55 and has not planned for retirement

[Time2]

But then the B&B idea popped up!

My daughter moved into a home and we have all got to know the neighbor. He's a single guy 55 years old and has no retirement plan. I started him thinking about it, but I don't think he will ever take any action.
Just recently he was lamenting his lonely lifestyle, he took care of his dad and another person at different times at the end of their life. Then got the idea of B&Bing his one bedroom. In January he received $1,200 in rent, which basically covered some of the start up items (and a few needed boat parts) The house is on the water. He has bookings of $3,850 for the month of February. And has already had enough problems that he think he knows how to make it work. I hope I can convince him to sock most of that B&B income away for his future. The neighbor is really a fun guy to be with and I think most of his visitors will have a fun experience staying at his place.
Just wanted to post about the shared living B&B idea.





He's self employed and has been much of his life. He freely admits he paid minimal taxes, meaning he will get minimal SS. Next time I see him, I'm going to try to get him to look at MySocialSecurity.gov, just to get an idea where he stands. At 55 he has bad knees and a bad back and when I suggested he will probably need to work until 70 to maximize his SS, he looked at me like, "no way will I be able to work 15 more years." But, he needs to do something, because he may be looking at less then $12k a year in SS. And to make matters worse, he just got a loan for a boat.
He does have the house worth maybe $350k to $400k, he has it for sale at $475k, but just on the off chance someone can't live without it. He doesn't really expect to move. I'm done rambling.

 

[ERD50]

The comment that "He freely admits he paid minimal taxes," is a red/yellow flag. If he's open to talking about this, he should make sure he's got his 40 quarters in to qualify, and work to get then if he is short.

And since SS is benefit/income ratio is weighted towards lower incomes, he might actually be hurting himself with low ( or possibly unreported) income? I'm not sure if the slope on that curve is steep enough to worry about or if SS (beyond qualifying) should even be looked at as a good "investment", esp for a single male (on average). OTOH, SS is probably an important part of his "three legged stool", which probably has two very short legs?

The B&B gig sounds like a good fit for him though. With that cash flow, maybe he shouldn't sell the place? Being on the water I assume is an attraction?

-ERD50

 

[Time2]

I'm hoping that finding out what his SS will be might give him some incentive to change the outcome of what I think he's headed towards.

 

[punkinhead]

What's your goal in discussing these things with him? I don't think a casual acquaintance's financial future is going to get fixed over a couple beers. I've never had this level of conversation about money with one of my kids' neighbors.

 

[marko]

I started him thinking about it, but I don't think he will ever take any action.

There you go. He says he can't work 15 more years but "just got a loan for a boat"?

Run!

There are some people who just stumble through life not thinking beyond Tuesday. Somehow, beyond all expectations, they usually manage to get from A to B in life.

I'd let it go unless he were to initiate a discussion. Even then, you saying that four letter word "save" would likely freak him right out.

 

[Sunset]

Maybe he would have incentive to look at his SS earnings record to ensure he has 40 points, after you tell him it will qualify him for medicare. ?

Point out less than 40 and he gets nothing, so not everyone gets it.

 

[athena53]

Point out less than 40 and he gets nothing, so not everyone gets it.

My mother had a friend who had had a few short-lived (less than 10-year) marriages and had worked on and off as a hairdresser. Friend figured she'd retire at 62 and start collecting SS. Mom pointed out that she needed 40 quarters to qualify- I'm not even sure the friend had that many, so maybe she worked off the books a lot?

It's one of the reasons I'm reluctant to hire people to do work for cash when I think their income is going unreported. They're not contributing to SS and they're likely the ones who will need it most.

 

[Time2]

There you go. He says he can't work 15 more years but "just got a loan for a boat"?

Run!

There are some people who just stumble through life not thinking beyond Tuesday. Somehow, beyond all expectations, they usually manage to get from A to B in life.

I'd let it go unless he were to initiate a discussion. Even then, you saying that four letter word "save" would likely freak him right out.

On a previous trip, I had given him some print outs of, the 4% guide, "The Shockingly Simple Math behind early retirement" and one other I don't recall, just to give him some ideas. This trip I went over and he did start talking about the print outs, which then morphed into his B&B. So it is on his mind. It is not a hard conversation with him.

 

[Music Lover]

If I was 55 with bad knees and a bad back I wouldn't want to work until 70 either. In fact, I was perfectly healthy and retired at 53.

He got $1200 in January and $3850 in February renting just a bedroom. If it was me I'd concentrate on maximizing rental income instead of working all day for another decade or more and destroying my body for a few hundred more each month in SS. Does he have another bedroom that can be rented? Can he turn a garage into a studio with a kitchenette?

 

[Time2]

If I was 55 with bad knees and a bad back I wouldn't want to work until 70 either. In fact, I was perfectly healthy and retired at 53.

He got $1200 in January and $3850 in February renting just a bedroom. If it was me I'd concentrate on maximizing rental income instead of working all day for another decade or more and destroying my body for a few hundred more each month in SS. Does he have another bedroom that can be rented? Can he turn a garage into a studio with a kitchenette?

He doesn't really have another bedroom. However he does have a small garage and a second odd, very usable bathroom near it. I was thinking he could make the garage his room and then have a second room available.
His ad clearly stated "shared" living and one bedroom, but his first client showed up with a wife, daughter and dog. There was a discussion and he sent the family on their way. His first learning experience.

 

[Music Lover]

He doesn't really have another bedroom. However he does have a small garage and a second odd, very usable bathroom near it. I was thinking he could make the garage his room and then have a second room available.

That sounds like a viable option. If he was getting $3850 for one bedroom, renting a 2nd one could double his rental income. $7000 a month can be a lot of money if you live frugally.

 

[RetiredHappy]

I think the most important thing is that he needs to ensure that he has 40 quarters of SS. Getting Medicare is a big deal. If he is physically unable to work and gets income through rental, then he really does not need to work.

 

[Time2]

I think the most important thing is that he needs to ensure that he has 40 quarters of SS. Getting Medicare is a big deal. If he is physically unable to work and gets income through rental, then he really does not need to work.

Yep, I'll be asking about that, I suspect he filed every year, just forgot some income. But, he needs to have his 40.

 

[brucethebroker]

Good thought on the garage option.

 

[Bamaman]

Unfortunately, there is a huge percentage of the U.S. population that's a member of a subculture--working as carpenters, laborers, backhoe owners and many other professions. They work under the table and don't get 1099B's or have savings accounts.

You might be surprised how many self employed individuals don't pay income taxes, especially when their businesses are paid in cash. And it's not uncommon for these type of people to ignore "taking care of business."

My son in law was very successful in a high tech auto repair shop--grossing $650K per year. He had three new vehicles, a 4500 square foot home, motor cycles, 2 drag cars and boats. And he reported income low enough to get food stamps. He got leukemia and died with no life insurance--leaving 3 kids and my daughter. And had he lived another 20 years, he could have never had the financial resources to retire.

Nobody can count on anyone but themselves to save for their future. You certainly cannot count on Uncle Sam on anything--but higher taxes. And the future of Social Security is in question too.

The gentleman in question at the start of this post has time to do something about saving for his future. But old dogs don't learn new tricks, and it's doubtful he has it in him to change. He's probably close to being a hopeless cause.

 

[Sunset]

Unfortunately, there is a huge percentage of the U.S. population that's a member of a subculture--working as carpenters, laborers, backhoe owners and many other professions. They work under the table and don't get 1099B's or have savings accounts.

You might be surprised how many self employed individuals don't pay income taxes, especially when their businesses are paid in cash. And it's not uncommon for these type of people to ignore "taking care of business."
.....
Nobody can count on anyone but themselves to save for their future. You certainly cannot count on Uncle Sam on anything--but higher taxes. And the future of Social Security is in question too.

.....

These under the table workers, think they are smart, at least the few I knew. While I agree one should always save for their own future, to throw away the benefits of Medicare and SS is like shooting themselves in the foot.

As soon as a person makes lots of money, but cannot "show" it in any savings, they just end up spending it.
Like drug dealers, having a few million in the bank, while the IRS has a record of zero income for a few decades is suspicious.

The bizarre thing is, a person in business with smart accountants can write off a large number of expenses, and pay no tax or a tiny amount of tax.

 

[mystang52]

Is DD's neighbor asking for advice? If not, spend your time elsewhere.

 

[Time2]

Is DD's neighbor asking for advice? If not, spend your time elsewhere.

He is curious and accepting of the information, and has brought up the information on his own. Whether he does anything with it is...

 

[pb4uski]

Will he be declaring the B&B income on his taxes?

Would a full time roommate be easier?

Alternatively, you said that he previously had people rooming with him and took care of them. One of the neighbors at the end of our road did this. It was an alternative to a nursing home for elderly folks that couldn't live on their own anymore but didn't need to be in a nursing home. He could make that his new full-time job but it would be less physically demanding, steadier income and more lucrative... but also more time consuming with meal prep and all.

ETA. Now that I think about it I think the situation I was thinking about may have even been licensed as a micro nursing home. I think the wife had a nursing background.

 

[Music Lover]

The gentleman in question at the start of this post has time to do something about saving for his future. But old dogs don't learn new tricks, and it's doubtful he has it in him to change. He's probably close to being a hopeless cause.

HE might be a hopeless case, but he seemingly has the potential to earn $7000+ a month running the B&B. I bet that most people here under the same circumstances could make it work if they had to.

I know that I could.

 

[brett]

Is DD's neighbor asking for advice? If not, spend your time elsewhere.

Agree. MYOB. What makes you think that he will listen to your advice? That is...if he really wants that advice.

I have come to the conclusion that some people do not care. They are more than happy to coast along and make their problem someone else's problem...or the Government's problem. They want the problem solved.... by someone else and through no concerted effort of their own.

He is NOT you.

 

[Time2]

I'm not sure why many here get worked up about this. It is a casual conversation that both parts show an interest in. Why does anyone care.
I got some good info about making sure he has his 40 quarters and I'll pass that along.

 

[pb4uski]

^^^ I don't either... the guy seems to be inviting the conversation knowing that he needs some help from someone who knows more about it than he does.

 

[travelover]

I'm not sure why many here get worked up about this. ............

I know.

 

[Markola]

People muddle through, one way or another.