In-laws financial challenges-looking for options

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truncatedexponential
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In-laws financial challenges-looking for options

Post by truncatedexponential »

My mother and father-in-law are nearing 80 years old and currently live in a LCOL region and live on a fixed income of social security.

There total liquid invested assets are: 160,000.00

His social security: 1,500.00/month
Her social security: 900.00/month

That's the whole picture.

There current rent is: 1,400.00/month (maintenance provided possibly) 3 bedroom, 2 bath condo/home that they need to move out of to get rid of stairs and downsize. They are wanting to move to 2 bedroom/2BA, no stairs type living arrangement.

The kicker is they want their rent/payment to be LESS than 1,400/month which to me seems impossible for anything in a reasonable part of town they'd like to live in.

They have considered putting the 160,000.00 (or a healthy portion of it) to a down payment and then taking out a mortgage with payment less than current rent. I don't think that is great idea because it leaves them ZERO money and then they need home maintenance (lawn/snow), insurance, property taxes etc.

Any brilliant ideas to stretch this nest egg out to any reasonable length and be able to live on social security exclusively at this time in their lives?

Love this forum and thanks for taking a stab at any thoughts you might have!
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FiveK
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Re: In-laws financial challenges-looking for options

Post by FiveK »

truncatedexponential wrote: Tue Sep 21, 2021 9:25 pmcurrent rent is: 1,400.00/month (maintenance provided possibly) 3 bedroom, 2 bath
....wanting to move to 2 bedroom/2BA, ...they want their rent/payment to be LESS than 1,400/month.
On the face of it, moving to a smaller place and expecting to pay a lower rent is not at all unreasonable. Is there more to the story?
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celia
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Re: In-laws financial challenges-looking for options

Post by celia »

I would think they can rent somewhere for less than that amount. I would first question why they need a 2-bedroom. Of course, that would be nice, but is probably out of their price range.

Check with their city/county to see if there is subsidized housing for low-income elderly. That should be stairless and handicap accessible, which may come in handy. Often they are near a senior center which has activities and other resources for them. Their senior center is another place to check.
Jags4186
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Re: In-laws financial challenges-looking for options

Post by Jags4186 »

I wouldn’t move unless mobility is the issue and/or the $1400 could be significantly cut. How much are their monthly expenses? Assuming they are low they should simply subsidize out of the $160k. If they need an extra $1000 month that gets them into their 90s. At that point you’d need to consider subsidizing. Hopefully there are other siblings who could share the burden.

Another option is to put $120k or so into a SPIA. That’ll pay roughly $800/mo for the rest of their lives and leave them with $40k in the bank.

If/when one passes away consider a move to a 1br.
Living Free
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Re: In-laws financial challenges-looking for options

Post by Living Free »

I agree with the above comments that they should consider a 1 bed 1 bath apartment.
oldfatguy
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Re: In-laws financial challenges-looking for options

Post by oldfatguy »

truncatedexponential wrote: Tue Sep 21, 2021 9:25 pm
They have considered putting the 160,000.00 (or a healthy portion of it) to a down payment and then taking out a mortgage with payment less than current rent. I don't think that is great idea because it leaves them ZERO money and then they need home maintenance (lawn/snow), insurance, property taxes etc.

I agree that sounds like a bad idea. Would they even qualify for a mortgage?
mnnice
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Re: In-laws financial challenges-looking for options

Post by mnnice »

That seems like way too much rent given their situation and low cost of living area. Are they being too picky?

My area has several newer developments that are income restricted (not section 8) meaning you need ok income but not great they probably would meet that criteria.

What is their plan if one half off the duo would die? They would lose more than a third of their income?
delamer
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Re: In-laws financial challenges-looking for options

Post by delamer »

mnnice wrote: Wed Sep 22, 2021 9:36 am That seems like way too much rent given their situation and low cost of living area. Are they being too picky?

My area has several newer developments that are income restricted (not section 8) meaning you need ok income but not great they probably would meet that criteria.

What is their plan if one half off the duo would die? They would lose more than a third of their income?
It’s not really whether one of them would die, but when. It’s virtually certain that one will outlive the other, and the lower Social Security benefit ($900) will go away at that point.

The mortgage is a really bad idea, given the above. It’s one thing to have to move to a new rental due to an income loss, it’s another thing to lose your mortgaged home.

Contact their county’s department for the aging and find out if there are any subsidized apartments.

Any chance you of someone in the family buying a small condo and renting it to them at an affordable rate?
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
dbr
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Re: In-laws financial challenges-looking for options

Post by dbr »

The most effective and possibly happiest outcome would be for you to subsidize their income. How much can you afford per month? It might be you could make all the difference at something you can afford.

The suggestion to investigate subsidized housing and other elderly/low income benefits is a good idea. In my area which is not LCOL I have a friend in a subsidized 1br/1bath apartment for about $600, I think. It is not centrally located but amenities are nearby. I have another friend in a "nice" place 1br/1bath not subsidized at $1400 and to be increased. Getting that subsidy can be onerous and with long waits.
iamblessed
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Re: In-laws financial challenges-looking for options

Post by iamblessed »

An hour or two outside town might lower the rent a lot. Try a small town. They should be able to buy a small house in a small town for way under 160k
tashnewbie
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Re: In-laws financial challenges-looking for options

Post by tashnewbie »

I agree they should look for a smaller and cheaper place to rent. I wouldn't get a mortgage at their ages, even if they could qualify for one.

A small apartment shouldn't cost $1400/month in a LCOL area.
student
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Re: In-laws financial challenges-looking for options

Post by student »

I also agree that buy a house at that age is not a good idea. If something needs fixing, they may not be able to do it themselves and hiring someone is costly.
dak
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Re: In-laws financial challenges-looking for options

Post by dak »

I don't see how purchasing a home of any sort would improve their situation. Remind them that they need to account for property taxes, maintenance, insurance, utilities, and repairs. in addition to the mortgage. Owning a property is expensive almost anywhere unless you are going uncovered for insurance (probably not possible with a mortgage) or neglecting the property and allowing it to deteriorate.
59Gibson
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Re: In-laws financial challenges-looking for options

Post by 59Gibson »

Makes no sense to purchase a house w a mortgage. Many lcol areas have small apts for $700-800/mo. $1400 is not really lcol.
psteinx
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Re: In-laws financial challenges-looking for options

Post by psteinx »

One more "No" vote on a mortgage/purchase.

And agree that:

1) Even if they only "partially" downsize (to a 2BR), they should be able to be at less than the $1400 they're paying now, in a LCOL area.

but probably:

2) They should be thinking more of a reasonably spacious 1BR, unless they expect a LOT of visitors.

Also, as another has posted:

3) If you and/or any siblings you may have can subsidize to some extent, that would help things. Or, if you're positioned to be the financially backup, should they draw down their $160K (i.e. if one or both lives an unusually long time, and/or has significant health care costs not covered by other entities).
PVW
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Re: In-laws financial challenges-looking for options

Post by PVW »

truncatedexponential wrote: Tue Sep 21, 2021 9:25 pm
The kicker is they want their rent/payment to be LESS than 1,400/month which to me seems impossible for anything in a reasonable part of town they'd like to live in.
Did you (or anyone) look for apartments that would meet their criteria?

In my MCOL area, $1400 would be above average rent for a 2 bedroom.
3feetpete
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Re: In-laws financial challenges-looking for options

Post by 3feetpete »

Take a look at this. https://www.centuryvillage.com/places/c ... palm-beach. You can buy a two bedroom condo furnished in West Palm Beach for less than 100k. I did this for my mother in law several years ago. The HOA fees and taxes and everything are all geared to living off of SS. Plus they provide free transportation to shopping , medical and there are many pools and other amenities.
3feetpete
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Re: In-laws financial challenges-looking for options

Post by 3feetpete »

Take a look at this. https://www.centuryvillage.com/places/c ... palm-beach. You can buy a two bedroom condo furnished in West Palm Beach for less than 100k. I did this for my mother in law several years ago. The HOA fees and taxes and everything are all geared to living off of SS. Plus they provide free transportation to shopping , medical and there are many pools and other amenities.
iamblessed
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Re: In-laws financial challenges-looking for options

Post by iamblessed »

In a small town in the Midwest you should be able to rent for about $700
Topic Author
truncatedexponential
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Re: In-laws financial challenges-looking for options

Post by truncatedexponential »

Great advice and thoughts appreciate it.

Some clarifications. It is very much a LCOL area, but to be clear they currently own a 3 BR, 2.5BA, 2 car garage, (2 story with basement) apartment. So, for 1,400.00/month that's pretty good.

More clarification, is they are considering a "mortgage", but for a maintenance provided condo (looks like typical multi/family apartment complex) that is 2BR, 2BA (no garage/basement etc.), but maintenance provided that will lower their payment to possibly less than 1,000/month.

Would you all recommend they do a SPIA for a portion of their 160,000.00/liquid asset for guaranteed income?

OR

Would you just recommend they put in some reasonable asset allocation like 50:50 (stocks/bonds) and withdraw over time as needed?

thanks again!
tashnewbie
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Re: In-laws financial challenges-looking for options

Post by tashnewbie »

truncatedexponential wrote: Wed Sep 22, 2021 9:19 pm Great advice and thoughts appreciate it.

Some clarifications. It is very much a LCOL area, but to be clear they currently own a 3 BR, 2.5BA, 2 car garage, (2 story with basement) apartment. So, for 1,400.00/month that's pretty good.

More clarification, is they are considering a "mortgage", but for a maintenance provided condo (looks like typical multi/family apartment complex) that is 2BR, 2BA (no garage/basement etc.), but maintenance provided that will lower their payment to possibly less than 1,000/month.
You say they "currently own" the 3br/2.5ba apartment (is this a condo or townhome?). How much equity do they have?
delamer
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Re: In-laws financial challenges-looking for options

Post by delamer »

truncatedexponential wrote: Wed Sep 22, 2021 9:19 pm Great advice and thoughts appreciate it.

Some clarifications. It is very much a LCOL area, but to be clear they currently own a 3 BR, 2.5BA, 2 car garage, (2 story with basement) apartment. So, for 1,400.00/month that's pretty good.

More clarification, is they are considering a "mortgage", but for a maintenance provided condo (looks like typical multi/family apartment complex) that is 2BR, 2BA (no garage/basement etc.), but maintenance provided that will lower their payment to possibly less than 1,000/month.

Would you all recommend they do a SPIA for a portion of their 160,000.00/liquid asset for guaranteed income?

OR

Would you just recommend they put in some reasonable asset allocation like 50:50 (stocks/bonds) and withdraw over time as needed?

thanks again!
Your response is confusing; why would you put “mortgage” in quotes? Either they are going to rent or they are going to build equity, if they move to a new home.

In your initial post, you said they rent their current residence. But above you said that they own it.

It’s important because it could change the recommendation regarding their investments.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
Topic Author
truncatedexponential
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Re: In-laws financial challenges-looking for options

Post by truncatedexponential »

My apologies for confusion.

They current RENT a 3BR, 2.5BA, 2 car garage maintenance provided condo for 1400.00/month.

They are looking to reduce expenses and are still wanting to take out a mortgage to reduce expenses by downsizing to a condo. The place they are considering is functionally an apartment complex they converted to condos with individual ownership. So, they'd have a mortgage if they did this.

I believe we are going to subsidize them with our money to help them along so they don't need to pull out their 160,000.00 nest egg. If we can get their rent/mortgage payment down to less than their social security+expenses (they have little expense, they own two cars with no debt) then they can have a bit of freedom hopefully.

Still not sure what to do with their 160,000.00 in a brokerage account invested with Schwab money market.

Thanks again.
softwaregeek
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Re: In-laws financial challenges-looking for options

Post by softwaregeek »

Consider buying a place yourself and renting it out to them.
Saving$
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Re: In-laws financial challenges-looking for options

Post by Saving$ »

truncatedexponential wrote: Thu Sep 23, 2021 9:32 pm My apologies for confusion.

They current RENT a 3BR, 2.5BA, 2 car garage maintenance provided condo for 1400.00/month.

They are looking to reduce expenses and are still wanting to take out a mortgage to reduce expenses by downsizing to a condo. The place they are considering is functionally an apartment complex they converted to condos with individual ownership. So, they'd have a mortgage if they did this.

I believe we are going to subsidize them with our money to help them along so they don't need to pull out their 160,000.00 nest egg. If we can get their rent/mortgage payment down to less than their social security+expenses (they have little expense, they own two cars with no debt) then they can have a bit of freedom hopefully.

Still not sure what to do with their 160,000.00 in a brokerage account invested with Schwab money market.

Thanks again.
You have not told us what the purchase price of the condo is.
Their costs there will be the mortgage (if they don't pay cash for it) plus HOA fees plus property tax plus any special assessments. On a fixed income special assessments can be problematic.

If the purchase price of the condo is $140k or less, they should use their nest egg to purchase it and keep $20k, IF
The monthly HOA fees + property taxes + special assessments will be less than their current $1400/m rent. Then they should try to save the difference between the current $1400/m rent and the new monthly costs to rebuild their cushion.
If the purchase price of the condo is more than $140k, and you can help with the difference, consider that. You can have them sign a no interest promissory note with no monthly payments, that you get paid back on their passing out of the proceeds of the condo sale at that time.

Not sure why you think it is important to help them along now so they don't need to tap their $160k nest egg that you are "not sure what to do with" What is it being saved for? In fact if one of them needs to go on medicaid, you may find they have to spend down that $160k before they qualify, whereas if the majority of it is in the condo equity, they may qualify for medicaid help. Suggest you think this through more.
Is your spouse their only heir or are there others involved? Try to not make this messy.
tashnewbie
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Re: In-laws financial challenges-looking for options

Post by tashnewbie »

truncatedexponential wrote: Thu Sep 23, 2021 9:32 pm My apologies for confusion.

They current RENT a 3BR, 2.5BA, 2 car garage maintenance provided condo for 1400.00/month.

They are looking to reduce expenses and are still wanting to take out a mortgage to reduce expenses by downsizing to a condo. The place they are considering is functionally an apartment complex they converted to condos with individual ownership. So, they'd have a mortgage if they did this.

I believe we are going to subsidize them with our money to help them along so they don't need to pull out their 160,000.00 nest egg. If we can get their rent/mortgage payment down to less than their social security+expenses (they have little expense, they own two cars with no debt) then they can have a bit of freedom hopefully.

Still not sure what to do with their 160,000.00 in a brokerage account invested with Schwab money market.

Thanks again.
Is renting a cheaper place not an option? I think that would be the easiest and cleanest option.

Does it makes sense for them to buy a place at their ages, even if they don't have to take a mortgage? I lean towards "no."

I agree with user above that you should prioritize doing this with as little mess as possible. I think buying a place and renting it to them or helping them buy a place are both messy options. They can be structured carefully to minimize mess, but it's still something to deal with. The best option for you all is probably very personal and depends on the nature of the relationships involved.

What's the plan for the $160k "nest egg"? Is it intended as a legacy for their heir(s)? They probably can't spend it all under normal circumstances during their remaining life expectancy, so it would only get spent if they have big expenses like medical issues or buying real property.

As user above said, if it's not tied up as equity in a primary residence, it would need to get spent down if they need to qualify for Medicaid in the future.
bradinsky
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Re: In-laws financial challenges-looking for options

Post by bradinsky »

Why does a married couple “almost 80” years old own 2 cars. Eliminating one car most surely will reduce their monthly expenses.
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Watty
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Re: In-laws financial challenges-looking for options

Post by Watty »

truncatedexponential wrote: Tue Sep 21, 2021 9:25 pm Any brilliant ideas to stretch this nest egg out to any reasonable length and be able to live on social security exclusively at this time in their lives?
I doubt it is brilliant and not necessarily a good idea, and quite possibly a bad idea but just for brainstorming here is an idea.

I have not done it, or know anyone who has, but I have heard that it is possible to buy a home with a reverse mortgage. They likely would not qualify for a normal mortgage anyway.

As I understand it they might do something like buy a $200K condo with $100K down and a reverse mortgage for the rest and then be able to live there without making a mortgage payment even if one of them lives to be 105 but does not need to move to assisted living. They would still have other condo fees and property taxes to pay.

I have no idea what the actual numbers would look like.

If they have to move out, like to assisted living, in two years then the condo would be sold and they would get part of that $100K back less all sorts of significant costs and fees but they could get a fraction of it back for a while. After a while they will have used up all of that $100K and would get nothing if they need to move or after they die.

When looking at a reverse mortgage it is critical to understand the details of what they would get back if they need to move in the future. You also need to understand how this will be impacted if the price of the condo goes up or down.

As I understand it they revised the rules for reverse mortgage ten+ years ago so they are not as bad as they used to be. They still have lots of costs and downsides and should be pretty much used as a last resort but in some cases they can make sense.

They are complex and similar to a SPIA but they are somewhat inflation protected since your housing cost would not change. If they bought a SPIA and used that income to pay for an apartment they would need to worry about future rent increases.

When you are reading up on reverse mortgages one big risk and criticism about reverse mortgages is that people will use them to hold on to something like a big family home that they have lived in for decades but cannot afford to maintain and pay property taxes on. In that case delaying cutting back on their lifestyle can be detrimental since the person may have few other assets left if they eventually need to move. Since your parents would be downsizing to a basic condo this would not be a problem for them.

Anyway I am just throwing this out there for you to research. I do not know if it would be a good idea or not.
delamer
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Re: In-laws financial challenges-looking for options

Post by delamer »

truncatedexponential wrote: Thu Sep 23, 2021 9:32 pm My apologies for confusion.

They current RENT a 3BR, 2.5BA, 2 car garage maintenance provided condo for 1400.00/month.

They are looking to reduce expenses and are still wanting to take out a mortgage to reduce expenses by downsizing to a condo. The place they are considering is functionally an apartment complex they converted to condos with individual ownership. So, they'd have a mortgage if they did this.

I believe we are going to subsidize them with our money to help them along so they don't need to pull out their 160,000.00 nest egg. If we can get their rent/mortgage payment down to less than their social security+expenses (they have little expense, they own two cars with no debt) then they can have a bit of freedom hopefully.

Still not sure what to do with their 160,000.00 in a brokerage account invested with Schwab money market.

Thanks again.
Why not have them spend their assets for the downpayment, and you and your wife can backstop them as needed? Generally, it’s better to minimize financial entanglements, particularly loans, with family members if possible.

Or agree to pick up one specific expense for them, like their supplemental Medicare insurance or their car insurance.

While they may have no debt and low expenses, they still have:

Food
Medicare & Medicare supplement premiums
Medical care co-pays
Car insurance premiums, plus gas & maintenance
Utilities
Homeowners’/renters’ insurance

Plus the survivor’s Social Security will drop whrn the first spouse dies. While some expenses will drop too, the mortgage/utilities/homeowners’ insurance won’t.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
Living Free
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Re: In-laws financial challenges-looking for options

Post by Living Free »

truncatedexponential wrote: Thu Sep 23, 2021 9:32 pm My apologies for confusion.

They current RENT a 3BR, 2.5BA, 2 car garage maintenance provided condo for 1400.00/month.

They are looking to reduce expenses and are still wanting to take out a mortgage to reduce expenses by downsizing to a condo. The place they are considering is functionally an apartment complex they converted to condos with individual ownership. So, they'd have a mortgage if they did this.

I believe we are going to subsidize them with our money to help them along so they don't need to pull out their 160,000.00 nest egg.
If we can get their rent/mortgage payment down to less than their social security+expenses (they have little expense, they own two cars with no debt) then they can have a bit of freedom hopefully.

Still not sure what to do with their 160,000.00 in a brokerage account invested with Schwab money market.

Thanks again.
I added the bold. Why would you do that? If one of them needs to go into a nursing home that money will get spent to paying for nursing home care until they are impoverished enough to qualify for medicaid.
Nebraska_Drought
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Re: In-laws financial challenges-looking for options

Post by Nebraska_Drought »

At their ages, how long are they expecting to stay at their own home before going into assisted living of some kind? I agree, a smaller place would work and that they should see what is out there. Ideally, they stay in their own place as long as possible, but reality is that rarely is the choice that is hardest to make.

Are their any adult living places that have various levels of care already (from no/little care, to full care) ?

If mobility (stairs) are an issue, are there health/medical challenges they are dealing with that will only progress?
iamblessed
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Re: In-laws financial challenges-looking for options

Post by iamblessed »

bradinsky wrote: Fri Sep 24, 2021 9:00 am Why does a married couple “almost 80” years old own 2 cars. Eliminating one car most surely will reduce their monthly expenses.
I don't think they can afford two cars with that income.
Freetime76
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Re: In-laws financial challenges-looking for options

Post by Freetime76 »

For your in-laws, I wanted to add:
1. I could see the advantage of only moving once, unless necessary for care. This means that the new place would be affordable one just one Social Security income for the surviving spouse.

2. Renting offers the advantage of a fixed expense - no surprise assessments, no worrying about if the HOA is well-managed for the next decade, no HVAC goes out simultaneous with the clothes washer and a leaky roof. Yes, rent goes up over time, but it’s less dramatic than one major housing repair.

3. Renting also makes upkeep someone else’s problem - again, for the surviving spouse, in particular. My MIL rents a duplex - 1 story, 2 Bedroom/2 Bath, garage...she’ll never move. The landlord is happy because no need to put in new carpet for new tenants.

4. I under that Medicaid exists and has rules. I would not make it my goal, nor aim to make use of it (Medicaid facilities vary widely). I’d rather mom and dad keep the nest egg to cover more of what care they may need.

5. Another vote from me for paying for a certain expense, They may be able to budget more easily if X and Y are taken care of (phones, tv, Internet, for example).


Some of this depends on how close the rest of the family is and how involved (help-wise) they want to be (and how much mom and dad want them to be involved!).
Please spell out new acronyms. Thank you.
EnerJi
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Re: In-laws financial challenges-looking for options

Post by EnerJi »

Why not rent a one bedroom? Purchasing a condo on very limited income is risky. What will they do if there are special assessments, or if the HOA fees go up significantly? What happens when one passes away and they lose a good chunk of their SS income?
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truncatedexponential
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Re: In-laws financial challenges-looking for options

Post by truncatedexponential »

tashnewbie wrote: Fri Sep 24, 2021 8:34 am
truncatedexponential wrote: Thu Sep 23, 2021 9:32 pm My apologies for confusion.

They current RENT a 3BR, 2.5BA, 2 car garage maintenance provided condo for 1400.00/month.

They are looking to reduce expenses and are still wanting to take out a mortgage to reduce expenses by downsizing to a condo. The place they are considering is functionally an apartment complex they converted to condos with individual ownership. So, they'd have a mortgage if they did this.

I believe we are going to subsidize them with our money to help them along so they don't need to pull out their 160,000.00 nest egg. If we can get their rent/mortgage payment down to less than their social security+expenses (they have little expense, they own two cars with no debt) then they can have a bit of freedom hopefully.

Still not sure what to do with their 160,000.00 in a brokerage account invested with Schwab money market.

Thanks again.
Is renting a cheaper place not an option? I think that would be the easiest and cleanest option.

Does it makes sense for them to buy a place at their ages, even if they don't have to take a mortgage? I lean towards "no."

I agree with user above that you should prioritize doing this with as little mess as possible. I think buying a place and renting it to them or helping them buy a place are both messy options. They can be structured carefully to minimize mess, but it's still something to deal with. The best option for you all is probably very personal and depends on the nature of the relationships involved.

What's the plan for the $160k "nest egg"? Is it intended as a legacy for their heir(s)? They probably can't spend it all under normal circumstances during their remaining life expectancy, so it would only get spent if they have big expenses like medical issues or buying real property.

As user above said, if it's not tied up as equity in a primary residence, it would need to get spent down if they need to qualify for Medicaid in the future.
Renting another place that is cheaper is an option they are considering as well. I don't like that they want to buy something at this age, BUT it's not my decision.
I don't think anybody is expecting any legacy from their nestegg in any way, shape, or form.
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truncatedexponential
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Re: In-laws financial challenges-looking for options

Post by truncatedexponential »

bradinsky wrote: Fri Sep 24, 2021 9:00 am Why does a married couple “almost 80” years old own 2 cars. Eliminating one car most surely will reduce their monthly expenses.
They are considering selling one car, BUT they are also both very active normally and do separate activities. Only having one car would tax my wife a lot if the other needed a ride somewhere. They are both paid off fortunately.
iamblessed
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Re: In-laws financial challenges-looking for options

Post by iamblessed »

truncatedexponential wrote: Thu Sep 23, 2021 9:32 pm My apologies for confusion.

They current RENT a 3BR, 2.5BA, 2 car garage maintenance provided condo for 1400.00/month.

They are looking to reduce expenses and are still wanting to take out a mortgage to reduce expenses by downsizing to a condo. The place they are considering is functionally an apartment complex they converted to condos with individual ownership. So, they'd have a mortgage if they did this.

I believe we are going to subsidize them with our money to help them along so they don't need to pull out their 160,000.00 nest egg. If we can get their rent/mortgage payment down to less than their social security+expenses (they have little expense, they own two cars with no debt) then they can have a bit of freedom hopefully.

Still not sure what to do with their 160,000.00 in a brokerage account invested with Schwab money market.

Thanks again.
How much does this place cost?
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truncatedexponential
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Re: In-laws financial challenges-looking for options

Post by truncatedexponential »

Living Free wrote: Fri Sep 24, 2021 10:49 am
truncatedexponential wrote: Thu Sep 23, 2021 9:32 pm My apologies for confusion.

They current RENT a 3BR, 2.5BA, 2 car garage maintenance provided condo for 1400.00/month.

They are looking to reduce expenses and are still wanting to take out a mortgage to reduce expenses by downsizing to a condo. The place they are considering is functionally an apartment complex they converted to condos with individual ownership. So, they'd have a mortgage if they did this.

I believe we are going to subsidize them with our money to help them along so they don't need to pull out their 160,000.00 nest egg.
If we can get their rent/mortgage payment down to less than their social security+expenses (they have little expense, they own two cars with no debt) then they can have a bit of freedom hopefully.

Still not sure what to do with their 160,000.00 in a brokerage account invested with Schwab money market.

Thanks again.
I added the bold. Why would you do that? If one of them needs to go into a nursing home that money will get spent to paying for nursing home care until they are impoverished enough to qualify for medicaid.
Also a good point. It just feels weird to have them get rid of that much money in preparation for an unknown like needing long term care, if my wife and I can subsidize them with some monthly income to keep them from using the money. We won't miss the money to subsidize them.
Herekittykitty
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Re: In-laws financial challenges-looking for options

Post by Herekittykitty »

I put the info into list form and added a few clarifying questions. I can't tell what exactly their goals are - for example whether purchasing a place to live is a goal in itself or if they think it will make some other goal possible. Also I don't have a clear picture of what they want to be able to do with their lives (activities, friends, visitors, and so on) and what their health and abilities (physical and mental) are. Those could all make a difference in advising them. I'll edit if/when more information comes in.

MIL & FIL nearly 80 years old
LCOL region

RENT: $1,400 per month condo, 3 BR 2 Bath, has stairs

INCOME:
His Social Security: $1,500 per month
Her Social Security: $900 per month
Total Income: $1,500 + $900 = $2,400 per month (drops to $1,500 per month on death of either)

ASSETS:
$160,000 invested (in what? does it produce income?) ($160,000 divided by 20 years = $7,500/year income if it is spent down evenly per year for 20 years - not recommending this, but just for an example)
2 cars
Any other cash in accounts or investments?

DEBT:

EXPENSES:

GOALS:
Move to a 2 BR 2 Bath condo with no stairs Is this what they want or what they think they need to do?

Have enough income to live comfortably (I’m guessing that is a goal, if so how much income would that be?)

Have enough assets not to run out of money (I’m guessing that is a goal)

QUESTIONS TO THINK ABOUT:

Are either of them US military veterans?

Are they spending only their monthly income, or have they been drawing down savings to supplement monthly income?

What monthly income would let them live comfortably and without worry on a month to month basis?

Are you and/or any other of their kids willing/able to supplement their monthly income without causing your own families financial or other undue stress?

Why are they considering purchasing a condo?(Do they want to own and if so, why? It looks like they might think it would further some financial goal, but I don’ see data supporting that compared to renting)

How about 2 bedrooms and one bath? Why do they want to downsize? (It makes sense but what are their reasons?)

How is their health (physical and cognitive)?

What do they like to do? Are they active? Friends? Do they both drive? Do they need 2 cars?

Is there public transportation in their town? Senior Ride services? A Senior Center?

AN OBSERVATION OR SO:

It would be helpful to see data comparing the cost of purchasing versus cost of renting. (Such a comparison would need to include the opportunity cost of any down payment versus investing that money.) I am not convinced purchasing would be to their financial advantage (I don't know.)

I also am concerned that purchasing would reduce/complicate their options to move as their situation changes.

COMPARING MY LIVING SITUATION: My rent is $1,300 a month for a 2 bedroom one bath apartment in an in a nice complex for people over age 55, in a small to medium mid western town. There are one bedroom apartments in the complex for lower rent. Rent includes heat and water, I pay electric and cable. Underground heated parking. Balconies. Large community areas on each floor with comfortable furniture. Residents gather and play games, have meals, or whatever with each other or their visiting families. An apartment available to rent on a daily basis for overnight visitors of residents. Elevator. Wide carpeted stairs. Exercise room. Underground heated parking. Green areas and a pond. Residents can each have a small (a couple of feet) garden.

I drive but some residents don't. They take Senior Ride and/or their families drive them around. (There are city buses but no route close to the apartment building - that's the only downside to this apartment complex.) The town has a nice Senior Center good for meals, socializing, activities, and resources. Some residents get home delivered meals at reasonable cost from the Senior Center.
I don't know anything.
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