Running out of money?

[mickeyd]

Living the life that is guided by LBYM insures that one does not spend more than is available. Don't most REers live this way?

 

[stepford]

For the various folks talking of parents or parents in law running out of cash in their 90s and then having to shoulder the burden of paying for nursing home care - isn't Medicaid supposed to cover this. Perhaps not the nicest facility, but something (?).

Or are we already assuming that Medicaid is soon to be abolished?

 

[Fermion]

When I am 90, whatever is left in SS will be enough.

I want to have enough money in my 50s 60s, 70s and 80s though.

 

[mpeirce]

For the various folks talking of parents or parents in law running out of cash in their 90s and then having to shoulder the burden of paying for nursing home care - isn't Medicaid supposed to cover this.

In my DGM's case, the place she lived was above the level medicaid would pay for. Since the family could afford it if we had to, we wouldn't move her from the place she had lived in for many years. It would have been very tough for her to leave her friends behind.

 

[nun]

I planned for a 0% WR because I'm the eternal pessimist.

 

[RunningBum]

With all our discussion here about withdrawal strategies, returns, AA's and such, has anyone run out of money or known someone who has or nearly has? I am assuming people take action as they see the inevitable and ward off disaster. I wonder sometimes if we worry too much or if the threat is truly real.

I "worry" about money in that sense of identifying underperforming investments or overspending. I don't want to get to the point of near disaster and having to take drastic action. I think most of us here are that way, though it sounds like a few don't need to. I want to know as early as possible if I'm heading toward failure so I can cut back on luxuries not so important to me, and not have to give up extras I really enjoy, and certainly not basic comforts. I don't ever want to go into survival mode, and I'm pretty certain I won't.

If you're happy as long as you can keep a roof over your head and adequate nutrition, you probably don't need to worry. If you have higher hopes for living in comfort, maybe you do want to be at least somewhat concerned.

If you're talking about people outside this forum, yes, I do know people who have lost their house and gone bankrupt, or are basically living on a meager SS and will be in subsidized housing soon.

As far as obsessing about AAs, withdrawal strategies, and returns, for me, that's as much of a hobby as it is worrying. I like playing the numbers game. I'll look for a better credit card deal, CD interest rate, plane fare, and discounts. I do it more to feel good about finding these things rather than feeling like I have to or I'll run out of money.

I wouldn't have gotten to where I am, ER'd before age 50 and living very comfortably, without managing my money well, and I'm not going to stop now.

 

[Danmar]

I, for one, do not think a $2 million house is frugal.... just sayin.....

They bought it for $150,000 in the '70's. Nothing special. Poorly maintained and decorated. This is Toronto.

 

[Bigdawg]

Also agree that most smart planners would have several alternative mitigating plans that would prevent the actual event of running out of money. This is why I find the almost anal discussion of Firecalc scenarios of little use, especially for those in drawdown mode.

+1

 

[Danmar]

For the various folks talking of parents or parents in law running out of cash in their 90s and then having to shoulder the burden of paying for nursing home care - isn't Medicaid supposed to cover this. Perhaps not the nicest facility, but something (?).

Or are we already assuming that Medicaid is soon to be abolished?

The compararable program in Toronto would be pretty grim. I would rather pay for a better place for my mom.

 

[Fermion]

The compararable program in Toronto would be pretty grim. I would rather pay for a better place for my mom.

Do we have any actual proof of this or just stories? Do they beat you every Saturday and twice on Sunday? Serve cat food just once per day?

 

[Danmar]

I "worry" about money in that sense of identifying underperforming investments or overspending. I don't want to get to the point of near disaster and having to take drastic action. I think most of us here are that way, though it sounds like a few don't need to. I want to know as early as possible if I'm heading toward failure so I can cut back.



I wouldn't have gotten to where I am, ER'd before age 50 and living very comfortably, without managing my money well, and I'm not going to stop now.

Fair enough, I was thinking more about the interminable discussion around the historical Firecalc results ( to 4 significant digits) when a simple reaction to actual results would certainly suffice for almost all of us here. Certainly for those in withdrawal mode.

 

[Options]

...

I wouldn't have gotten to where I am, ER'd before age 50 and living very comfortably, without managing my money well, and I'm not going to stop now.

+1
Well said.

Years ago a brilliant and very successful mentor told me money stays around people who respect it and take good care of it. It does the opposite to those who don't manage it well.

 

[kcowan]

Frugal to the point of cheapness. Great for us so not complaining.

I would try to get them to loosen up and enjoy life!

Other end is my mom. She was never frugal and actually a little frivolous and vain. She may very well run out of money. But she is 91 and has about 6 years of funding left. If she runs out, we will pay her nursing home bills which are quite high at about $85,000 per year.

You should be able to get her in a nice subsidized home and then subsidize her informally for extras?

 

[kcowan]

The compararable program in Toronto would be pretty grim. I would rather pay for a better place for my mom.

I shopped for one for my bro in Toronto on Yonge north of Bloor. It would have been great, even for me. The key is to apply ahead of because of wait times.

Do we have any actual proof of this or just stories? Do they beat you every Saturday and twice on Sunday? Serve cat food just once per day?

My market research was done in 2005 so it might have gone downhill in 10 years.

But if I were out of money I would jump at it. Walking to entertainment/shopping and right on the rapid transit.

 

[Danmar]

I would try to get them to loosen up and enjoy life!
You should be able to get her in a nice subsidized home and then subsidize her informally for extras?

Too late for half of my in laws. He is almost gone. She will move into a very nice place. But still won't spend a dollar.

As for my mother. She's 91 with 6 more years of funding left. I don't think there is that much risk of her running out?

 

[braumeister]

She's 91 with 6 more years of funding left. I don't think there is that much risk of her running out?

I sincerely hope you're right, but of course you never know.
That's what a good friend thought when his mom became confined to her bed at 95. She died at 103, and it was a very rough eight years for everyone.

Always better to err on the conservative side.

 

[daylatedollarshort]

SS and pensions will cover most of our basic expenses plus a few frills and we can use some of the portfolio income and hobby income for extras if we want. We use liability matching and our plan is pretty much to have at least the same net worth we have today in inflation adjusted dollars more or less at age 104+, less whatever we need for long term care or other extraordinary expenses. If we downsize or move to a lower cost of living area we could save a bit more. We decided early on our focus would be more on avoiding sequence of returns risk or having to worry about running out of money than growing our portfolio in retirement.

 

[Surewhitey]

Mom's situation is the only one I know intimately. She and Hubby is living on SS and she's on VA benefits for health. She's still saving about 1/3 of her SS and only has $90-100k outside of the home she owns (not worth much, but lives there "free").

When Hubby passes, she'll be low maintenance until her health slows. Then we'll step in to help. She's pretty self-sufficient / independent otherwise.

I manage some of her finances and she beat the S&P by 4.5% this year...

 

[Surewhitey]

Our expenses are on the high side and only 4% of our totals. When we hit SS and small pension, we'll use that as "fun" money...

Most that I see here are very in tune with their finances and likely plan for the worst and get better from their performance.

We have a 45 year plan and have columns for health, car, home maint. events happening ever "x" years and put in a 3% inflation into spending although the only inflation we notice is health insurance...

 

[Huston55]

I personally think you have to worry enough to manage the risk. Sitting here today, there are a few things I cannot know: 1) how long DW and I will live, 2) how healthy we will be (imoldernu's sugar post is freaking me out right now...), 3) how reliable are our income sources in retirement. These constitute risks that require some consideration.

Risk is all about managing consequences and their associated probabilities. For longevity, I use the six-sigma tail value of age 100, plan for savings withdrawals to last at least that long. For income source reliability, I am arranging multiple sources, both pensions and savings, if one falters it won't take us down the tubes. For health, well, doggonit, I'm going to go and throw all the sugar we have in the trash. Oh, when DW gets home....

100 yo is actually closer to 5-sigma but, who's counting?

 

[Texas Proud]

They bought it for $150,000 in the '70's. Nothing special. Poorly maintained and decorated. This is Toronto.

OK... that makes more sense...

Forgot about that in some HCOL areas....

 

[Meadbh]

OK... that makes more sense...

Forgot about that in some HCOL areas....

Canada's HCOL areas are Vancouver and Toronto.

Here’s what $1-million homes look like in 16 Canadian cities | Globalnews.ca

 

[Andre1969]

I have a few family members in my parents' generation (ages 64, 70, and 72) that are retired/unemployed/disabled, who probably wouldn't be able to do it, if it weren't for help from the family. The 72 year old is one of my cousins who's always been a bit of a leech, although he did have medical issues. He lives in his 92 year old mother's basement, but when she passes away I can almost guarantee he won't be able to keep up with expenses and maintenance of the house, and will probably lose it.

The 64 year old is my uncle, who's on disability as well (kidney issues), and is living in my grandmother's house (Mom's side of the family). The house is part his, part Mom's, and part mine. We're holding onto it, so he has a place to live. He did get a pretty nice inheritance from Grandmom, plus I helped him with his 401k over the years, so he's doing fairly well. But, if it wasn't for Grandmom's house, he'd either have to live with my Mom, or me...probably wouldn't be able to make it on his own for very long.

The 70 year old is my Dad. He's living in Granddad's house, which I think is currently going through probate. There are two other heirs, his brothers. My Dad is in pretty bad health. I think he has cancer, but he's refusing to go to the doctor. He's supposed to get a pretty nice inheritance once Granddad's estate settles...provided his two brothers don't get greedy, start fighting, and lawyering up. If they end up selling the house and my Dad has to find another place, he says he'll be okay, but I have my doubts.

 

[Lsbcal]

...
As far as obsessing about AAs, withdrawal strategies, and returns, for me, that's as much of a hobby as it is worrying. I like playing the numbers game. I'll look for a better credit card deal, CD interest rate, plane fare, and discounts. I do it more to feel good about finding these things rather than feeling like I have to or I'll run out of money.

...

Me too. It's especially fun to talk about money on this forum when the market is providing more spending money for us.

I don't think we've quite gotten to the market's greed stage but we are far from the fear stage. Mild greed is more fun. Shame it can't be perpetual.

 

[Teacher Terry]

I don't understand why people stay in homes that they can't afford to maintain. I would sell and rent or buy a small condo. We have lots of discretionary spending that we could cut if we needed too.