Call it a leaseback.
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@busdriver, your “rent” could be either free or very low.
We know a family who sold their family home to a neighboring business (neighborhood had businesses long after the family built there). The new owners allowed the last of the family to live in the house until the last one died…which was recently. I think the transaction took place about 10 years ago. The new owners were the owners and assumed all expenses…taxes, any repairs etc. the old family paid utilities only. It was worth it to these new owners to gain ownership of the property. Theirs is a family owned business and the next generation agreed (they are now owners of the business and the house).
I don’t know what structure they used for this…but I DO know, it was drawn up by a lawyer.
But back to the subject of this thread. I know @busdriver11 seems to want to purchase property. If that is something you want to do when you retire, you need to have a financial plan to do so.
In the Thumper household, our goals is to not own additional properties. So that is not part of our retirement plan at all. And we don’t need a dedicated amount for real estate purchases (and lawyers) to do so. As retirees, we are happy just owning our home…for now.
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Clean buy of the house seems like the best way to give control / security to you, flexibility to the buyer. A lawyer can help you figure out if there needs to be any mention of the lease-back as contingency of the sale transaction.
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I realize that forestry is not something everyone is interested in. It wouldn’t have been on my top 100 things to do list before we retired several years ago, but we enjoy it and it gives us purpose. Owning beautiful, forested acreage within commuting distance of Seattle is likely a good investment, we believe. Glad we did this over buying vacation homes.
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In this article “But state regulators can authorize departures from the organization’s principles, and that is what happened in the PHL case.”
That is key. I imagine because the insurance company probably lured investors with greater returns on annuity because of the risk - or may have given a buy-in bonus which was quick money for the FA that recommended the annuity product.
First, initially, when purchasing an annuity, be with a trusted FA (who is a Fiduciary, meaning to do in the best interest of you financially) - being a Fiduciary doesn’t fully protect, but it is assurance IMHO that the recommendations would be in one’s best interest.
Insurance companies are rated. One certainly wants one that is highly rated.
Our FA group stakes itself on its reputation. Not involved with ‘risky’ products. Sometimes there can be incentives for investments that are OK. Sometimes toward the end of an annuity’s time (if the product was for a time frame and not a ‘lifetime’ product) it makes sense to change annuity products. For example, the last year when the buy-out makes sense because of incentive with a different annuity with a better return - we have done this twice. At our next regular meeting with our FA, I will ask at what age does it not make sense to replace our annuities when they mature - or at what age should we ‘phase out’ of annuities. Right now, we have our annuities with a 6 - 12-year maturity. We have a very small monthly lifetime annuity from DH’s employer when one company bought out another (almost all retirement assets were obtained in cash or stocks, but we do receive $131/month with what was an annuity which started right at that time).
One does need to understand what is being purchased. It is tough to pay for an annuity and then find out between the FA, the insurance company, the state regulators (who didn’t really do their job), there was a lot of dishonestly about the risk of the product.
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I am not against annuities. I just think it’s important to understand that vetting the product and the company is very important - for all annuity and insurance products. The agent should also be carefully chosen. Regulations are being rolled back, regulatory staffs are being cut … just tread wisely.
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What an unfortunate situation. Good reminder that diversity is a good thing, having a variety of investments.
As we get older, I find a bit of conflict from my desire for simplification (fewer accounts, easier estate handling someday) and diversification. Part of me wants to move my Fidelity 401K to our main Schwab accounts with FA. Have been deferring that to avoid the fees and to not have most all our eggs in the Schwab basket. At this point tis easy to keep it at Fidelity while we tap the other/Schwab assets, though at some point I may roll over to IRA.
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It’s not just annuities. We purchased a LTC policy about 18 years ago. At that time, the company (Genworth) was rated extremely well (somewhere in the A or A+ category). They had NEVER had a premium increase, and are not allowed to do so with our policy, based on age milestones or future health changes. Once we hit age 60, the premiums started to rise, and now rising very fast. Supposedly rate increases are all approved by our state, and not due to our age, but the timing was interesting. On further investigation we learned the company is in trouble, current rating is C++ and Genworth is in a “vulnerable financial position”.
Our only saving grace is that the old policies included a 5% inflation factor. So, we try our best to keep the inflation amount in place, but ratchet back the benefit as it rises, to better stabilize the premiums. The company is constantly trying to encourage us to change to a very low 0-1% inflation benefit, but that would eventually be worthless to us, if we live long enough.
We definitely did our due diligence and vetted the company and product when we purchased. Like any insurance, we hope to never use it, but now question every year if worth it – especially knowing the company’s financial position. Obviously if they fail due to financial causes, it will ultimately become worthless. Our state has some type of insurance on the insurance, but nowhere near what we have invested or might need.
(I’ve posted something similar elsewhere– but not sure which thread, so apologies if repeated).
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FYI, all my retirement monies are with Vanguard, but they don’t manage all my assets. Our brokerage and dh’s Roth is not managed by the personal adviser thus we avoid fees on those.
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That’s a good point. My husband does have a chunk of money at Schwab, not managed by our FA. It’s one of the the other reasons helpful to maintain “snapshot” of all, so we and FA see the big picture in one place.
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Curious - when folks were making the ‘should I retire’ decision - how significant was the ‘maybe I might need to help out my adult kids’ factor?
We have one kid completely launched (age 35; well-paying career) and kid 10 years younger (25 yrs old) who is just starting out (also in a pretty well-paying industry).
Our anticipated future expenses include possibly helping younger kid with living expenses (if there is temporary job loss, etc.). It’s not a huge chunk of money though - and our overall retirement plan doesn’t have a huge amount of leeway.
We are almost there (in deciding to retire) - this piece keeps nagging at me (ability help younger kid if needed). I think we will be okay but wondered how others have approached..
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I wouldn’t call it a “significant” part of our retirement decision, but we do have funds in case our kids need something. We did not factor this at all into our decision to retire.
We work with a CFP and lately he has been encouraging us to gift more to our kids now…because we have the funds to do so. So…we are.
I should add…I retired over 12 years before my DH did. During those 12 years, I did work a number of longterm leave positions which gave us some extra income that was not anticipated.
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Thanks, thumper. I am anticipating doing some (minimally paying) remote work in retirement and H has the skills to easily earn part-time $ (although initially not inclined as he just retired). So we have some ways of supplementing our retirement funds/pension if needed.
It’s just a far cry from a steady, reasonably large (for me) paycheck coming in.
I realized that the ability to help kid if needed is a part of the retirement decision (for me) - coming to terms with possible limitation in that capacity.
Figured folks who are still on CC after all these years might relate! 
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None. Absolutely none.
We paid for their college, they both got degrees that can support them. We paid for their bachelors, they both support themselves. We spent years of living very frugally to pay for that college, the kids had no loans.
Both of our parents did not support us in any capacity. I’m sure they never even thought about it. We didn’t receive any gifts others than small things until we were already retired. We will probably gift our kids more generously before they are retired.
We did gift a kid money for their wedding. We did give a generous gift to a college fund for the one who paid for their wedding themselves.
My mom recently passed away, we gave each of the kids a gift from grandma. We are more generous than either of our parents, some by necessity and some by the nature of parents who grew up during the depression.
But the thought of holding off on retirement. No. Can’t even get my mind around that to be honest.
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Agree. The decision to retire was based on our decisions to…retire. Not on the possible financial needs of our kids in the future.
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The help we factored into our retirement decision was location based not financial based. We felt it was time to be physically closer to our one child so we could help her when she needed it. She is single and lives alone. We really enjoy being able to easily travel to her with home made food etc.
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The thought that either my husband’s parents or mine ever thought about retiring to their children’s location is so out there I can’t even begin to fathom it.
It shows me how much things have changed with our generation
Not judging your decision because that’s what you wanted to do and it’s great you made that choice.
But the thought that our parents gave us any kind of thought is just not what I’m sure they ever thought of. Heck my mil wanted us to retire close to her even though our children live in completely different states.
Maybe I’m wrong about past generations moving near their children. In ours it wasn’t a consideration or it was expected that we would move near them
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In a way. We have only one child. Her chosen career is not a well paying job (a librarian). She loves what she does. She is single and claims she does not want to get married (or have children).
We live in an expensive state, MA. We have saved and are able to retire comfortably. We plan to support her as needed. If things work out as intended, our house will be hers. It is very difficult for a single person in a humanity field to own a home in MA.
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I think it’s really important to agree before retirement on how or if you’ll be helping your children. It’s been a significant area of disagreement between us that is hopefully now resolved. I would have absolutely no problem helping our D if she needed it, but I am sick of bailing S out and I won’t do it anymore. It would be one thing if he learned from his mistakes, but he hasn’t and I don’t see that changing. I wanted my mom to restructure her estate plan to give part what she intended for me to my D so she could purchase a home and unfortunately that didn’t happen prior to Mom passing. It would be difficult for me to gift a downpayment to D without significant tax consequences. She is well established in her field and comfortable income-wise, so we haven’t needed to help other than we’ve made gifts to make her life a bit easier (I hope).
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