<p>My dad thought he had enough to live on but it cost a LOT to maintain things for him the last few years of his life. We had to refi his house and pull out cash to deal with the negative cashflow. Also was ultimately able to access his long term care benefits (fortunately) for almost the last 2 years of his life. It was looking like he might outlive his money even though he’d done his best to try to set up his finances when he was younger so as to be able to live without being a burden on us when he was older. </p>
<p>As it stands, there will be some monies after the estate is settled (not sure if I call it a “windfall”) and , being very fiscally conservative, I will keep it in investments. I do not EVER want my kids to go through what I went through (with no help from my brother) to manage things for my dad. I was happy to take care of him and now his estate, but its been 8 years of this and it takes a LOT of time and energy. It was very stressful. I tend to be a worrier, and its hard to predict what might happen down the road (eg relocate to a much more expensive area if both kids settle on the west coast, which may happen; be expected to help care for nephews some point in the future, etc). That said, I will put the inheritance in investments, and DH and I will look at an early retirement so we can enjoy life and travel some.</p>
<p>"> However I assume that those of us who talk about funding their childrens’ iras etc </p>
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<p>How do you do this in a tax-efficient way? "</p>
<p>I don’t fully know the answer to this. My philosophy in regards to my kids is that I spent time and money on their education to give them the tools to make wise decisions and save for their own retirement. The best thing that parents can do is to make certain they do not become a burden to their children in their later years. For many of us, this will be difficult. From what I’m seeing in general, I pity our children and the issues that they’re going to be facing with our generation retiring without pensions and without any money saved.</p>
<p>This is nothing new. As children we take care of our elders. That is how it works. My parents tried their best to do it without me or my sister. They needed us in the end and we had no problem with that. The circle closed and there was a windfall. But windfalls are not caregivers, decision-makers, hand-holders. You can’t pay anyone to do that and have it done well. I learned so much from the process and so will my son when his time comes. Will there be a windfall for him? I think there will. But he is no dummy and is saving for retirement at age 25. It is a back and forward arrangement.</p>
<p>From what I’m seeing it is something new. My parents generation was far more conservative with money than my generation and most had pensions. I know so many in their 50’s who are assuming that the government is going to take care of them and not only haven’t they saved a penny (literally), they are deeply in debt. These aren’t folks on welfare but educated people with good jobs.</p>
<p>overseas,
In our case we HAD to pay someone(s) to be caregivers and hand-holders because my dad wanted to stay in his home, which was his right, but it was over 1000 mi away from mine. I was the decision-maker for the mostpart, but had to find, to the best of my ability, the other resources for the day-to-day care and needs. Not easy.</p>
<p>We also had to pay someone to be handholder for loved one who lives in SF (tho we would have had to pay if she lived in our town as both H & I are still working). I do know more folks that I’d like who have little to no savings and are in their 50s & 60s. Some own their homes that are worth 7 figures and have considerable equity while others are renters. It is very tough for many, especially with no pensions. </p>
<p>If you have a pension from a secure source, you don’t need quite as much for financial security (or as significant a nestegg), since that SHOULD be a reliable stream. Some folks I know are collecting multiple pensions from their various jobs–state, county, and federal, as well as SS, while still working & collecting rent from investment properties. They work because they were bored and did not know what to do with themselves every time they retired.</p>
<p>Pensions are becoming scarcer and scarcer these days. </p>
<p>JYM, glad you were able to work things out with your folks. Sorry it was tough for you, but good that there were assets that could be used for the expenses. It’s really tough when there are no assets that can be used to help with providing needed care, which likely will be an increasing problem as more folks live longer in poor health.</p>
<p>In our area, real estate is pretty consistently a good investment, with significant appreciation and a pretty large pool of renters. I am not all that confident about stock market investments, as mine have mostly stagnated while others have lost value. That being said, I know real estate requires some management and has overhead. In addition, I know that it is illiquid and takes time and effort to turn back into liquid assets, such as cash for expenses or other uses.</p>
<p>I think how much folks need to live on depends on a LOT of factors–cost of living in their area; the standard of living they want to maintain; whether they plan to entertain, travel or have expensive hobbies, their health conditions; the family genetics & longeivity; whether they plan to bring in ANY income in the future; whether there are others economically dependent on them; and likely factors I haven’t listed.</p>
<p>The tightwad gazette and other publications talk about how inexpensively folks can live, especially if they have no debt, grow/raise their own food and/or forage. The other extreme are on the tabloids all the time with their lavish lifestyles than burn through money like no one’s business.</p>
<p>Tracking past expenses can give some insight as to future expenses, but it is quite variable (see above). Hard to know whom to believe as to exactly how much money/resources is “enough.” If you have a significant pension from a reliable source that has automatic COLA, you are in better shape than many, especially if you have no debt and own your own home.</p>
<p>Here’s a good NPR article about how much you need to save & outliving your money.</p>
This continues to be my moving target. We can run financial calculators til we are blue in the face, but some of those “unknowns”, like if we move to a place with a higher COL, or have to help extended family members out financially (dont get me started on that one) its hard to figure out how much we’ll need. </p>
<p>And thanks for the nice words, HImom. It was, and remains, tough to manage elderly parents and their matters long distance.</p>
<p>I don’t have a windfall to count on. Might come. But, I have been doing the prioritization:</p>
<ol>
<li> Fully funded 529 plans. Kids can likely college and grad school without debt (funding to date wouldn’t cover med school but neither kid is going to med school). Unused funds will be shifted to grandkids’ education if/when they arise.</li>
<li> Saving for retirement via defined benefit plan plus 401(k).</li>
<li> Irrevocable life insurance trust funded with post-tax dollars and life insurance in defined benefit plan funded with pre-tax dollars, plus serious LT disability insurance.</li>
<li> Enabled funding for a trust structure created by a relative – beneficiaries are my wife and me, our kids, our progeny (in the unlikely event the money saved outlasts our kids). To be used for health and welfare, education, housing. The trust may purchase a condo that our daughter will live in and rent out while in school. The trust might supply down payments on kids houses in the future. All the investments with possible big payoff go into the trust.</li>
<li> Used kids’ employment income to fund their Roth IRAs.</li>
<li> We do lots of traveling and always have. One or two family trips every year to fun and/or exotic places. The kids love traveling with us and vice versa. I am often able to use the frequent flyer miles and hotel points I accumulate by working 80+ hours a week all over the world.</li>
<li> Help both mother and mother-in-law manage their financial affairs so they will not need additional money. This has been a lot of work.</li>
<li> Have set up modest donor-advised charitable fund, in addition to modest charitable giving. Have endowed very modest prize in honor of my father at his alma mater.</li>
</ol>
<p>To do list:</p>
<p>Finish retirement savings.
Buy house in the mountains or sun where I’d like to work and where kids would like to visit. Probably purchased by the trust.
Continue to travel with kids (and later, with their grand kids).
More time/money on targeted pro bono/charitable projects that can use both our money and our skill.
529s for grandkids if/when they come aboard.
Downsize existing house for smaller, more energy efficient house on a river or lake.</p>
<p>I didn’t read the whole thread, but someone asked about what would happen if expenses were to jump up (or if income were to drop). I’d move to a place with lower costs of living (e.g., the cost of living in Albuquerque is roughly half that of Boston and Mexico or Panama might be even less). If health care costs are a major issue and the US hasn’t gone to universal healthcare after the Supremes nix Obamacare, I think we might move to Canada (where my wife and kids are citizens and I could become one). In general, my life planning is made simple because I love what I do and don’t plan to retire, just to slow down. So, my drawdown of retirement savings might be slower than most.</p>
<p>DocT, I hope so. Not clear that eventuality will arise as we’ve been pretty fortunate, but if the economic situation arises, who knows. If we’re doing well and move to Panama, I’d pay for the kids/grandkids to visit.</p>
<p>We live in one of the highest cost of living places and really want our kiddos and eventual grandkiddos to be ABLE to afford to live here. H has no intention of ever moving and we want to be together. Housing prices just keep rising–was $500K 20 years ago for a modest 3 bedroom, 2 bath house of about 1000 square feet in a 40-50 year old neighborhood in the suburbs. Recent list prices for same neighborhood now are $800-900K!</p>
<p>I guess all we can all do is the best we can, saving as much in the way of assets as possible and preparing our kids the best we can, so they will have an array of good options & choices available.</p>
<p>It’s a qualitative difference between living in the same community and having to travel to spend time together. We noticed that when my sister had the first niece in our extended family and we only got to see her when they were able to visit or we were able to visit. Our extended family made the choice individually to re-settle back in Honolulu, so our kids could grow up together. We and they are all very close and enjoy living a short drive from all the relatives rather than having to fly to visit. Our kids say they hope to move back to HI after they’ve gotten experience they can bring back to HI.</p>
<p>No windfall expected here. Our siblings are far less secure financially and we expect our aging parents will leave their money to them. We have treated bonus income and raises like windfalls for many years - saved rather than spent it. That has meant kids can go to expensive colleges debt free and that we are on track for a secure retirement by the time DH reaches 60. We will land wherever we can be closest to our kids. Would be fine with renting in an urban area in retirement. Love my house but could also enjoy downsizing.</p>
<p>My rather minor windfall occurred when my grandmother passed away. Newly divorced, it was a great gift that gave me a safety cushion, and helped fund my kid’s college. Gone now, with the final tuition payment, I am so glad that it showed up when it did. No anticipation of anything else coming my way, unless I start buying lottery tickets. </p>
<p>If another windfall of sufficient size came along, I’d secure my retirement, and work very part time, while finding some sort of volunteer work to keep involved in the community. </p>
<p>I hear a lot about moving to Panama. As my dad retired to Thailand, I know the appeal of that sort of retirement. Ideally you’d love the culture, as much as the lower cost, and be able to fund travel home on a regular basis. We saw my dad every two years for a few days. It was fun, but not really enough for my kids to get to know him.</p>
<p>We plan to do some more travel when H retires. Will probably maximize funding of IRAs and life insurance.</p>
<p>Our biggest dream is to have real estate that the kids could live in, so they will have somewhere they can live if they move back to HI. Will see how that goes.</p>
<p>No our IRAs aren’t big enough to purchase any significant real estate in HI & it makes more sense to me that they remain liquid. Would be very tough to make mandatory minimum distributions from real estate, I’d think. Sorry if my stream of consciousness seems rambling. </p>
<p>Was thinking more along the lines of purchasing real estate with a significant down payment, where rental income would pay the mortgage that the kids could take over when they move home. That would be wholly different from the IRA & travel.</p>