Here is my story. My mom is 58 and my dad is 59. My parents have managed to save 0 for retirement and they currently rent their home. My dad filed bankruptcy about 2 years ago and currently owes about 6K to student loans. He basically lives paycheck to pay with no savings period and owns nothing of value. He claims he currently does not have the ability to save anything as he is having a hard time getting by without. He is also not in the best health. My mom has never worked. My parents have 4 kids. Out of the 4 of us I am the only one not in a mess financially (mess is an understatment).
Here is my situation. I currently Max out my employers matching for my 401K. (which is 5%). My employer also puts money into a pension account for me (4%). I was thinking of investing $3K a year into a ROTH (currently I’m just putting it into a savings account). This will put me into saving about 17% for retirement. I’m currently 33 and am playing catch up.
Now my father’s plan is to work until he dies and leave the mess to someone else when he goes. My mother’s doesn’t want to deal with the issue nor does she really understand money and how things work.
I tried to buy a life insurance policy for Dad but the rate of return is not worth it, basically equivalent to a savings account. Not to mention the $3k I spent a year would be directly affecting my ability to retire.
I basically need a way to invent money. This is the idea I have. I would fund my father’s 401K so he could get access to his company’s match. His company matches 6% dollar for dollar. $3k a year will be roughly 6% of his salary after taxes. My plan is to have dad give me power of attorney and specify me as the beneficiary of half (my original investment). I would then take my ½ and place it in my IRA (after dad passes). The other half would go towards taking care of mom. In 10 years this should invent roughly 50K for my mom and in the end I would still be able put the 3K (per year) into my retirement savings.
Currently I cannot afford (nor can my siblings) to take care of my parents mess without affecting my ability to retire (and i don't have kids or a spouse to rely on).
Here are my concerns.
-Will my dad be forced to start making withdrawals from his 401K when he gets older?
-How do I prevent my siblings from going after their share of his 401K if mom dies first or at the same time?
-Can I prevent my dad from borrowing or spending his 401K?
-Am I going to get screwed paying taxes twice on the same money?
-My dad lives in Va, does Virgina law allow my dad to leave me ½ of his estate?
-Is it possible (or legal) to periodically transfer funds from Dad’s 401K into my IRA without having to take a tax hit?
-Can i get some type of legal agreement that basically bars my parents from tapping into this account.
-Is this a flat out bad idea?
I called a couple lawyers and they all asked for extremely large retainers?
I’m open for other options/ideas as well? Please discus.
adding new questions:
-How can someone invest 6% into thier 401K (to take advantage of thier company matching) when they can't afford to take the 6% hit to thier paycheck?
-Is it possible to take early withdrawls every year to pay me back? I realize he would probably take a nice tax hit but there would still be allot left after the employer matching. If this was done anually it would limit my risk to 3K.
Creative ideas please.
Michael
Here is my situation. I currently Max out my employers matching for my 401K. (which is 5%). My employer also puts money into a pension account for me (4%). I was thinking of investing $3K a year into a ROTH (currently I’m just putting it into a savings account). This will put me into saving about 17% for retirement. I’m currently 33 and am playing catch up.
Now my father’s plan is to work until he dies and leave the mess to someone else when he goes. My mother’s doesn’t want to deal with the issue nor does she really understand money and how things work.
I tried to buy a life insurance policy for Dad but the rate of return is not worth it, basically equivalent to a savings account. Not to mention the $3k I spent a year would be directly affecting my ability to retire.
I basically need a way to invent money. This is the idea I have. I would fund my father’s 401K so he could get access to his company’s match. His company matches 6% dollar for dollar. $3k a year will be roughly 6% of his salary after taxes. My plan is to have dad give me power of attorney and specify me as the beneficiary of half (my original investment). I would then take my ½ and place it in my IRA (after dad passes). The other half would go towards taking care of mom. In 10 years this should invent roughly 50K for my mom and in the end I would still be able put the 3K (per year) into my retirement savings.
Currently I cannot afford (nor can my siblings) to take care of my parents mess without affecting my ability to retire (and i don't have kids or a spouse to rely on).
Here are my concerns.
-Will my dad be forced to start making withdrawals from his 401K when he gets older?
-How do I prevent my siblings from going after their share of his 401K if mom dies first or at the same time?
-Can I prevent my dad from borrowing or spending his 401K?
-Am I going to get screwed paying taxes twice on the same money?
-My dad lives in Va, does Virgina law allow my dad to leave me ½ of his estate?
-Is it possible (or legal) to periodically transfer funds from Dad’s 401K into my IRA without having to take a tax hit?
-Can i get some type of legal agreement that basically bars my parents from tapping into this account.
-Is this a flat out bad idea?
I called a couple lawyers and they all asked for extremely large retainers?
I’m open for other options/ideas as well? Please discus.
adding new questions:
-How can someone invest 6% into thier 401K (to take advantage of thier company matching) when they can't afford to take the 6% hit to thier paycheck?
-Is it possible to take early withdrawls every year to pay me back? I realize he would probably take a nice tax hit but there would still be allot left after the employer matching. If this was done anually it would limit my risk to 3K.
Creative ideas please.
Michael
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