We thought we had a few more years before dealing with the problem, but there we are... I have been helping MIL with her finances for a few years now (she is truly clueless when it comes to money) and she relies on my advice to make important decisions. While I feel very confident planning for my own retirement, I find it hard to help planning hers. I guess it feels a bit too "real"?!? While I plan to have a lot of cushion in my retirement plan, hers has a very small margin of error. So I am begging for pointers...
A bit of background: FIL divorced MIL 2 years ago. FIL was supposed to pay her a substantial alimony for a period of 10 years. Unfortunately, he voluntarily quit his well paid position early last year and has been unable to find another job. While the situation is supposedly temporay, MIL fears that she'll never see another dime from him again. We now have to seriously consider that possibility.
MIL is 66, great health (her mom lived into her 90's), unemployed and with few qualifications (SAHW most of her life), with $170K in retirement accounts (mostly IRA) and a home worth $200K (paid for). No other assets to speak of.
For the past 14 months, MIL was able to avoid touching her retirement accounts and has paid for her living expenses out of savings. Starting in August, she'll have about $1,100 a month in SS coming in. Her savings will run out in November and she will have to start tapping her retirement accounts. Her annual living expenses are currently about $36K, but I am working with her to try and reduce that to $32K. It has been a battle.
Between her SS check and the dividends from her IRA (about 4% yield), we are looking at an annual income stream of $20K, far short of the 32K needed.
This is far from an ideal situation, and my first reaction was: without that alimony coming in, you can't afford to retire. She finds the prospect of getting a job at her age less than thrilling and she wants to investigate alternatives before starting to polish her "resume".
It seems like a reverse-mortgage could help. But, according to a calculator I found on Wells-Fargo's website, it might only give her an additional $6K-$7K a year. I don't know how current interest rates affect the monthly payments and I would appreciate any clarification on the subject. But, even with a reverse mortgage, she would still have a gap of $5K-$6K between her income and expenses.
Do you guys have any other suggestions on how to bridge the income gap?
Thanks!
A bit of background: FIL divorced MIL 2 years ago. FIL was supposed to pay her a substantial alimony for a period of 10 years. Unfortunately, he voluntarily quit his well paid position early last year and has been unable to find another job. While the situation is supposedly temporay, MIL fears that she'll never see another dime from him again. We now have to seriously consider that possibility.
MIL is 66, great health (her mom lived into her 90's), unemployed and with few qualifications (SAHW most of her life), with $170K in retirement accounts (mostly IRA) and a home worth $200K (paid for). No other assets to speak of.
For the past 14 months, MIL was able to avoid touching her retirement accounts and has paid for her living expenses out of savings. Starting in August, she'll have about $1,100 a month in SS coming in. Her savings will run out in November and she will have to start tapping her retirement accounts. Her annual living expenses are currently about $36K, but I am working with her to try and reduce that to $32K. It has been a battle.
Between her SS check and the dividends from her IRA (about 4% yield), we are looking at an annual income stream of $20K, far short of the 32K needed.
This is far from an ideal situation, and my first reaction was: without that alimony coming in, you can't afford to retire. She finds the prospect of getting a job at her age less than thrilling and she wants to investigate alternatives before starting to polish her "resume".
It seems like a reverse-mortgage could help. But, according to a calculator I found on Wells-Fargo's website, it might only give her an additional $6K-$7K a year. I don't know how current interest rates affect the monthly payments and I would appreciate any clarification on the subject. But, even with a reverse mortgage, she would still have a gap of $5K-$6K between her income and expenses.
Do you guys have any other suggestions on how to bridge the income gap?
Thanks!