I’ve been reading through this thread and wondering if things are really all that dire.
MIL has an income of 6k a month and is spending 4.7k a month. At age 70 she will have an income of 1.4k a month from SS. She also has 300k in invested assets and a 200k house. The income could stop at any time, and will definitely run out in 10 years.
If things continue exactly as they are then in 10 years MIL should have about 700k (assuming constant spending of 4.7k a month, and a 5% investment return), and be able to spend something like 3k a month (at 75 she might be fine with a WR > 4%) from investments and 1.4k from SS. No problem.
If something bad does happen to the income in the next 10 years, then the possibility of running out of money may seem a lot more real to her than it does now, and she will probably have an easier time spending less. In this scenario she may have to cut expenses significantly, but while the adjustment may be more severe from a financial standpoint, it will be easier for her to make psychologically when she sees the reason. You know what? If it happens, she will probably have no regrets.
Worst case is that she starts spending a lot more than 4.7k a month, stops saving entirely, and then the alimony stops because her ex decides to retire - so she sees him enjoying life while she’s eating beans. That will be tough, but she’ll still have SS and some investment income to live on, so she won’t be living out of a box. She may also get bailed out by high investment returns for the next few years, selling her house, or meeting a sugar daddy. Maybe none of those are very likely, but you never know. She may also not live to see the day of reckoning.
Most of the people around here are high-planning types that like to see a 99% probability of success in their forecasts. Not everyone is like that. A member of my family is in his 70's, spends like it’s going out of style, and is 100%+ equities (with a couple mortgages) mostly in emerging markets and biotech all managed by a professional advisor. Every once in a while he’ll ask me if I think China or India or gold is a better place for him to put money. I’ll tell him that TIPS are nice, and I like index funds, but I don’t think he has a lot of interest. I used to be worried, but this has been going on for ten years now. He’s gotten this far, and will probably end up fine. I feel worse for his wife who is several years younger, will likely outlive him by a while, and is completely uninvolved in their finances. What can you do? Make polite comments when asked, and try and stay out of it otherwise. The hardest thing is not letting it bother you, and smiling when they tell you “bonds just went down the tank, and my mongolian yak futures are up 63%! Good thing I don't take your advice!”
