“They’re only worth a few million. Not really rich”

[Anonymous]

Anonymous wrote:
NP here - Don't kid yourself - there is a HUGE difference between nursing homes and that different matters. I've spent a fair amount of time with a couple different older relatives while they were in nursing homes. Thankfully, none of them were in truly awful homes, but there was a fairly large difference between the mediocre and the great homes. ( Also, my husband works in the medical field and has been in some truly awful nursing homes, so I know that they exist, even if I haven't personally spent much time in them.) At the high end nursing homes, there was sunlight in the rooms, flowers and nice decor in the common areas, all the patients (even the dementia patients) always had their hair done and looked cute and clean, the aides joked with the patients....and best of all, the place didn't smell. Not at all. My relatives did decline mentally, but they each had a couple of years where they were well aware where they were....and even during the worst mental periods, I think that they had some awareness of their surroundings. And for the rest of us, it was much better to visit in a nice nursing home than a dark, kind of smelly one.

With a 4M net worth you can draw down at about 160k a year indefinitely. That will cover something nicer than a "mediocre" nursing home (even in the DMV).

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My inlaws are worth 3 million and then their house is another $900k. They are certainly rich by many standards. But if they go into nice assisted living that money will evaporate so fast. And it's what they saved for in the first place. Drove one Japanese car for 20 years before getting another, kept the house cold in winter and hot in summer, no European vacations for kids, no private, rare new clothes.

This. Without a pension, that money is unlikely to last until the next generation if one or both of them ends up needing long-term care. It's a hedge against having to go into an medicare-paid nursing home, not a resource for free-wheeling living.

This is sad. I get it and I'm not judging -- costs ARE atrocious. But to get to a place in life where you've accumulated $3 mil plus another 1 mil in housing and STILL it involves keeping the house hot in the summer and no new clothes!?

Why is "pension" a bid deal?

[Anonymous]

Anonymous wrote:

Anonymous wrote:
NP here - Don't kid yourself - there is a HUGE difference between nursing homes and that different matters. I've spent a fair amount of time with a couple different older relatives while they were in nursing homes. Thankfully, none of them were in truly awful homes, but there was a fairly large difference between the mediocre and the great homes. ( Also, my husband works in the medical field and has been in some truly awful nursing homes, so I know that they exist, even if I haven't personally spent much time in them.) At the high end nursing homes, there was sunlight in the rooms, flowers and nice decor in the common areas, all the patients (even the dementia patients) always had their hair done and looked cute and clean, the aides joked with the patients....and best of all, the place didn't smell. Not at all. My relatives did decline mentally, but they each had a couple of years where they were well aware where they were....and even during the worst mental periods, I think that they had some awareness of their surroundings. And for the rest of us, it was much better to visit in a nice nursing home than a dark, kind of smelly one.

With a 4M net worth you can draw down at about 160k a year indefinitely. That will cover something nicer than a "mediocre" nursing home (even in the DMV).

That's exactly my point of why it's worth it to have money available in retirement. Let's go with the scenario of one person is in memory care for 5+ years, and the other still wants to live at home, but maybe needs some help around the house. (a fairly typical scenario, in my experience). So, they really only have $3M available in liquid assets, since $1M locked up in the house. And by the time that they get to the point of needing more intensive help, they might have already spent down some of that $3M, though they'd also likely be getting Social Security.

The average cost of memory care is ~ $5k/month - let's estimate that it's at least $6k/month in DC, and $7k/month for the really nice care. In that estimate, memory care would cost $84k/year. Lets say that the homebound spouse is spending $20k/year for help around the house. So, that's $104k/year just for caregiving. If they only have $2M left in assets at that point, using the 4% rule, then they can only safely draw down $80k in assets/year. So adding in social security - and the homebound spouse living somewhat frugally - then yes, they could cover it. Maybe they even draw down some money from principle....well, they'll still probably have some money left at the end. The kids can inherit then. But if I were this (now) hypothetical couple's child, I would be very glad that they were entering into the caregiving years with a decent chunk of money in the bank.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My inlaws are worth 3 million and then their house is another $900k. They are certainly rich by many standards. But if they go into nice assisted living that money will evaporate so fast. And it's what they saved for in the first place. Drove one Japanese car for 20 years before getting another, kept the house cold in winter and hot in summer, no European vacations for kids, no private, rare new clothes.

This. Without a pension, that money is unlikely to last until the next generation if one or both of them ends up needing long-term care. It's a hedge against having to go into an medicare-paid nursing home, not a resource for free-wheeling living.

This is sad. I get it and I'm not judging -- costs ARE atrocious. But to get to a place in life where you've accumulated $3 mil plus another 1 mil in housing and STILL it involves keeping the house hot in the summer and no new clothes!?

Why is "pension" a bid deal?

A $40k pension is equivalent to having about $1mil invested. It makes a big difference for people who don’t have assets to throw off a steady income.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:
NP here - Don't kid yourself - there is a HUGE difference between nursing homes and that different matters. I've spent a fair amount of time with a couple different older relatives while they were in nursing homes. Thankfully, none of them were in truly awful homes, but there was a fairly large difference between the mediocre and the great homes. ( Also, my husband works in the medical field and has been in some truly awful nursing homes, so I know that they exist, even if I haven't personally spent much time in them.) At the high end nursing homes, there was sunlight in the rooms, flowers and nice decor in the common areas, all the patients (even the dementia patients) always had their hair done and looked cute and clean, the aides joked with the patients....and best of all, the place didn't smell. Not at all. My relatives did decline mentally, but they each had a couple of years where they were well aware where they were....and even during the worst mental periods, I think that they had some awareness of their surroundings. And for the rest of us, it was much better to visit in a nice nursing home than a dark, kind of smelly one.

With a 4M net worth you can draw down at about 160k a year indefinitely. That will cover something nicer than a "mediocre" nursing home (even in the DMV).

That's exactly my point of why it's worth it to have money available in retirement. Let's go with the scenario of one person is in memory care for 5+ years, and the other still wants to live at home, but maybe needs some help around the house. (a fairly typical scenario, in my experience). So, they really only have $3M available in liquid assets, since $1M locked up in the house. And by the time that they get to the point of needing more intensive help, they might have already spent down some of that $3M, though they'd also likely be getting Social Security.

The average cost of memory care is ~ $5k/month - let's estimate that it's at least $6k/month in DC, and $7k/month for the really nice care. In that estimate, memory care would cost $84k/year. Lets say that the homebound spouse is spending $20k/year for help around the house. So, that's $104k/year just for caregiving. If they only have $2M left in assets at that point, using the 4% rule, then they can only safely draw down $80k in assets/year. So adding in social security - and the homebound spouse living somewhat frugally - then yes, they could cover it. Maybe they even draw down some money from principle....well, they'll still probably have some money left at the end. The kids can inherit then. But if I were this (now) hypothetical couple's child, I would be very glad that they were entering into the caregiving years with a decent chunk of money in the bank.

You just lumped a lot of worse case scenarios together (spent a 1/3 of their retirement savings prior to problems, one of the more expensive types of care, no social security, one spouse still in the house, no long term care insurance) and they will end up with enough left over to give their children an inheritance. I find it hard to comprehend that people do not see this as being rich.

[Anonymous]

With the amounts of money we're talking here, you could move to Panama or Costa Rica or even Puerto Rico and have the life.

Including, yes, nursing homes and as many plane tickets you want for you/ your family.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My inlaws are worth 3 million and then their house is another $900k. They are certainly rich by many standards. But if they go into nice assisted living that money will evaporate so fast. And it's what they saved for in the first place. Drove one Japanese car for 20 years before getting another, kept the house cold in winter and hot in summer, no European vacations for kids, no private, rare new clothes.

This. Without a pension, that money is unlikely to last until the next generation if one or both of them ends up needing long-term care. It's a hedge against having to go into an medicare-paid nursing home, not a resource for free-wheeling living.

This is sad. I get it and I'm not judging -- costs ARE atrocious. But to get to a place in life where you've accumulated $3 mil plus another 1 mil in housing and STILL it involves keeping the house hot in the summer and no new clothes!?

Why is "pension" a bid deal?

Pp here. They saved all of that on HHI between 80 and 140k most of their lives. (and a well timed house purchase) and had two kids they put through college at full pay. The house temps and clothes are remnants of depression era upbringing and are very ingrained in people whose efamoloea lost everything. The plan is to age in place with help for as long as they can. Cleaning people, nurses etc.

[Anonymous]

Anonymous wrote:With the amounts of money we're talking here, you could move to Panama or Costa Rica or even Puerto Rico and have the life.

Including, yes, nursing homes and as many plane tickets you want for you/ your family.

Sure. But then they'd be away from their families and grandchildren. Works for some but not for all. And at a certain age newness is scary.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:
NP here - Don't kid yourself - there is a HUGE difference between nursing homes and that different matters. I've spent a fair amount of time with a couple different older relatives while they were in nursing homes. Thankfully, none of them were in truly awful homes, but there was a fairly large difference between the mediocre and the great homes. ( Also, my husband works in the medical field and has been in some truly awful nursing homes, so I know that they exist, even if I haven't personally spent much time in them.) At the high end nursing homes, there was sunlight in the rooms, flowers and nice decor in the common areas, all the patients (even the dementia patients) always had their hair done and looked cute and clean, the aides joked with the patients....and best of all, the place didn't smell. Not at all. My relatives did decline mentally, but they each had a couple of years where they were well aware where they were....and even during the worst mental periods, I think that they had some awareness of their surroundings. And for the rest of us, it was much better to visit in a nice nursing home than a dark, kind of smelly one.

With a 4M net worth you can draw down at about 160k a year indefinitely. That will cover something nicer than a "mediocre" nursing home (even in the DMV).

That's exactly my point of why it's worth it to have money available in retirement. Let's go with the scenario of one person is in memory care for 5+ years, and the other still wants to live at home, but maybe needs some help around the house. (a fairly typical scenario, in my experience). So, they really only have $3M available in liquid assets, since $1M locked up in the house. And by the time that they get to the point of needing more intensive help, they might have already spent down some of that $3M, though they'd also likely be getting Social Security.

The average cost of memory care is ~ $5k/month - let's estimate that it's at least $6k/month in DC, and $7k/month for the really nice care. In that estimate, memory care would cost $84k/year. Lets say that the homebound spouse is spending $20k/year for help around the house. So, that's $104k/year just for caregiving. If they only have $2M left in assets at that point, using the 4% rule, then they can only safely draw down $80k in assets/year. So adding in social security - and the homebound spouse living somewhat frugally - then yes, they could cover it. Maybe they even draw down some money from principle....well, they'll still probably have some money left at the end. The kids can inherit then. But if I were this (now) hypothetical couple's child, I would be very glad that they were entering into the caregiving years with a decent chunk of money in the bank.

You just lumped a lot of worse case scenarios together (spent a 1/3 of their retirement savings prior to problems, one of the more expensive types of care, no social security, one spouse still in the house, no long term care insurance) and they will end up with enough left over to give their children an inheritance. I find it hard to comprehend that people do not see this as being rich.

Actually, I very specifically included social security in my discussion. I described a scenario that is what I've seen (a couple of times) in my own family, so I don't think that it's all that unusual. Five years in memory care certainly isn't worst case scenario, btw - it can go on for much longer than that, especially if it's early onset dementia.

I wrote out that scenario (and the original comment about quality of nursing homes) in response to someone who said that quality of nursing homes doesn't matter. My point is that is does matter, and it's well worth budgeting for over the long term. I would agree with you that a family that can support 5-10 years of high intensity nursing home care and still have assets left over for the heirs is certainly well off. However, they're not so well off that they can be careless about saving and budgeting.

[Anonymous]

5 million is now the amount needed to retire for a couple with zero debt.

So a person newly retired or about to retire that is the bare min hardly rich

[Anonymous]

Anonymous wrote:5 million is now the amount needed to retire for a couple with zero debt.

So a person newly retired or about to retire that is the bare min hardly rich

My formula is pretty simple. I want to maintain my W-2 income level post retirement. That income will consist of social security for both of us, our pensions and utilizing 4-5% of our debt free assets. Our social security will be $40,000+, our pensions $80,000 so that total is $120,000 with W-2 income of $300,000. The gap is $180,000 so we need a minimum of debt free assets of $3.6-$4.5 million to make it work. I know it is very simplistic but it is easy for me to deal with. We are not far from retirement and the bull market the last few years has increased our assets nicely above the target. We are now shifting our investment mix to more conservative assets so we don't get caught retiring just when equity markets head south.

[Anonymous]

Anonymous wrote:5 million is now the amount needed to retire for a couple with zero debt.

So a person newly retired or about to retire that is the bare min hardly rich

I will never ever have this or even half of it by the time I retire so I'm just going to write an advance directive with explicit instructions to shoot me up with happy drugs as soon as dementia sets in so I can at least be comfortable in my public nursing home.

[Anonymous]

Anonymous wrote:

Anonymous wrote:5 million is now the amount needed to retire for a couple with zero debt.

So a person newly retired or about to retire that is the bare min hardly rich

My formula is pretty simple. I want to maintain my W-2 income level post retirement. That income will consist of social security for both of us, our pensions and utilizing 4-5% of our debt free assets. Our social security will be $40,000+, our pensions $80,000 so that total is $120,000 with W-2 income of $300,000. The gap is $180,000 so we need a minimum of debt free assets of $3.6-$4.5 million to make it work. I know it is very simplistic but it is easy for me to deal with. We are not far from retirement and the bull market the last few years has increased our assets nicely above the target. We are now shifting our investment mix to more conservative assets so we don't get caught retiring just when equity markets head south.

Why do you need ALL of your w2 income in retirement? Won’t your mortgage be paid off? No 529s. No retirement savings.

We earn over 400k HHI and 85% of our spending is taxes, retirement, brokerage, mortgage, 529 and childcare. The only expense we will have in retirement is taxes.

[Anonymous]

Anonymous wrote:

Anonymous wrote:5 million is now the amount needed to retire for a couple with zero debt.

So a person newly retired or about to retire that is the bare min hardly rich

I will never ever have this or even half of it by the time I retire so I'm just going to write an advance directive with explicit instructions to shoot me up with happy drugs as soon as dementia sets in so I can at least be comfortable in my public nursing home.

I'll be right there with you!

[Anonymous]

You guys need perspective- the median household income in Washington, DC is $75,506.