It could work if the city house has a million+ dollars of equity, and the real estate market doesn’t collapse between now and then. Assuming they are in the US they need to watch where they live or they could wind up owing capital gains on a big chunk of it.
Interesting… Has their RE appreciated much? How is the market for stunning houses doing in their area? Everything can change in 3-4 years. While a crash like the recent one is not very likely, RE markets can slow down… people’s perception of what is stunning can change.
(Our house is a good chunk of our net worth, but to most buyers here the value will be in the land when the time to sell comes…)
Seems like all of their retirement savings is concentrated in the houses. Could be risky, depending on where the general and local (to those houses) real estate markets go, as well as how attractive those houses in particular are to potential buyers.
Presumably, the kids are now self-supporting adults without special expensive needs (e.g. chronic expensive medical conditions), unfinished education, or other situations where bequeathing them a larger estate (than that house) is worth considering?
There is something to be said about enjoying your money while you can…unless you have to spend every last penny to take care of your real estate. I suppose it’s more pleasant to live in it, than watch it in a mutual fund, for some. I prefer to do both.
As recent retirees, we have enough to sustain our life-style in retirement. But I can’t answer that question for everyone. What has made our retirement financially viable? a) Good health (or I should say, illnesses that are manageable, no major disabilities), b) Good health insurance (Medicare and employer-paid supplemental coverage), c) No sustained debt (paid-off home), d) No dependents, e) Social Security income, but more importantly for us . . .> f) Net retirement savings (401k, etc.) that in combination with Social Security can provide a monthly income that’s equivalent to 75% of our gross income in our later working years.
Other potentially important factors: g) No dependents other than my spouse (even if we’ve provided some support to the kids), h) Staying in place or alternatively moving to a lower-cost area, and i) Having an estate and financial management plan, including skilled advisors if you have complex investments.
The couple in question live in Canada. There has been huge appreciation in the city where they live. No doubt way more than $1 MM in equity in the city house, I’d guess. Probably no or minimal mortgage. Kids are both healthy adults and both are married. One is an entrepreneur in his mid thirties but worked for a high-end i-bank before that. Not clear if his business will succeed. The other is in her early thirties works in marketing, I think, but is married to a guy in private equity. So, neither is likely to become destitute.
It is interesting. I have seen my major job as in effect helping my kids have satisfying, productive, meaningful adult lives. He sees his as ensuring that his wife is happy and that they have a good time. I think I’ve been a spectacularly good father and a pretty good husband. He’s probably been a sensationally good husband (he’s really a wonderfully doting husband) and, from what I have seen over the years, a pretty mediocre father. But, in a funny way, I never really stepped back to evaluate the decision. I was going to say evaluate the tradeoffs but it is unclear how much one really has to trade off. Going to ruminate on this.
If the kids are Canadian, perhaps the parents have less concern about the kids becoming destitute from medical bills, grandkids’ university costs, or whatever, compared to parents in the US. So they may have less reason to be concerned about leaving a larger estate for them.
Good point @ucbalumnus. One kid lives in the US, the other in the UK. I wouldn’t bet either will move back to Canada given their career choices and spouses.
On another note. As someone married to a Canadian but living in the US, I have a lot of exposure to Canada (relatives in Toronto, Montreal, Calgary, Vancouver and probably elsewhere; we co-own a house; lots of consulting clients; ski and hiking vacations, etc.). My observation is that if you take ignore the top 5% or so of the population who really want to excel – the folks who say I want to be the best in the world at what I do or work on the most challenging problems – the quality of life for everyone else is higher in Canada than the US. Health care, university costs are part of that. But, so is the culture. Many, many people own cottages outside of Toronto or on lakes outside of Montreal, for example. In comparable cities in the Northeast US, it is often the case that the only people who can afford country houses are working so hard they don’t have the time to spend at the country houses. In Canada, people generally (there are always exceptions) don’t work or push as hard. A couple of years ago, ShawWife was up at our Canadian house for a week of intense painting. She made a large pot of lentil soup, got up very early to work, ate lentil soup for lunch, went back to painting, worked until dark, and then had more of the lentil soup. After a couple of days of this schedule, the neighbors did an intervention. They insisted that this was not OK and that she needed to stop earlier for a civilized dinner, eat real food (not lentil soup), have a glass of wine, talk to people etc. So, she was invited every night to a different neighbor. It was just counter-cultural to work that hard. These people are earnest and want to do a good job at whatever they do, but don’t have the same level of ambition. I would say they have a higher quality of life than comparable folks in the US.
ShawWife had actually moved to the US many years ago after a conversation with the owner of a high-end gallery in Toronto. She asked, “What does it take to make it here as an artist.” He said, “There are two ways to make it here. Play the old boy network for 20 years. Or, go to the states, get well-known and then we will claim you.” The latter is at least related to quality and she has seen many ambitious Canadian artists move to the US – and I see the same in other fields. In a biomedical area, I was talking to a scientist whose Canadian university had recently recruited a dean or department head from Harvard or MIT. The intent was to up the level of their ambition and instill the approach and work ethic that this department head/Dean was used to at Harvard/MIT.
So, skim off the top 5%. For most everyone else, I think the quality of life tends to be better (don’t think too hard about the winter, however). I think ShawD would really be a good fit in Canada. Wants to do a very good job as a nurse practitioner. Does have some ambitions beyond that which might be harder to pursue in Canada. ShawSon would not fit. Just too much drive and ambition. He has always wanted to be the best at whatever he is doing. Even now, he measures how his startup is doing relative to the others from his class (and the next couple of earlier classes).
“The kids can sell the country house when they die. That will be their only insurance. Interesting.” - I don’t think that is so awful (assuming they will have enough savings to fund all of their own needs). We hope to leave some money to our kids, especially since we inheirited some ourselves (as did they) from the grandparents. But we’ve been phasing out the life insurance.
We earned our kibble with zero $$ from any trusts or estates, so we expect our kids to do the same. They’ve got the smart brains, good hands, and the education paid by the bank of mom and dad. And a tiny bit of help with their RE situations. After this, they are on their own. Any crumbs left over after the last us of us departs will be the proverbial cherry on the top. 
BTW, there are very driven and ambitious people in CA (yes, that’s Canada). I know quite a few.
We are like @colorado_mom and @BunsenBurner , now that all three are doing well and DH is retired, we dropped life insurance. It was term insurance and getting more and more expensive. To us insurance was to cover your dependents in case of untimely death.
To answer the OP’s question, I need everything, including house and cars, paid off and no debt and $3 Mill ($4 mill would be better) in the bank acct to retire completely. Alternatively, I need annual gross income of at least $150K (not including Social Security). Our debt free big house worth over 1 Mill to $1.4 Mill is part of our security in that it can be sold and we can move to a smaller place, but we really don’t want to move so relatives and friends can visit and use empty rooms.
^^ I dropped my term life insurance long time ago, way before it matured. I did that as soon as I know I don’t need that $500K for my estate. Now, if I want to buy $500K term life at age near 70, I’d have to pay about $2000+ per month.
We dropped life insurance as soon as kiddo turned 18. In our opinion, no need for it at that point. We don’t want to to give anyone an incentive to profit from our deaths.
Our ex financial advisor suggested we get whole life insurance. At annual premium over $14,000. I told him to forget it. It is a lot of money. I thought we could just invest the premium and end up the same or even bigger.
Dh dropped life insurance (I never had any) after ds graduated from college. Being full-pay at a private university, I wanted him to keep it until ds was out of school.
We had both term and whole life, we are still keeping the whole life (diversification) and are gradually reducing the term. We also got whole life for DS as a future gift for him. Won’t add anything more to life insurance, but are thinking of whether to add long term care insurance.
We still have some term life insurance, because we got 30-year level premium policies it is dirt-cheap (around $700/year for $700K in coverage) so we are keeping it until the 30 year term runs out in 6 or 7 years. After that the cost will go up probably 10x, so we will dump it then unless one of us is seriously ill or something.
Were you seriously worried your kid was going to bump you off for the insurance? 
That’s a pretty big nut… are you going to make it?