Here's a question that many of us will face. How should we handle (and plan for) inevitable demands for help from family members who are bad with money?
Here's one situation. My father in law has significant debts and no savings. He's always had a decent income, top 25% of Americans or so, but he has consistently lived beyond his means and just never saved a dime, and racked up lots of debt along the way. He's a big spender type--driving a (leased) SUV makes him feel special, for example. He's deep enough in the hole at his current age of 65 that he'll never be able to accumulate any retirement savings, even if he dramatically and voluntarily changes his lifestyle, which is unlikely.
So, I worry that he will come to me and my wife at some point and say, hey, I need money. By the time he realizes how little resources he has, he may find it very difficult to generate any income himself. We'll have assets and capacity for income producing employment, and he'll know it. My wife (who is incredibly close to her father) will find it very difficult to see him suffer in any way--she'll want us to give him money. And if he needs some money for bills or medical care or even for a trip to see his grandkids or something, it will be hard for her to see his needs and our accumulated savings and not want to just hand over chunks of money.
This is all upsetting to me. I feel like I have a huge looming liability. He's still healthy and making a decent income. I resent the idea of being the ant to his grasshopper. I feel guilty and selfish for thinking this way. But the guy is a financial train wreck. I would never directly marry a person like him. And yet, I fear that his financial problems will be a part of my life, one way or another. The biggest problem is that it interferes with my ability to feel in control of my own saving and financial planning. If I moderate my own lifestyle to save money, and the result is a pile of money that I will be considered heartless not to share with my bad-with-money father-in-law, it makes the saving a lot less fun.
How should early retirees and would be early retirees manage these types of liabilities? Any thoughts?