Reply to I’m young (27) and my parents (60 & 61) have told me that the will “never be able to retire”

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Reply to "I’m young (27) and my parents (60 & 61) have told me that the will “never be able to retire”"

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[quote=Anonymous][quote=Anonymous]There is not much you can do OP. There are a significant number of people between the ages of 50-65 that have been hit by the recession when we graduated and the great recession too.

They need to really start pinching pennies. I'm 55 and drive a 20 year old Toyota to save money for retirement, cook almost all food at home, and limit purchases. They need to plan to reduce lifestyle expenses (like the leased cars) and to work part time doing something less taxing as they get to be 68+.

I would not plan to  give them money.

[b]On the plus side they have 400k+, a paid off house and no mortgage.[/b] I would assume that is a big part of their retirement plan. If they could get rid of the leased cars and buy smaller fuel efficient cars when prices come down, that might help too. The 400k and paid off mortgage in a LCOL area is more than a vast number of Americans their age. [/quote]

They aren't financially comfortable, perhaps, but thanks to that paid off house and $400,000 in savings, plus Social Security, they certainly are not destitute. Median net worth for people ages 65 to 74 is $266,400 -- so your parents are doing better than well over half the people in that age group in the U.S.

If they spend 4 percent of their $400k savings every year (and invest it well), that's $16,000 per year, plus inflation in future years. In addition, if they retire at 67, they would get about $40,000 a year in Social Security (per the AARP quick SS benefit calculator). If they don't start collecting SS until age 70, their annual take would be nearly $50,000.

So, that's annual income of $56,000 to $66,000 a year, in a low cost of living area, which should be doable. And we haven't even talked about the fact that their $400k in savings should grow over the next few years if they continue to work and if it invested well, or about ways to tap their home equity.

In short, they should have enough money to finance a modest retirement, especially if they keep working for a few more years. What they lack is enough savings to adequately finance long-term care should they need it, but you'll and they will just have to cross that bridge if you come to it.

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