# Your retirement future when your parents need financial help



## Shrek (May 1, 2002)

We all plan for our own retirements. Some of us even plan to early retire b anywhere from a few years early to up to three or four decades early if we can invest wisely and "double down our bets" enough during our high risk years during our 20 somethings and securely invest it during our conservative focus start period during our 30 somethings in hopes of retiring in our 40s or 50s.

Most, especially those who retirement plan to get out in their mid 40s/50s seldom take in consideration if their retired parents should need help during hard economic times.

When we are young we often turn to our parents for help. When we are still away from our own retirement or even comfortably retired in our early out of the rat race niche, whats wrong with our parents turning to us first?

In the latest issue of Bottom Line Personal there is an article titled "How to Help Parents in Financial Need" by Robert Mauterstock, CFP of Parent Care Planning that offers five options for children to consider so that they can offer their parents financial help while better ensuring their own retirement or retirement plans.

He even addresses a reverse mortgage approach that offers all security and doesn't leave the taste of being a bad deal as those advertised by celebrities do.

If any of y'all have any interest in this topic we can continue the discussion.


----------



## Ramblin Wreck (Jun 10, 2005)

I've never heard anything good about reverse mortgages, so it would be interesting to hear about a "good one", for curiosity purposes only. I'd never do one.

Both my parents have passed, Dad a lot earlier than Mom (he was 15 years older). He was a good money manager, but Mom needed a lot of help that she never knew she got. My sisters were on the checking account with her and would alert us when there was a need to add funding. All of us would chip in, so it was not a biggie. Having siblings that work together is a real blessing.


----------



## Shrek (May 1, 2002)

His advise about the reverse mortgage was to give your parent the reverse mortgage yourself with the home as collateral if you can afford it to make them feel less of a burden and possibly make yourself a better profit than some current bond funds are projected of returning.

He did say not to do it informally and to have the reverse mortgage written by an estate planning attorney and recorded with the Registry of Deeds in the parent's county of residence to ensure that the funds from the sale of the home go back to you after the parents death rather than to other creditors or heirs.


----------



## ldc (Oct 11, 2006)

I unexpectedly had to help my folks, godparents and aunts, for about 16 yrs. It was difficult, as I was more than a thousand miles away. It took 62 trips, etc. Nobody had a home to reverse mortgage.


----------



## Wolf mom (Mar 8, 2005)

Shrek said:


> His advise about the reverse mortgage was to give your parent the reverse mortgage yourself with the home as collateral if you can afford it to make them feel less of a burden and possibly make yourself a better profit than some current bond funds are projected of returning.
> 
> He did say not to do it informally and to have the reverse mortgage written by an estate planning attorney and recorded with the Registry of Deeds in the parent's county of residence to ensure that the funds from the sale of the home go back to you after the parents death rather than to other creditors or heirs.


That'd work if the parental home is free & clear or the children can pay off the existing mortgage to re-incumber it with a reverse mortgage. If the parents get the mortgage deduction it would not be needed as they probably would not have the income to use it. 

Why not put the parental home in both the children & parents names, held in joint tenancy (no inheritance tax if done long enough before death) and give the parents a life estate? Then just take over paying some monthly bills. I think to play banker for parents, the way it is suggested - you'd have have a pretty good income or lots of money if you were to give them a bundle all at once. 

This is why it's a quandry for me to have people talk about paying off their home. How do you get all that money out to use to live on after you are retired?


----------



## Shrek (May 1, 2002)

Paying off the mortgage so the house is free and clear before retirement simply frees up the amount of the house payment as the retiree enters retirement and still wants to keep their comfortable roof over their heads.


----------



## Wolf mom (Mar 8, 2005)

Shrek said:


> Paying off the mortgage so the house is free and clear before retirement simply frees up the amount of the house payment as the retiree enters retirement and still wants to keep their comfortable roof over their heads.


I understand this, Shrek, but it does not answer my question.

So what happens when you have $200,000 worth of equity, then incur huge medical bills and and are living on your monthly SS check rather than having a large savings account (or investments) because the thing to do is pay off the mortgage? That $200,000 that you can't get to would help pay those medical bills - or at least, allow a lot more freedom in life than just living on a monthly SS check .

Remember, when SS was instituted, it was not set up to have people use that as their monthly income to live on. Today, most people live month to month on their SS check


----------



## Shrek (May 1, 2002)

Wolf mom said:


> I understand this, Shrek, but it does not answer my question.
> 
> So what happens when you have $200,000 worth of equity, then incur huge medical bills and and are living on your monthly SS check rather than having a large savings account (or investments) because the thing to do is pay off the mortgage? That $200,000 that you can't get to would help pay those medical bills - or at least, allow a lot more freedom in life than just living on a monthly SS check .
> 
> Remember, when SS was instituted, it was not set up to have people use that as their monthly income to live on. Today, most people live month to month on their SS check


In a situation as that its most often "game over" unless the property hasn't already been seized and you can use it to buy your way into a nursing home.

All plans have monkey wrench vulnerable aspects. All anyone can do is try to logically minimize as many as they can while still enjoying their days.


----------



## TheMartianChick (May 26, 2009)

Our family tries to always have a Plan B. Life has taught us that things can go south rather quickly. Our backup plans have always included rental property. Not just for the income, but to have the flexibility to move a parent in close to us or with us, if need be. My husband's parents have both passed away and mine live independently in a home that is far too big. While they are financially secure, there could always be a medical issue that would necessitate something like that.

I don't like the idea of reverse mortgages, but they are an available option for an older person who wants to remain financially independent and not be a burden to their children. Parents can be proud and not want their children to know that they are struggling. It's kind of funny but, I would be proud to assist my parents in some way and I think most of us here at HT feel the same way. There just isn't much opportunity.


----------



## Maura (Jun 6, 2004)

Owning free and clear doesn't neccessarily eat up your retirement funds. If you've owned your home for 30 years, chances are it's paid off. Through some creative buying and selling and building our own home, we built a nice new house with a pond and 6.5 acres with no mortgage. This has freed up what would be a mortgage payment to be put into savings and this year we purchased a smaller retirement home- cash no mortgage. When we sell this house we will have a pile of cash. Maybe not as much as we'd like, because of the housing market, but nothing to laugh at.

Whether or not to pay off the mortgage is going to be dependent on several factors. I certainly would not want to go into retirement with a heavy mortgage.

My siblings and I are lucky in that both my parents have/had a pension as well as SS. They have lived comfortably enough to suit them. Mom does get $175 each of 11 months out of the year (each kid gets one month, regardless of financial situation). They planned for their future, which makes it easier on everyone. We have planned for our retirement, but if something diabolical happened, I know our kids would help.


----------

