Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Need Ideas to Help My Sister
Old 01-12-2021, 12:42 AM   #1
Recycles dryer sheets
 
Join Date: Mar 2014
Posts: 162
Need Ideas to Help My Sister

My sister is going through a divorce. She is in her mid 50ís, has worked inconsistently (she was a stay at home mom to 4 kids, worked at the local Catholic school, basically in exchange for tuition when her kids were young) She now has a teaching job. They had very limited assets, including retirement funds. Like, she will probably walk away with about 50k. Thatís everythingÖ.home equity, savings, retirement. (I knew they were not as financially well off as dh and I, but this has me truly shocked). Right now she has a decent salary. Her salary increases this spring because she just finished her masters degree in December.

She plans to teach until she is 65. That will give her 13 years towards a pension. She will have social security, but a small amount. Itís projected to be:
Age 62 $710
Age 65 $1009
Age 70 $1251

My brother decided to move to the city where she lives. Heís retired and he has lived around the country and has realized he wants to live where he has family (heís single). Heís rehabbing a house and so come summer (when the house is habitable), she can live there and not have rent/mortgage. They live in an area thatís slightly below the average cost of living.

I understand 100% that one should never ever count on an inheritance. However, it is likely she will receive something from my mom, likely in low to mid six figures. But I realize thatís not something we should count on.

I am helping her figure out things and make a plan. Iíd appreciate any ideas/suggestions/comments.

My thoughts/questions so far.
She will be impacted by the GPO. Iím just not sure exactly how to figure it out.
I am going to encourage her to open a retirement account, but Iím not clear on what she can do. Can she contribute to a ROTH, regular IRA and a 403b? Are totals cumulative or separate? I also believe she can contribute ďcatch upĒ?

Her salary can increase if she has 30 more college class units. She plans to take them this spring and summer so her salary will increase for the next school year (21-22). I have offered to pay for the classes, so she can put the tuition amount towards retirement instead.

Thank you.
PandaBear is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-12-2021, 04:04 AM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Amethyst's Avatar
 
Join Date: Dec 2008
Posts: 9,429
Well, I can answer one thing. When I was working, I contributed to my pension (7%), the Thrift Savings Plan (which is a 401K), a regular IRA, and a tax-deferred annuity. They are separate contributions with their own maximums; I contributed the max to the TSP and the regular IRA, and a set amount to the annuity (no max there). I would have contributed to a Roth instead of a regular IRA, except our combined income exceeded the Roth ceiling. Since that will not be an issue for your sister, her issue will be more one of how much she can afford to contribute.

I wish her the best. It is not easy getting a masters in your 50's, and she sounds like an industrious sort. Good that her siblings care about her.
__________________
If you understood everything I say, you'd be me ~ Miles Davis
'There is only one success Ė to be able to spend your life in your own way.í Christopher Morley.
It involved a mannequin hand, and an electric shaver taped to a golf club! - "The Other Guys"
Amethyst is offline   Reply With Quote
Old 01-12-2021, 06:24 AM   #3
Recycles dryer sheets
wrigley's Avatar
 
Join Date: Nov 2008
Location: Jacksonville
Posts: 463
Quote:
Originally Posted by PandaBear View Post
My sister is going through a divorce. She is in her mid 50’s, has worked inconsistently (she was a stay at home mom to 4 kids, worked at the local Catholic school, basically in exchange for tuition when her kids were young) She now has a teaching job. They had very limited assets, including retirement funds. Like, she will probably walk away with about 50k. That’s everything….home equity, savings, retirement. (I knew they were not as financially well off as dh and I, but this has me truly shocked). Right now she has a decent salary. Her salary increases this spring because she just finished her masters degree in December.

She plans to teach until she is 65. That will give her 13 years towards a pension. She will have social security, but a small amount. It’s projected to be:
Age 62 $710
Age 65 $1009
Age 70 $1251

My brother decided to move to the city where she lives. He’s retired and he has lived around the country and has realized he wants to live where he has family (he’s single). He’s rehabbing a house and so come summer (when the house is habitable), she can live there and not have rent/mortgage. They live in an area that’s slightly below the average cost of living.

I understand 100% that one should never ever count on an inheritance. However, it is likely she will receive something from my mom, likely in low to mid six figures. But I realize that’s not something we should count on.

I am helping her figure out things and make a plan. I’d appreciate any ideas/suggestions/comments.

My thoughts/questions so far.
She will be impacted by the GPO. I’m just not sure exactly how to figure it out.
I am going to encourage her to open a retirement account, but I’m not clear on what she can do. Can she contribute to a ROTH, regular IRA and a 403b? Are totals cumulative or separate? I also believe she can contribute “catch up”?

Her salary can increase if she has 30 more college class units. She plans to take them this spring and summer so her salary will increase for the next school year (21-22). I have offered to pay for the classes, so she can put the tuition amount towards retirement instead.

Thank you.



Doesn't she have some sort of pension/retirement plan through the county/state she is teaching in? My son is a teacher here in Florida and he has a matching pension/retirement/401k plan through the county he teaches in. It's not much, but it's a start.



Mike
wrigley is offline   Reply With Quote
Old 01-12-2021, 06:25 AM   #4
Recycles dryer sheets
 
Join Date: Jul 2019
Posts: 167
I am not in academic field or have kids but hopefully the following list of my retirement accounts give some ideas:

Roth IRA
Roth 401k
Traditional IRA (from 401k of the previous employer rollover) that I will be converting to Roth IRA within the next few years
HSA (she needs to have the required healthcare insurance plan to be able to contribute to this)
529 with Vanguard. I contribute $300 a month mainly for my niece but can always use it for qualified purchases. Perhaps 1200/month for the 4kids then? Tell the oldest they will need scholarship and/or part-time jobs to cover their own expenses in college.

Max all retirement accounts contributions including the 50yr age catchup. Survive from the remaining income. If there is any leftover, save and invest steadily.

Getting an advanced degree in the 50s is an achievement. She will need to start saving aggressively though. If she can utilize her Master's degree to boost the annual income over $100k, and the father pays for full childcare, plus good investment strategy, it is achievable to save over $2mil in 13yrs and have a modest retirement in low cost of living area with social security and RMDs rather comfortably.
teetee is online now   Reply With Quote
Old 01-12-2021, 07:10 AM   #5
Full time employment: Posting here.
 
Join Date: Mar 2011
Location: North TX
Posts: 569
To really help her, you will need to first find her monthly expenses (or annual). Let's just do an example.

We spend $4k monthly for everything ($3k if we don't travel)
This includes insurance(s), property taxes, everything.
If we were each to expect $1k/months ($2k total), then we need $2k difference to cover everything.

To get $2k, we'll need to save $24k x 25 (4% rule) or $600k.

This is a starting point for discussion.

If she doesn't remarry, she should be able to get spousal SS benefits based her ex's too.

Hopefully she will get at least $1k SS & $1k pension and not spend as much as 2 people in my above example. Also as I see it, the 4 kids will hopefully be able to help in some way. And having generous siblings is awesome. She'll be fine after the initial year and she really knows what she will need.

My mom and SF live on SS & actually save some every month. They live in an extremely LCOL area and no debt, but are content.

My $.02
Surewhitey is offline   Reply With Quote
Old 01-12-2021, 07:39 AM   #6
Thinks s/he gets paid by the post
 
Join Date: Feb 2007
Posts: 3,003
If her current teaching job is in a public school is that the pension she will have? Is she in a state where public employees do not pay into Social Security? If that is the case then she will be subjected to WEP and GPO. These are reductions to her own SS and also to her benefits as a spouse.

If she's paying into SS with her teaching job then it's no problem. If she's not then look into WEP and GPO to see the effects on her SS benefits.
__________________
Married, both 65. DH retired June, 2010. Before the pandemic I had a pleasant little part time job.
Sue J is offline   Reply With Quote
Old 01-12-2021, 09:24 AM   #7
Recycles dryer sheets
 
Join Date: Mar 2014
Posts: 162
Quote:
Originally Posted by Sue J View Post
If her current teaching job is in a public school is that the pension she will have? Is she in a state where public employees do not pay into Social Security? If that is the case then she will be subjected to WEP and GPO. These are reductions to her own SS and also to her benefits as a spouse.

If she's paying into SS with her teaching job then it's no problem. If she's not then look into WEP and GPO to see the effects on her SS benefits.


Yes, as I mentioned she will be subject to the GPO. Iím just not sure how much.
PandaBear is offline   Reply With Quote
Old 01-12-2021, 09:25 AM   #8
Recycles dryer sheets
 
Join Date: Mar 2014
Posts: 162
Quote:
Originally Posted by Surewhitey View Post
To really help her, you will need to first find her monthly expenses (or annual). Let's just do an example.

We spend $4k monthly for everything ($3k if we don't travel)
This includes insurance(s), property taxes, everything.
If we were each to expect $1k/months ($2k total), then we need $2k difference to cover everything.

To get $2k, we'll need to save $24k x 25 (4% rule) or $600k.

This is a starting point for discussion.

If she doesn't remarry, she should be able to get spousal SS benefits based her ex's too.

Hopefully she will get at least $1k SS & $1k pension and not spend as much as 2 people in my above example. Also as I see it, the 4 kids will hopefully be able to help in some way. And having generous siblings is awesome. She'll be fine after the initial year and she really knows what she will need.

My $.02


I will have her ask her attorney about spousal social security.
PandaBear is offline   Reply With Quote
Old 01-12-2021, 09:29 AM   #9
Recycles dryer sheets
 
Join Date: Mar 2014
Posts: 162
Quote:
Originally Posted by teetee View Post
I am not in academic field or have kids but hopefully the following list of my retirement accounts give some ideas:

Roth IRA
Roth 401k
Traditional IRA (from 401k of the previous employer rollover) that I will be converting to Roth IRA within the next few years
HSA (she needs to have the required healthcare insurance plan to be able to contribute to this)
529 with Vanguard. I contribute $300 a month mainly for my niece but can always use it for qualified purchases. Perhaps 1200/month for the 4kids then? Tell the oldest they will need scholarship and/or part-time jobs to cover their own expenses in college.

Max all retirement accounts contributions including the 50yr age catchup. Survive from the remaining income. If there is any leftover, save and invest steadily.

Getting an advanced degree in the 50s is an achievement. She will need to start saving aggressively though. If she can utilize her Master's degree to boost the annual income over $100k, and the father pays for full childcare, plus good investment strategy, it is achievable to save over $2mil in 13yrs and have a modest retirement in low cost of living area with social security and RMDs rather comfortably.


Thanks for the ideas. Her kids are all young adults and they already werenít helping with college. So no childcare or anything like that. Sheís in education so her salary wonít be 100k. She did do the census so made a little extra money last year. She will also probably teach summer school so thatís extra as well but no where near 100k. And at 55 sheís unlikely to find a job that will with limited experience (I think).
PandaBear is offline   Reply With Quote
Old 01-12-2021, 09:29 AM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
ivinsfan's Avatar
 
Join Date: Feb 2007
Posts: 6,209
Quote:
Originally Posted by PandaBear View Post
I will have her ask her attorney about spousal social security.
She doesn't need to pay an attorney over this it's black and white... you could do a little reading here and then talk to her about it.. the GPO is a bigger issue..

Sounds to me like she will be fine not flush but fine...
ivinsfan is online now   Reply With Quote
Old 01-12-2021, 09:31 AM   #11
Recycles dryer sheets
 
Join Date: Mar 2014
Posts: 162
Quote:
Originally Posted by wrigley View Post
Doesn't she have some sort of pension/retirement plan through the county/state she is teaching in? My son is a teacher here in Florida and he has a matching pension/retirement/401k plan through the county he teaches in. It's not much, but it's a start.



Mike


Hi, she does have a teachers pension as I mentioned. She will have 13 years in. She can also contribute to a 403b which is for teachers. I just want sure if she could do IRA, 403b and Roth simultaneously.
Thanks.
PandaBear is offline   Reply With Quote
Old 01-12-2021, 09:36 AM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
ivinsfan's Avatar
 
Join Date: Feb 2007
Posts: 6,209
Quote:
Originally Posted by PandaBear View Post
Hi, she does have a teachers pension as I mentioned. She will have 13 years in. She can also contribute to a 403b which is for teachers. I just want sure if she could do IRA, 403b and Roth simultaneously.
Thanks.
I don't that she needs to use a Roth at her income level. I don't see much benefit.
ivinsfan is online now   Reply With Quote
Old 01-12-2021, 09:52 AM   #13
Thinks s/he gets paid by the post
38Chevy454's Avatar
 
Join Date: Sep 2013
Location: Cincinnati, OH
Posts: 2,745
Your sister can get spousal SS based on being married 10 years or more, and doesn't affect the spouse's SS amount. Also not dependent on being currently married or not. She qualifies based on 10 years marriage. She should be able to get higher SS based on this from what you are describing.

Is there any employer match for 403b? If so, then always save the req'd amount to get the max employer match. That's free money. Depending on her income, whether to save additional Roth or other is question of taxes and her budget needs. Being over 50, she can save additional in retirement savings per the over 50 catch up provisions. With the extra income based on further education, she can try to maximize savings.

Nice that your brother is moving into the area and can provide her with free or lower cost housing. I am sure she will still contributor some to household expenses even if she technically does not pay rent. Such as utilities, internet, etc.
__________________
The advice we're giving you is invaluable, that's why it's free
Experience is a good teacher, but the tuition can get expensive real fast

Semi-Retired 7/1/16: working part-time (60%) for now [4/24/17 changed to 80%]
Retired Aug 2, 2017; age 53
38Chevy454 is offline   Reply With Quote
Old 01-12-2021, 09:52 AM   #14
Thinks s/he gets paid by the post
Accidental Retiree's Avatar
 
Join Date: Feb 2012
Posts: 1,177
Quote:
Originally Posted by PandaBear View Post
Hi, she does have a teachers pension as I mentioned. She will have 13 years in. She can also contribute to a 403b which is for teachers. I just want sure if she could do IRA, 403b and Roth simultaneously.
Thanks.
Last I looked, the Social Security site has a WEP calculator which you may find helpful.

To give you some idea, I had 21 years of substantial earnings outside of my public sector work, and WEP decreased my SS by about 25% when I started collecting SS at 63-1/2.
__________________
Chief Retirement Strategist
The AR Group
Accidental Retiree is offline   Reply With Quote
Old 01-12-2021, 09:52 AM   #15
Recycles dryer sheets
 
Join Date: May 2015
Posts: 94
I also believe that she would benefit from planning for post 65 work. At least part time. She should be able to do substitute teaching or tutoring, or some other part time work as long as possible.
__________________
Class of 2019
YakGrl is offline   Reply With Quote
Old 01-12-2021, 09:58 AM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 28,178
The most important thing that she can do is to live below her means... and living with your retired brother is a good start.

Would she qualify for spousal benefits under SS? My wife's SS benefit is about the same as hers (another SAHM) but once I start collecting she'll receive half of my PIA which is substantially higher and that doesn't show up on her annual SS statement at all. It would only apply if her husband's PIA is more than twice her PIA... and given that it sound like they didn't have much it sounds like it might not apply.

While I agree that it is unwise to make an inheritance your retirement plan, it may eventually ride into the picture and save the day.

I don't know much about GPO but I did find this:
Quote:
If you receive a pension from a government job but did not pay Social Security taxes while you had the job, we'll reduce your Social Security spouse, widow, or widower benefits by two-thirds of the amount of your government pension. This offset is known as the GPO.
Whether she should use tax-deferred (tIRA or 403b) or tax-free (Roth IRA or Roth 403b) retirement savings on her marginal tax bracket now and her marginal tax bracket in retirement. If the difference is slight, then go with a Roth... if it is substantial, then go with tax-deferred.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56...target 65/35/0 AA TBD
pb4uski is online now   Reply With Quote
Old 01-12-2021, 10:14 AM   #17
Thinks s/he gets paid by the post
 
Join Date: Jul 2007
Location: St. Louis
Posts: 1,273
Quote:
Originally Posted by Surewhitey View Post
To really help her, you will need to first find her monthly expenses (or annual). Let's just do an example.

We spend $4k monthly for everything ($3k if we don't travel)
This includes insurance(s), property taxes, everything.
If we were each to expect $1k/months ($2k total), then we need $2k difference to cover everything.

To get $2k, we'll need to save $24k x 25 (4% rule) or $600k.

This is a starting point for discussion.

If she doesn't remarry, she should be able to get spousal SS benefits based her ex's too.

Hopefully she will get at least $1k SS & $1k pension and not spend as much as 2 people in my above example. Also as I see it, the 4 kids will hopefully be able to help in some way. And having generous siblings is awesome. She'll be fine after the initial year and she really knows what she will need.

My mom and SF live on SS & actually save some every month. They live in an extremely LCOL area and no debt, but are content.

My $.02
+1 Check her spending to make sure it is not out of line. That is very important all the advice in the world is no good if her spending is crazy.
FANOFJESUS is offline   Reply With Quote
Old 01-12-2021, 10:14 AM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Teacher Terry's Avatar
 
Join Date: Jun 2014
Posts: 5,129
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.
Teacher Terry is offline   Reply With Quote
Old 01-12-2021, 10:31 AM   #19
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
ivinsfan's Avatar
 
Join Date: Feb 2007
Posts: 6,209
Quote:
Originally Posted by Teacher Terry View Post
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.
That's interesting...so spousal SS might not be much of a factor...the bigger factor would be at what age the sister claims.
ivinsfan is online now   Reply With Quote
Old 01-12-2021, 10:57 AM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
OldShooter's Avatar
 
Join Date: Mar 2017
Location: City
Posts: 5,977
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.

Another tack would be to find the local Certified Financial Planners' "club." (via https://www.cfp.net/). In our city, the club offers pro bono financial planning help for low income people. They also offer annually a free one-day sort of seminar festival called Financial Planning Day covering various topics and including free consultation with a CFP. It is very well run; no sales pitches are allowed and the CFP participants are not allowed to create prospect lists from it. I attended one time and talked a bit with the club president. I gave her my card, but she did not even have any of her own cards with her.
__________________
Ignoramus et ignorabimus
OldShooter is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Really need help with sister inheritance dallas27 FIRE and Money 59 12-05-2017 10:20 PM
Retirement plan help for 51 year old sister chewy FIRE and Money 43 09-07-2010 06:31 PM
Help: I need ideas on what words to engrave...... FinanceDude Other topics 24 05-02-2008 04:57 PM
Frugal-yet-fun vacation ideas: need ideas from vagabonds OKLibrarian Other topics 23 04-12-2007 08:16 AM
Help for my sister scubamonkey Young Dreamers 55 11-30-2006 10:36 PM

» Quick Links

 
All times are GMT -6. The time now is 02:10 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2021, vBulletin Solutions, Inc.