Helping my hopeless parents plan for retirement

[Anonymous]

It’s odd to me that this “rental property” can’t seem to support its own Maintainance and taxes...an investment property owned (even if it has some debt in it) should cash flow unless poorly managed or in a very low cap rate area.

I have no other comment on the cluster of a situation.

[Anonymous]

Anonymous wrote:Hi! OP here - wanted to respond before I get totally consumed in the caucus results. So the inheritance story is VERY complicated and the real evildoer is my father's brother (the co-executor) who stole a bunch of money that my father was counting on. So we were happy to sign over the property bc we wanted to help and as 20somethings we were happy to wash our hands of the expenses, taxes, etc. We also at the time had no idea how bad other aspects of their finances were. A lot of it boils down to my dad having expected a large inheritance that didn't end up existing courtesy of his brother who died at 71 without ever having held down a job. Bad financial decisions are in the DNA, it seems!).Anyway! My parents are not scheming or bad people, just... hopeless. I have always assumed they would sell the house and live off the proceeds but I thought it would be best to hold onto the property for as long as possible so they could have a larger nest egg - and maybe be too old to waste the money in dumb ways. I don't want them to end up in a Medicaid nursing home but I know there are worse fates :/. So maybe selling both and renting a small place is the best bet. DCUM always knows whats up!

And the Dave Ramsay advice is great - thanks. That's exactly the kind of Finance for Dummies thing I was looking for.

I think that Dave would want to see your parents in a paid off house. Whether they stay in their current home or downsize into something easier for them to maintain, they should have a paid off mortgage. The rest of the money would be invested fairly conservatively to provide them income in their retirement. Your parents need to talk to a reputable financial advisor and they need to get their estate planning into place. Your parents sound like good people who are a bit financially clueless. Hang in there and be patient with them. It'll all work out.

[Anonymous]

Anonymous wrote:It’s odd to me that this “rental property” can’t seem to support its own Maintainance and taxes...an investment property owned (even if it has some debt in it) should cash flow unless poorly managed or in a very low cap rate area.

I have no other comment on the cluster of a situation.

It sounds as though they need the rental income to afford their current home but the rental income doesn't cover all of their expenses so they really have to scramble to come up with property tax payments, maintenance, etc on both properties.

They need to sell and simplify this picture. The investment property might be a great money making opportunity for a savvy real estate investor but Op's parents are not savvy real estate investors.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It’s odd to me that this “rental property” can’t seem to support its own Maintainance and taxes...an investment property owned (even if it has some debt in it) should cash flow unless poorly managed or in a very low cap rate area.

I have no other comment on the cluster of a situation.

It sounds as though they need the rental income to afford their current home but the rental income doesn't cover all of their expenses so they really have to scramble to come up with property tax payments, maintenance, etc on both properties.

They need to sell and simplify this picture. The investment property might be a great money making opportunity for a savvy real estate investor but Op's parents are not savvy real estate investors.

OP here. This is right. I think they count on the rental income to pay for everything, including the place where they live, and they never figure in expenses, taxes, etc. And property taxes are very high and they don't understand the concept of escrow

[Anonymous]

Anonymous wrote:

Anonymous wrote:Hi! OP here - wanted to respond before I get totally consumed in the caucus results. So the inheritance story is VERY complicated and the real evildoer is my father's brother (the co-executor) who stole a bunch of money that my father was counting on. So we were happy to sign over the property bc we wanted to help and as 20somethings we were happy to wash our hands of the expenses, taxes, etc. We also at the time had no idea how bad other aspects of their finances were. A lot of it boils down to my dad having expected a large inheritance that didn't end up existing courtesy of his brother who died at 71 without ever having held down a job. Bad financial decisions are in the DNA, it seems!).Anyway! My parents are not scheming or bad people, just... hopeless. I have always assumed they would sell the house and live off the proceeds but I thought it would be best to hold onto the property for as long as possible so they could have a larger nest egg - and maybe be too old to waste the money in dumb ways. I don't want them to end up in a Medicaid nursing home but I know there are worse fates :/. So maybe selling both and renting a small place is the best bet. DCUM always knows whats up!

And the Dave Ramsay advice is great - thanks. That's exactly the kind of Finance for Dummies thing I was looking for.

I think that Dave would want to see your parents in a paid off house. Whether they stay in their current home or downsize into something easier for them to maintain, they should have a paid off mortgage. The rest of the money would be invested fairly conservatively to provide them income in their retirement. Your parents need to talk to a reputable financial advisor and they need to get their estate planning into place. Your parents sound like good people who are a bit financially clueless. Hang in there and be patient with them. It'll all work out.

That's right. My mom can see the problems but out of some weird generational reflex she keeps assuming my dad will solve them - even like 20 years after everyone else in the family understood otherwise. So she's the one I want to send for some basic know-how.

[Anonymous]

Anonymous wrote:This is not a fight worth having. They currently have no money, so they have nothing to lose. They are mid 70s so they have little in the way of earning potential, so again nothing to lose. If they figure out a way to finance the home renovation, good for them. Again, it is no skin off your back.

Oh there is still trouble! My in-laws were almost convinced to mortgage all the equity in their paid off house and put it in an account managed by this “fiduciary” broker

[Anonymous]

You should go to the meeting with her.
Make sure she puts your name on the will.

[Anonymous]

Anonymous wrote:You’re not going to be able to change a 70 year old. You’re wasting your time and energy.

The only thing you should do is let them know you have to save for your own retirement / kids / whatever and you absolutely will NOT help them out financially.

Then remove yourself from conversations about finances.

Your parents will absolutely face financial hardship as they will not change. They will be unable to support themselves and will come to YOU

Step away from things. At 70 your parents won't change. Don't let them drain your energy, time and money.