Had a long, incredible talk with my parents!

[Bikesy]

My parents are 55ish and just today I had the opportunity to look over their finances.  They've always been semi-frugal, just no real direction or plan.  I ran some numbers for them and it turns out that by downsizing their 5 bdr house and using the proceeds to pay off some debt they will be FI!  They were really excited about the prospect of getting out of the high stress small business they own and entering a 10 year "semi-retirement" before being completely retired.  Both of my parents are wired for work and a retirement without some sort of "occupation" for awhile just sounds boring to them.  It was incredible to see them open up to the idea and really see the light turn on.  Here's a very simple breakdown of how they got to FI:


Annual Expenses: 

- 42k

This is extremely generous.  Actual will be closer to 30/35k.  We included some large buffers as well as LTC insurance and a hefty travel budget.  They will have no debt at all.


Income: 

- 15k from rentals (50% of gross rents)
- 20k in side income for 10 years.  The current small business will allow a very easy, no stress transition into this.
- $300,000 in investments
- Expected social security benefits @ traditional retirement age.


FireSim puts it at 100% success if they live until 100.

Just wanted to share!  I'm super excited to be able to join them in 10 years or so!

[2Birds1Stone]

That is awesome, I know beyond a shadow of a doubt that my parents could easily pull the trigger. Its extremely sad to me that they will not. Largely due to my mother.

They have a house worth ~$700k being super conservative in a HCOL. Completely paid off.
They have numerous investment properties both domestically and in europe.
They have over $500k in various Brokerage Accounts.
They are both less than 10 years away from SS Benefits.

My dad has been suffering from OMY syndrome for the past 5 years. They could easily sell the primary residence, move 45 minutes away and be completely retired.

My mom never worked a day in her life and lives like she is upper class. My dad has been working ~80 hours a week for the past 30 years. She is basically preventing him from RE by refusing to move or give up her cush lifestyle and HCOL.

Drives me mad.

[RexualChocolate]

That's extremely awesome.

I'm having an incredibly hard time with my parents. They've been sitting on a lot of money in cash for 10 years and are having difficulties pulling the trigger investing it, even in an incredibly conservative allocation like 30/70. It's so overwhelming to them and they keep wanting to pay a FA 1%+ to put them into expensive mutual funds. It's been an uphill battle.

[3okirb]

That's extremely awesome.

I'm having an incredibly hard time with my parents. They've been sitting on a lot of money in cash for 10 years and are having difficulties pulling the trigger investing it, even in an incredibly conservative allocation like 30/70. It's so overwhelming to them and they keep wanting to pay a FA 1%+ to put them into expensive mutual funds. It's been an uphill battle.

So why not let them pay a FA 1% and get part of their money in the market.  After a year or two, when they're comfortable, they can try self directing a little bit. 

[Longwaytogo]

Congrats! Sounds awesome for them and you.

Both my parents and in-laws are in super mess financially at around 60 years old. Not sure how/when/if they will all get retirement figured out.

[RexualChocolate]

That's extremely awesome.

I'm having an incredibly hard time with my parents. They've been sitting on a lot of money in cash for 10 years and are having difficulties pulling the trigger investing it, even in an incredibly conservative allocation like 30/70. It's so overwhelming to them and they keep wanting to pay a FA 1%+ to put them into expensive mutual funds. It's been an uphill battle.

So why not let them pay a FA 1% and get part of their money in the market.  After a year or two, when they're comfortable, they can try self directing a little bit.

Thats the path I'm going, but I'd rather they not pay 60k/year they don't have to (1.5% AUM fee + front end loads + 1.5%expense ratios). This will be their biggest expense every year by a factor of 3 for a luxury purchase that adds no value and they don't realize it. Hard to watch them waste money.

[Sid Hoffman]

My mom never worked a day in her life and lives like she is upper class. My dad has been working ~80 hours a week for the past 30 years. She is basically preventing him from RE by refusing to move or give up her cush lifestyle and HCOL.

Thank you for reminding me that it is not a bad thing that my ex-wife left & divorced me.  ;)

[2Birds1Stone]

Oh I've been trying to convince him to leave her since I was 11.

[3okirb]

That's extremely awesome.

I'm having an incredibly hard time with my parents. They've been sitting on a lot of money in cash for 10 years and are having difficulties pulling the trigger investing it, even in an incredibly conservative allocation like 30/70. It's so overwhelming to them and they keep wanting to pay a FA 1%+ to put them into expensive mutual funds. It's been an uphill battle.

So why not let them pay a FA 1% and get part of their money in the market.  After a year or two, when they're comfortable, they can try self directing a little bit.

Thats the path I'm going, but I'd rather they not pay 60k/year they don't have to (1.5% AUM fee + front end loads + 1.5%expense ratios). This will be their biggest expense every year by a factor of 3 for a luxury purchase that adds no value and they don't realize it. Hard to watch them waste money.

Usually, management fees are charged to have access to no load mutual funds, so that should be added.  They are also usually VERY low in comparison to normal mutual funds.  You also get breaks over certain set points for the funds.  I would imagine that on the amount you're alluding to, it might be as high as 1.6 or so, but most likely less than that.  If it's not, you need to find someone else.  Usually, for higher amounts, it should bring it down to 1.2 or even 1%.

[Sunnymo]

Congrats! Sounds awesome for them and you.

Both my parents and in-laws are in super mess financially at around 60 years old. Not sure how/when/if they will all get retirement figured out.

My parents have got it together; Dad retired from full time work 21 years ago at 56. He sat around for 6 months and then got a two day a week (later three days) that he kept for 8 years. He has also had various casual jobs  that recur (eg exam supervisor for university exams) that he can keep doing as long as he wants. His career had compulsory retirement saving from day one. The follow up job had a very generous program that resulted in 17% contributions. They have more in Super (Australian 401k) than when Dad originally retired.

They live relatively simply as that is their preference but do have some high expense areas. Mum is disabled so there are ongoing health care costs and their preferred method of travel is cruising (she can't fly long distances) but they do that once every couple of years or so. Mum was a SAHM for many years and then ran a small business for 11 years when she wound that up money was put in to a retirement account for her.

They are quite open about their finances so I am certain that between their retirement savings and a paid off house they are sitting on around $1.2m plus they have about $50k in directly owned shares. Allowing for drawdown of funds as they age along with the high potential for high dependent long term care for Mum (disability plus many long lived family members makes this likely) I still think there will about half of this left to pass to myself and two siblings.

The in laws are different; FIL is 61 MIL 59. I am guessing that he only started accruing retirement savings when it became compulsory is Australia (1992) so he will work 65 if not beyond not because he wants to but because he needs to to bulk up the retirement accounts. MIL does not work but previously had a small business, when that sold they paid off their house and bought a motorhome large enough that a truck license is required to drive it. They are generally not extravagant but do take a 8-10 week in the motorhome every 12-18 months so this soaks up the cash.

They are not living paycheck to paycheck but do not have much in savings, there was a major IPO recently that they were interested in but didn't have the minimum $2.5k to take it up. I am not aware that they have any investments outside the FIL's retirement savings. As a guess I would say that they have around $800k between paid off house and retirement savings. Once FIL retires from full time work I can't see him doing anything part time. They will, I imagine take longer and more frequent trips, draw down on the retirement savings and and then leave probably half the value of the house ($250k) for my husband and two siblings. Longevity on both sides and their relative youth makes this a distant prospect.

So, neither are a mess but I can see two very different outcomes that will result in two widely different end of life situations and quite disparate inheritances; me around $200k, my husband around $80k.

[rocketpj]

Both of my parents pulled the trigger at the end of the school year after their 55th birthdays.  My FIL retired at 41 when he sold his restaurant, but my MIL is only this Spring going to retire, mostly because she has no idea what else to do and worries about being lost.  My suggestion that she go to Greece with her husband for 6 months/year seems a bit obvious (they have a house there), but for whatever reason she kept putting it off.

[Big Boots Buddha]

Oh I've been trying to convince him to leave her since I was 11.

I don't anything about you, but I really respect this kind of honest with reality thinking.

Keep trying. Freedom from that kind of mooching is priceless.

[Longwaytogo]

d bought a motorhome large enough that a truck license is required to drive it.


So, neither are a mess but I can see two very different outcomes that will result in two widely different end of life situations and quite disparate inheritances; me around $200k, my husband around $80k.

Unrelated, but in United States ANY recreational vehicle does not require a special license. Yet if you are a landscaper towing some mulch around you need a commercial drivers license. Such a joke, half the RV's you see are wrecked up by their senior citizen drivers.

I would be VERY surprised to get any inheritance from either set of parents. I'll consider myself lucky if me/siblings do not end up having to help them out at some point. Not that I want, need or expect any. I'll be happy if they enjoy spending every last dollar they have. I just hope they can all enjoy thier retirements. They worked hard and deserve it; just each made a few big mistakes.

[Sunnymo]

d bought a motorhome large enough that a truck license is required to drive it.


So, neither are a mess but I can see two very different outcomes that will result in two widely different end of life situations and quite disparate inheritances; me around $200k, my husband around $80k.

Unrelated, but in United States ANY recreational vehicle does not require a special license. Yet if you are a landscaper towing some mulch around you need a commercial drivers license. Such a joke, half the RV's you see are wrecked up by their senior citizen drivers.

I would be VERY surprised to get any inheritance from either set of parents. I'll consider myself lucky if me/siblings do not end up having to help them out at some point. Not that I want, need or expect any. I'll be happy if they enjoy spending every last dollar they have. I just hope they can all enjoy thier retirements. They worked hard and deserve it; just each made a few big mistakes.

I agree, they have all worked hard for what they have; each set will will have different retirements but one that they will (are for my parents) enjoy. They have every right to spend as much as they want; the ideal is to spend your last cent on the day you die. BUT with the varying levels of mustachism they exhibit I expect there will be money left. Particularly with my parents I just can't see how they could spend it all.

With their longevity and current ages anything will be 20+ years down the track. I think the best inheritance is the one that you don't need that you received when you don't need it. We should be FI but not necessarily retired and any money will be gratefully received and used wisely, not blown.

Back on the motorhome/RV theme; here the smaller ones can be driven on a regular licence, once they are over 4.5 tons a truck licence is required. Once they are this size they also require an annual inspection in order to renew the registration. When they travel FIL does all the driving, MIL navigates and they limit the distance and speed they travel to sensible levels.

[Capsu78]

With their longevity and current ages anything will be 20+ years down the track. I think the best inheritance is the one that you don't need that you received when you don't need it. We should be FI but not necessarily retired and any money will be gratefully received and used .

Yup! Any retirement plan can have multiple levels of achievement, but if the last $10 of the surviving spouse goes to tip the grave digger, that is a successful retirement plan.