yr of starting SS, she should stop SS, and return the money.
Her SS will then go up around 7-8% per year, so what she gets in 2 or more years will be Larger and for life.

Did she quit or get laid off from work in order to retire ?
How about signing up for unemployment ?

 

[skipro33]

Does she have any life insurance policies she can cash in? I helped my father fund his assisted living residence when he became too old to live on his own by cashing in his life insurance policies. At age 80, they paid out nearly the face value. He lived another 8 years and was able to support his own expenses because of this.

 

[mystang52]

Even with Mom being 100% supported by OP, I think it's crazy to consider investing the SS income. Just think of the emotional angst with one major market downturn. Park it in savings. Use an online bank (Ally, for example) that pays significantly more interest than nearly all brick and mortar banks.

 

[PaunchyPirate]

Even with Mom being 100% supported by OP, I think it's crazy to consider investing the SS income. Just think of the emotional angst with one major market downturn. Park it in savings. Use an online bank (Ally, for example) that pays significantly more interest than nearly all brick and mortar banks.

^^^ This. Investing her social security is not going to significantly help the situation.

 

[FIREd]

I think that it is too late to invest some of her money and expect a meaningful amount of income to boost her social security. Realistically, that supplemental income will probably have to come from you, I'm sorry to say.

I'm in a similar situation with my mother. She retired with no savings and with a pension of ~1,400 euros per month. At least her home was paid for so her housing costs are relatively low (she still has to pay HOA fees, insurance, property taxes, etc...). She worked a few years as a nanny after retirement, making a few hundred euros a months to supplement her pension, but it still wasn't enough and I've had to help for the past 8 years. Now she's in her 70's and her health has worsened to the point where she can't continue working. So I expect that my contribution will increase in the coming years.

 

[ExFlyBoy5]

I am sorry to hear about this OP but I agree with others that this will probably be a long time issue for you.

I have a distant aunt (she is 65 years old) that has a severe alcohol problem. She had a decent job working for a municipality but after some malfeasance, was terminated and lives on SS alone. This year she had a stroke and also broke her hip and recently moved in with her son because she couldn't make it on her own. Well, as "luck" would have it, her son is now in jail with little hope of getting out...and odds are pretty good that he will spend 20+ years in prison. It's a very unfortunate situation and I really don't know what will come of her.

 

[pb4uski]

^^^ Does this distant aunt know where you live?

 

[Brat]

If senior low-income housing is available in your community put her on waitlists. It may take 20 years for her name to come up but who knows... If her name does come up she can pass but still keep her place, at least that is what happens in my area. Typically if the apartment doesn't suit her once she moves in residents typically have dibs on vacancies so when an opening occurs focus on the building and location, not the apartment.