Help with an aging mom

[QueerBlackMustachian]

Hey all -

One of my goals is to help financially support my mom (58) who wants to retire at 62. My mom has literally no savings. She will only be relying on social security and three of her kids (including me). She's moving back to her native homeland where a home is being built for her (she currently rents). So shelter when she retires isn't an issue. And a home is being built, because it's a dirt cheap investment in her native homeland and makes sense for the long-term. One of the things that I'm really anxious about is the idea of her adult children supporting her, especially because we will have our own children to look out for. This anxiety was only exacerbated when a few of our kind-hearted mustachians pointed out the penalty for claiming social security at 62 (something I was aware about, but not concerned).

Does anyone have any stories or ideas about how I can ensure a comfortable retirement for my mom (who really deserves it after raising four kids on her own with really poor pay).

When I say comfortable -- I mean, I want us to be able to take care of her necessities (without having to scale back on providing for our own families) and some of her wants, too.

Should I start some kind of fund that can generate compound interest for her? ROTH, maybe?

Any ideas would help.

[MDM]

Have you looked at the SS benefit she would receive at different ages, and how that compares with her expected spending needs (including a reasonable contingency for irregular expenses)?

A couple of spreadsheets and a web tool that work well for calculating an individual's benefit:
- The 'SocialSecurity' tab of the personal finance toolbox spreadsheet.
- The Downloadable Social Security Benefit Estimator (repost) - Bogleheads.org.
 - Social Security Calculator

How many years' expenses are needed until she can start SS to match her needs/wants?

[Catbert]

Depending on her home country, a modest SS here could be plenty to live well there.  In addition to investigating what her SS will be, check out the cost of living in her retirement area.  If you're willing to share the homeland, there may be expats here that could help you understand the cost of living.

[frugaliknowit]

"...how I can ensure a comfortable retirement for my mom (who really deserves it after raising four kids on her own with really poor pay)".

A start would be to have her walk you through her current income and expenses, then walk through her anticipated income and expenses (in retirement) to see how it all does or doesn't make sense, then go from there.

I fail to see how a home being built for her (at least in the U.S.) can make any long term financial sense if she has NO money (here, the taxes and eventually the maintenance on a newly built home would financially "bury" someone like her...maybe in her home country it's different than here...).

[Rob_bob]

You will need to figure out what her expenses will be when she retires.

You will need to sign into the SS website and get her estimated income. Also unless congress gets it act together and comes up with a funding plan SS is scheduled to take about a 25% cut in roughly 15 years.  Keep that in mind.  Also think of what the average inflation rate is in her homeland, that will cause costs to rise in the local currency.

If the children are committed to helping they will have to budget an amount each and every month to make up any shortfall in her income.  Your own lifestyle and goals will need to be adjusted accordingly.

[Milizard]

You better not plan it if it absolutely depends on all 3 kids contributing.  Even with the best of intentions, shit happens.  You'd better plan it out as if only one kid is able to contribute, and if that doesn't work out, she should hold off of retiring until the numbers do work.

[Sibley]

Honestly, sounds like she needs to keep working for a while longer. There are consequences to poor financial planning, not getting to retire at 62 is one of them.

[Dee18]

I would do for your mother what I have done for myself, and what others have suggested.  Go on the Social Security website with her and run the numbers multiple ways.  You can determine (1) what she will get in Social Security if she retires at 62 and begins benefits then, (2) if she retires at 62 but waits until 66 to begin benefits,   (3) if she works until 66 and begins benefits then, etc.  There are many options.  Then help her come up with a budget for her expenses after moving back to her homeland.  See what will work.  Discuss with your siblings what they are comfortable contributing. Perhaps you could each contribute $250 per month without any stress, perhaps $750 plus her Social Security will be enough.  The only way to sort this out is to model it and then make choices, you, your siblings, and your mother.  But do it now, before she acts based on assumptions.

[Rosy]

^^^ Totally agree with that approach. ^^^

58 means you, your mom and your siblings still have four years to be all set for Mom's retirement at 62. Having a place of her own is surely a boost and a relief for your mom. Knowing exactly how much she'll have coming in each month and how much each of her children can chip in should be reassuring as well.
Discuss it in detail and then set it all on auto pay.

Hopefully, she'll settle in well - back in her home country. You can never go back home again. Things change and what was once comfortable - may prove to be less than - after she lives there again.
Just something to think about.

You may want to allow a bit of a travel budget for her to come for a visit once a year. You may want to all start to set a fixed amount a month aside so she has a good start or is set up for her first year or whatever makes the most sense.
Depending on her health and what she herself can really bring in each month for the next four years - it may make absolutely no sense for her to work past 62 - she might hit minimum SS or close to it, no matter what.

So yes, setting up her SS account online and looking at the numbers is step one. This will give you a clear picture of what she will receive based on her earnings.
If it is indeed very low, as in minimum, perhaps it makes sense to apply for her husband's SS (assuming there is/was one who worked here in the US). Even if they are divorced she is eligible to receive 50% of his SS under certain criteria - like having been married for ten years. A personal visit to the Social Security office will clarify all that - just call and make an appointment.
Or if she is widowed, she is entitled to all of her husband's SS - she can claim his instead of her own. Very easy to do, they will tell you what paperwork they want you to bring in and there is also a handy list on the SS website. I chose to do that since my departed husband's SS turned out to be slightly more than mine.

Once you have some facts and have played with the SS calculators like the one at AARP to see the results for different scenarios - and read the "Get What's Yours" book about Social Security Benefits you can make an informed decision as to how much support she may need in the future.

Setting up a Roth IRA may be helpful, even a CD/IRA might be a good idea.
Also, keep in mind if she works past 62, she still will not be able for Medicare - she must apply three months prior to her 65th birthday if she is still living in the US or there will be penalties - ask me how I know:).

The final decisions depend on her health and what she herself would like to do. I don't know of a single person who didn't crunch the numbers for months agonizing about what to do and when:)

Good luck - maybe it will all turn out much better than what you think:)

[Awesomeness]

Will she have family near her new home? Perhaps they will be able to contribute in some way, meals, home maintenance, health aide as she ages etc. How’s her health?   Some people retire and sit.  She’ll decline rapidly and have all kinds of issues if she does this and if she’s far from her children or other assistance this will be a big problem.  Is health insurance an issue, can she get Medicare?   Knowing all of this will help determine her expenses.

I’m assuming she’ll be near other family and if a home is super cheap it sounds like she may be ok w social security, especially if she’s been working for many years.  But I agree with the others that suggest getting a good idea of her expenses then going from there. Another thing I learned on this site is the numbers quoted on the website will be today’s numbers.  In other words they’ll adjust for inflation depending on the year she takes her withdrawal. 

[frugaldrummer]

There will be a 30% reduction in her social security retiring at 62 instead of 67. For example, if she was going to retire with $1,000 a month at 67, she'll get 700 a month at 62.

62 is still pretty young (for some of us anyway) and if she's in good health she might want to work a little longer as it will make a big difference over time. On the other hand, if she isn't in good health or is super lonely for her homeland, it might cost each of three children $100 a month to make up that difference.

I agree with previous poster that you need to factor in travel costs to your estimates.