Opinions on Marital Money Conflict

Parent Cafe
721

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<p>Well, no, I don’t know the family personally.</p>

<p>But let’s do some financial calculations here:</p>

<p>$50k in retirement income, $150k in the bank, plus 2 rental homes and half of a fourth home.</p>

<p>How much does the family need in retirement? My wife and I spend about $15 - $25k in a year excluding our housing cost. Much of that is for gas to get to and from work, which we wouldn’t need in retirement. I’d have to say that $30k a year would do us nicely in retirement unless we took on expensive new hobbies or bought fancy toys like motorcycles.</p>

<p>This family will have $50k a year in income plus maybe $20k - $30k from rental homes, so probably something around $80k in income. I have no idea what I’d do with $80,000 a year in retirement! </p>

<p>How much do all of you think you’ll need per year in retirement income? No college to fund, no mortgage payment? For the sake of this discussion, let’s assume that you don’t plan on an expensive hobby or need the money for expensive toys.</p>

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<p>From a financial standpoint, I think many financial planners would tell them they have enough in their budget and savings for a $25,000 purchase. </p>

<p>From a financial standpoint, the issue isn’t about the money. Would you tell the wife to go for it if she wanted to pay $25,000 toward graduate school for their kid instead? I think many people on here would be very supportive of that. </p>

<p>In which case, we’re all having opinions about what to spend the money on rather than whether they can afford to spend it or not.</p>

<p>(I personally would not be in favor of a spouse buying an expensive toy that they didn’t have long history of wanting and specific plans to use. So I’m not saying that the husband should go out and buy the motorcycle. But if I were a financial planner, I don’t think I could advise the family that they didn’t have the financial resources for it.)</p>

722

<p>babyontheway, just a quick note…you mention how much you and your wife spend each year beyond housing costs. Well, just gotta tell ya, you DON"T HAVE KIDS YET!!! They are very very expensive. Your expenses are gonna go UP! Just warnin’ ya.</p>

723

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<p>OP’s H should call Suze Orman during her Can I Afford It? show and ask if he can afford the bike. We’ll see what she has to say. (She does not deny every luxury item right off the bat (once she approved a $400K airplane purchase), but the circumstances have to be right. The plane was not an impulse toy buy).</p>

724

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<p>Yes, but we’re not retired either…</p>

<p>I’m working on the assumption that the OP retires after the kids are finished with college. Other than possible wedding costs, there really isn’t a lot more that the parents will continue to fund on an ongoing basis, unless they choose to.</p>

725

<p>That all depends on how comfortably you want to spend your retirement years, botw. Maybe after decades of work you will think differently. MIL/FIL have 2 homes, 3 cars, travel a great deal, belong to 2 golf clubs. Those are all choices, but they certainly “enjoy” their retirement more than you and your W would on $30K a year.</p>

726

<p>The power of compound interest is pretty strong. Starting the savings early on allows for the occasional luxury and the possible early retirement after the kids are out of school.</p>

727

<p>I live in the northeast, and $30K per year would make for a pretty hardscrabble life - even without a mortgage, property taxes, auto taxes, general home maintenance, as well as living expenses would eat through $30K pretty quickly. I’m not a good barometer of average, but I think you’ve vastly underestimated here.</p>

728

<p>In Post #37, OP said that they will have tuition payments totaling about $300,000 over the next 8 years. That is about $40,000 a year. She also stated that she felt that one or both of their jobs could be at risk within the next 3-5 years. While they might have a nice retirement when the rental houses are paid off, they aren’t there yet. If the kids were out of college, I might say, yes, go ahead. But, this is just the latest “want” her husband had to have. I think he should wait, it’s the adult thing to do.</p>

729

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<p>That would be why I said “do us in retirement” rather than “do them in retirement.”</p>

<p>The $30k was based on our families expenses…theirs will be different. But the $30k isn’t how much they will receive in retirement. They will get $24k per year in pensions alone (which go up every year they work) plus another $24k per year in social security plus $20k per year in rental house income. </p>

<p>That’s about $70k per year right there. And that is without tapping savings.</p>

730

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<p>Yes, but she said their current income is paying for 100% of the tuition expenses they currently have. And they have $150k in liquid funds they could tap if one of them lost their job for a while.</p>

<p>As far as jobs being at risk, all of our jobs are at risk within the next five years. They are not in a unique position there.</p>

<p>Anyway you slice or dice it, my advice if I were a financial advisor is they could afford a $25,000 purchase with disposable income today. Whether or not they should on a motorcycle is a different question – but not a financial one.</p>

731

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<p>Love this idea, but my H would never be on the phone for a chat show. Still, maybe even going privately to see a financial planner and to have someone outside of the marriage show the real “costs” of the bike down the line? I like that idea. It makes it less personal and more fact based.</p>

732

<p>Babyontheway…</p>

<p>you are talking about a different family…go back and read what my post was in regards to.</p>

<p>*babyontheway, just a quick note…you mention how much you and your wife spend each year beyond housing costs. Well, just gotta tell ya, you DON"T HAVE KIDS YET!!! They are very very expensive. Your expenses are gonna go UP! Just warnin’ ya. *</p>

<p>this couple is in for the biggest shock of their life…they think everything can be so closely planned and budgeted…LOL…they think having a kid is just a check item on the life bucket list.</p>

733

<p>LOL…</p>

<p>be nice, Mom2, nobody would have children if they had ANY idea of how expensive they really are. And the worry…OH MY GOD. If I’d have known? I’d have missed out on a couple of really fantastic people, expensive as they are. ;)</p>

734

<p>The vast majority of traditional pension plans don’t have adjustments for inflation once one retires. No guarantee those traditional pension plans will still be solvent in 20 years, either. If they go belly-up and get sold off the the PBGC, benefits will be reduced…drastically.</p>

<p>Most financial advisors recommend figuring on a post-retirement budget of 70% of your final pay. That is a chunk of change. Lots of people will need to replace a car during retirement, may want to travel to see grandkids and children, and then there are those health care expenses that Medicare and supplemental insurance don’t cover. I’ve read articles saying that retirees can expect to spend 30-40% of their post-retirement assets on health care/nursing home/home care/modifications to aging-in-place in the family home.</p>

<p>I would not pretend to claim to be financially solvent for retirement 15-20 years ahead of time. Too many things can happen. We are risk averse types, but geez…we would not be buying a Harley with kids still to put through school. Have had a couple of participants in the retirement plans I run get killed on their bikes. All were 40-somethings having their midlife crisis and were inexperienced riders.</p>

735

<p>babyontheway, whatever your expenses are now, ain’t what they will be during your child raising years. Off the top of my head…more food to feed more people, health insurance plan for a family, life insurance, yearly new clothes for the kids (they grow), lessons and activities and related equipment for these for each kid, summer programs, child care (you said your wife is gonna keep working), entertainment/vacation funds for more people, more gas to take the kids to all their activities, (possibly education if you do any private schools for nursery and/or K-12), more medications, things for the kids like toys/equipment/books/furnishings (car?), college visits and applications, babysitters for couple dates, ice cream cones (!!), etc. There is no way your current spending budget is gonna stay the same, not by a long shot. Not to mention saving for college.</p>

736

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<p>Yes, please don’t. Mention it, that is. :p</p>

<p>Don’t worry, babyontheway, you’ll grow into it. It’s gradual. Just remember to start the college account asap, because of the massive advantages of compounding interest.</p>

<p>Then, enjoy the baby. It’s over so fast, I can hardly believe it. :(</p>

737

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<p>I’m aware that it’s more expensive when you have kids, but that isn’t what is being discussed here. What is being discussed is much a future empty-nest couple will need in retirement.</p>

<p>If the OP and her husband are planning on retiring prior when their last kid graduates from college, she can make a great case for not spending the money now. But the way I read her posts it sounds like they will work until their kids graduate from college.</p>

<p>OP, please advise if either of you are planning on retiring before your kids graduate.</p>

738

<p>Those are all choices, but they certainly “enjoy” their retirement more than you and your W would on $30K a year</p>

<p>That is really subjective.
If your health and housing costs are taken care of- how much do you really need? Is * stuff* really gonna make you that much happier?
Then why are you more likely to find happy people in Louisiana or countries like Ghana or India rather than NY or CA?</p>

739

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That’s why I said “enjoy”, but I can tell you without a doubt that I would rather be retired with the kind of money they have and the choices it gives them than without it. And what they have isn’t so much stuff as the ability to go where they want to go and do things they enjoy doing. They don’t have a lot of toys.</p>

740

<p>I’m convinced that “having enough money” is when you don’t worry abut not having “enough”. I can live without a vacation, or a 2nd home, or a fancy car. I’m willing to work full time until retirement. My car is 18 years old! But I hate thinking I can’t afford a new one, and it’s only purpose is to get me to work.</p>