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RE2Boys · 01-12-2021, 10:05 AM

GPO would only impact your sister if she applies for social security spousal benefits based on her ex's social security record and she is receiving a government pension. It does not apply to her obtaining social security based on her earnings record (that is the function of the WEP). I'm a gov't pensioner and GPO will mean I can not receive spousal benefits based on my wife's considerably larger SS benefits, my SS benefits are based strictly on my earnings record and reduced by WEP.

Sunset · 01-12-2021, 10:14 AM

OP - One thing not addressed so far, is why is your sister in such dire straits. Was it due to low earnings and not working for years, or one of them (sister or husband) spend all the money and not bother to save ?

With my sister, the issue is spending, as soon as she thinks she is getting more money, she is planning how or actively spending it. She has a total of $1K in savings, that she has not spent yet.

The only reason she is not on the street is due to getting a pension monthly.

ivinsfan · 01-12-2021, 10:39 AM

Quote:

Originally Posted by Sunset

OP - One thing not addressed so far, is why is your sister in such dire straits. Was it due to low earnings and not working for years, or one of them (sister or husband) spend all the money and not bother to save ?

With my sister, the issue is spending, as soon as she thinks she is getting more money, she is planning how or actively spending it. She has a total of $1K in savings, that she has not spent yet.

The only reason she is not on the street is due to getting a pension monthly.

There are lots of people like this, doesn't mean they have done something wrong. Raised four kids, Mom at home or low paying job at church school to get the kids free tuition. Dad has blue collar job.. generally in situations like this, they aren't able to put much if any away until the kids are launched and the house is paid off.

This describes most the working class families in my rural area. They aren't blowing money on fancy cars or pricey vacations.

Sunset · 01-12-2021, 10:50 AM

Quote:

Originally Posted by ivinsfan

There are lots of people like this, doesn't mean they have done something wrong. Raised four kids, Mom at home or low paying job at church school to get the kids free tuition. Dad has blue collar job.. generally in situations like this, they aren't able to put much if any away until the kids are launched and the house is paid off.

This describes most the working class families in my rural area. They aren't blowing money on fancy cars or pricey vacations.

I agree, wasn't assigning blame, but as my sister has shown, it needs to be known what is the cause, or a lot of effort and $$ can be wasted, as my sister's reason is due to a burning hole in her pocket.
And she did blow ALL her inheritance money (and CC maxed out) on pricey vacations.

ivinsfan · 01-12-2021, 11:04 AM

Quote:

Originally Posted by Sunset

I agree, wasn't assigning blame, but as my sister has shown, it needs to be known what is the cause, or a lot of effort and $$ can be wasted, as my sister's reason is due to a burning hole in her pocket.
And she did blow ALL her inheritance money (and CC maxed out) on pricey vacations.

didn't say you were blaming just that dire straits isn't really the right term to use. Now if they made a million year that would be a different story.

Teacher Terry · 01-12-2021, 11:09 AM

With a free place to live, smaller pension and SS, small inheritance in a LCOL it sounds like she will be fine if she’s good with money. With no rent she should be able to save money during this time.

pb4uski · 01-12-2021, 11:19 AM

Quote:

Originally Posted by Sunset

... And she did blow ALL her inheritance money (and CC maxed out) on pricey vacations.

But didn't you know... she "deserved" all that stuff?

ILikeStarTrek · 01-12-2021, 12:23 PM

About this question you originally asked:

"Can [my sister] contribute to a ROTH, regular IRA and a 403b? Are totals cumulative or separate? I also believe she can contribute “catch up”? "

Teetee gave a partial answer in post #4 in this thread, although he talked about a 401k. For your sister's case, that will be replaced by the 403b.

So to directly answer your question, she can contribute to any/all of the 403b, Roth, Traditional IRA - although for the IRAs, there are some income limits she needs to be aware of.

The max annual contribution is separate for the 403b from the IRAs. For the traditional and Roth IRA, there is a combined max for the two of them.

For the 403b, in 2021 the max normal contribution is $19,500 with a max age 50+ catchup of an additional $6500 for a $26,000 total.

If she is able to contribute more than that, she can also do after-tax contributions (if the 403b plan allows it - some do, some don't). This is informally called a back-door Roth. The 2021 limit on after-tax contributions is $58,000 but this INCLUDES her other 403b contributions and any matching contributions. In other words, the TOTAL 403b maximum contributions of pre-tax + Roth + matching + after-tax is $58,000.

For IRA: There is a combined annual max for traditional and Roth IRA of $7000 (which includes the age 50+ catchup). So she basically should decide between the Roth IRA and the Traditional IRA and do one or the other. To reiterate, this IRA max is separate from the 403b max. The only other catch is, because she also has a 403b, if she exceeds certain income limits, there would be a further restriction on the IRA max. For more information about this, read here:
https://www.investopedia.com/ask/ans...401(k)_ira.asp

The main reason for doing Roth (403b and/or IRA) is if one expects to be in a higher tax bracket in retirement income than one is currently in. As another poster noted, your sister will probably not have a very high retirement income so it's probably better for her to do Traditional 401k & IRA contributions rather than any Roth.

aaronc879 · 01-12-2021, 12:39 PM

I don't see where the problem is. A teacher with a Master's gets paid a very solid wage no where near poverty level so she should be able to save many thousands a year even without any help from family. If she is willing and able to work into her mid 60's she should be better off than the majority of people even if she gets no inheritance. People make it sound like she is in a dire position. She will be in better shape than most people I know and better than I will likely be in due to her pension and in very good position if she gets a six-figure inheritance on top of everything else.

Retch The Grate · 01-12-2021, 05:53 PM

Quote:

Originally Posted by ivinsfan

I don't that she needs to use a Roth at her income level. I don't see much benefit.

But no real drawback to stashing money in a Roth at that income level either since she can always withdraw her contributions.

troutnut1 · 01-12-2021, 06:44 PM

Dave Ramsey just called and asked what kind of car she drives, and does she have a payment on it...

PandaBear · 01-12-2021, 08:38 PM

Quote:

Originally Posted by ivinsfan

There are lots of people like this, doesn't mean they have done something wrong. Raised four kids, Mom at home or low paying job at church school to get the kids free tuition. Dad has blue collar job.. generally in situations like this, they aren't able to put much if any away until the kids are launched and the house is paid off.

This describes most the working class families in my rural area. They aren't blowing money on fancy cars or pricey vacations.

Unfortunately it’s a combo. Her spouse is very poor with money and likes to buy things. Also her spouse has jumped from job to job and then dropped out of two different ph.d programs, but there is still loan debt.
(I personally believe It was an abusive situation of sorts....controlling, put downs, walking on eggshells for spouses feelings, etc. The spouse asked for the divorce. Now that she’s out of the relationship and seeing what is going on with divorce through more neutral eyes, she’s seeing it for herself now.

But no big vacations, or toys (at least for her).

PandaBear · 01-12-2021, 08:39 PM

Thank you for all of the comments. I’m going to copy the info so I know how to follow up. They are very helpful.

ivinsfan · 01-12-2021, 09:30 PM

Quote:

Originally Posted by Retch The Grate

But no real drawback to stashing money in a Roth at that income level either since she can always withdraw her contributions.

that's true it would just depend on do I want yet another account to worry about in this situation. A plain emergency fund would serve the purpose without any further hassle.

almosttime · 01-12-2021, 10:23 PM

Quote:

Originally Posted by Teacher Terry

GPO eliminates a higher SS from a spouse for someone affected by WEP. Mine is reduced 60% by WEP. The SS website even states that because of GPO the majority of people see their claim on spousal support go to zero. Or it did 24 years ago when I got divorced and checked after taking a job not paying in to SS.

Yes. WEP reduced my spousal SS to zero. GPO reduced my husbands SS substantially. Call your local office of The SSA for approximate numbers. Additionally, the SS estimates they mail out, and the numbers online, do not take WEP and GPO into account.

PandaBear · 01-12-2021, 10:57 PM

So my sister sent me her social security history.In todays dollars, she would get (based on her current pension estimate)
Age 62 $347
Age 65 $428
Age 70 $611

So that's one more piece.

I am also realizing she will be impacted by WEP, so probably can't get any SS from her soon to be ex-spouse.

Again, I appreciate all the comments. They all help me continue to brainstorm and plan.

daylatedollarshort · 01-13-2021, 12:59 AM

For the college credit have her look at online programs for adult learners. The Big 3 accredited colleges are Thomas Edison, Charter Oaks and Excelsior. They accept online credits from inexpensive online places like sophia.org and straighterline.com, CLEP tests, may give credit for work experience, etc. One of my relatives needed a degree as an adult and the Thomas Edison program worked out great.

This forum is a good resource for adults who already have careers and just need credits or degrees relatively quickly and painlessly - https://www.degreeforum.net/mybb/index.php

daylatedollarshort · 01-13-2021, 01:08 AM

Quote:

Originally Posted by OldShooter

In many states, maybe all of them, there are state-level organizations using state and federal money to support seniors. In our state there is a one-call hotline staffed with knowledgeable social workers who can refer callers to resources. I suggest that you try to find such a resource in your state.

First, so she can become familiar with the program. Much of what they do is more retirement oriented and oriented to very poor people, but not all.

Second, to see what financial planning resources are available. This is what she needs now and what you are trying to do for her, but if there is a formal program that is pro bono or inexpensive I think she would benefit.

We're in several senior clubs and the programs they have for low income seniors, or programs help them apply for are very nice - free lunches, discount public transportation passes, budget help, free counseling services, free bus service, discount produce, free college courses, help with utilities, information on Medicare, Medicaid and SNAP, etc. There's a lot of programs out there for seniors and low income households, at least there are in our state. She may also want to explore her options for subsidized housing once she retires so she can have a place of her own eventually with modest rent. It took a friend on mine 8 years before a spot opened up for her. Our library system has all sorts of activities and passes, free music, free streaming services, etc. In our area with shared housing and taking full advantage of all the community services, a senior with low income may still be able to have a fairly nice life.

iloveyoga · 01-13-2021, 05:13 AM

Lots of great advice here as always. I think she is really lucky to have you and your brother to help her like that, it will make a real difference for her, especially if she takes all of your advice to heart.