Submitted by DelightedWarship t3_yr0qix in personalfinance
Look, I hate to sound like a crappy kid, but my mother and her husband (not my father) have always considered themselves financial gurus and haven’t made great choices. Their retirement plan involves way too much of ME. I just want to protect myself and my family because we can’t afford to float them for their poor choices.
Background— my mother met my stepdad and carried nearly $20k in CC debt with her from her previous marriage. She also was getting a huge discount on rent because the landlord (also her boss) was feeling sorry for her situation. My stepdad owns his own small business, and believes cash is king. He had a nasty divorce himself, having to buy back his house from his ex, essentially paying a mortgage on it twice. Mom was making like $30k when they met, he was making $100-120k.
He’s older now(58) and his hard manual labor self employed business is taking its toll on him physically. I don’t think he’s breaking $100k anymore. I’d say $60-80k now that he’s slowing down. But his income is 100% tied to how much he wants to work. He also cuts grass on the side but that’s probably under $10k income a year. He has been the type to prefer cash transactions, did not even invest in retirement and I honestly don’t even know if he is paying in to social security. He just recently got added to my moms health insurance.
My mom(53) now has a state job making like $50-55k a year. Maybe there 3 years? She only contributed 5% of her pay to retirement to get the match, but has like 8% or something a paycheck that goes to her pension. She told me her retirement is currently down to like $70k right now. She refuses to add more because “the way the market is I don’t wanna be locking money up and it not benefitting me”.
They still live a comfortable life. He recently just purchased a $30k toy he’s making payments on, and a $12k lawnmower. They took a month long vacation in 2019 to tour the country, and it cost them like $10-15k. They intended to do the same again soon, and potentially yearly.
For them, retirement is an age, and my stepdad intends to retire by 62-65 at the latest. My mom will probably be retiring by 63. I have been trying to figure out how they will accomplish this, and they finally told me they intend to reverse mortgage the house. I’d estimate it to be $700k max in this market. Once they pass away, they intend for ME to buy the house back from the bank. (That’s no where in my plan). They are adamant on this part.
Let me add that my mother is not on the deed for the house either. She talked about getting some living estate drawn up to protect her if he passes first, but he doesn’t sound game. He doesn’t think it is necessary. Neither have a will either. I don’t know how any of this works.
Look I think this is all a bad idea, especially with their retirement plan of traveling the country, but I’m not here to fix them. If I can give them guidance, great, but I don’t want to be saddled with debt or them providing my social for any “deal” they intend to set up. Unfortunately they have tried that before. How can I protect myself?
Also, how the heck do I help them without financially help them? What guidance can I give them? I don’t even know where to start. I foresee them going broke and knocking on my doorstep begging to be let in, but we can’t afford that. Not now, not in the future. We will have children and our forever home doesn’t have space for them. What happens to people who try to retire and run out of their money? If they reverse mortgage the house, would they then be homeless? I don’t know how it all works but it all stresses me. They are the type of people who believes their children should care for them no matter what if they need help. But I have warned them many times I cannot be their retirement plan.
EDIT - so this post took off way past what I expected. Some notes:
Thank you for those who took time to outline how a RM works, and guidance I can provide my mother (if asked!).
I have no want or desire for “what I will get” out of them. I WANT them to live in their home, happily, and die at a happy old age in their comfort place. Then I want the bank or state or whoever to go ahead with the house. I don’t need it. I don’t really want it. It’s not about the money (because we could def use money). But that’s not MY money so it’s not for me to worry about. Therefore I just assume a $0 inheritance and am perfectly content with that. Ideally they should spend every last dollar on themselves making themselves happy. But I just fear they will outspend their money and will come to me seeking my financial support. And I can’t be that for them. In no fashion. Financially, and based off poor relationship/history there. I won’t do it.
I realized more so that this is also just a big relationship issues question, more than I wanted to believe. I was dancing around the thought of how do I turn my elderly parents away, who have squandered away all their funds through poor choices, and still sleep at night. If this was a healthy relationship, and didn’t have so many poor past experiences, I’d probably save a lot of money on therapy and not be here asking this question. But it truly is a relationship issue that unfortunately blends into financial issues when boundaries are not upheld. So I will speak with my therapist on this topic again. I will work on constantly reminding them of these boundaries when THEY bring this conversation up, and remain firm.
I appreciate everyone who took the time to reply. I read every comment and tried to process it.