Author Topic: how to make my Mom stretch her money  (Read 3723 times)

partgypsy

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how to make my Mom stretch her money
« on: May 26, 2017, 07:07:57 AM »
My Mom is (finally) working on selling her house. There are a lot of variables which I do not know, namely how much she can sell her house for, and what is the exact amount of debt she has. The hope/plan is that she can sell her house, pay off debt and clear 100-150K. Her only income is around 600/month in social security. She is in her early/mid 70's. She has a number of health problems, but people in her family usually live a long time.

the main options I see is her buying a very inexpensive place, and living extremely frugally on the rest.
the other option is to take that money and invest it somehow, so she could live off 4% of that and social security.
Am I missing anything else that she can do?
(there are more complications than this, but I am simplifying for the purpose of this question).

lizzzi

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Re: how to make my Mom stretch her money
« Reply #1 on: May 26, 2017, 07:17:41 AM »
How about low-income senior housing? Or will she have too much money after the house sale? I would at least look into this. I doubt that buying another house is the best idea here...taxes, maintenance, having to deal with it all with very little money and with her aging and maybe having health issues.

Broadway2019

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Re: how to make my Mom stretch her money
« Reply #2 on: May 26, 2017, 07:26:42 AM »
My Mom is (finally) working on selling her house. There are a lot of variables which I do not know, namely how much she can sell her house for, and what is the exact amount of debt she has. The hope/plan is that she can sell her house, pay off debt and clear 100-150K. Her only income is around 600/month in social security. She is in her early/mid 70's. She has a number of health problems, but people in her family usually live a long time.

the main options I see is her buying a very inexpensive place, and living extremely frugally on the rest.
the other option is to take that money and invest it somehow, so she could live off 4% of that and social security.
Am I missing anything else that she can do?
(there are more complications than this, but I am simplifying for the purpose of this question).

I am in the same situation with my mom. We are in the process of selling her home and she will net between $100k-$150k. She has no other savings and will get some money through social security. I am looking at getting her a condo so it is maintenance free. However, she is stubborn and wants a house. Also, I am worried she will just blow the money if it is just sitting there. She already thinks maybe she could rent a fancy apt or condo for $2k a month. I much rather at least know that by buying something she has a place to live if nothing else.

I relatively new here, however, I would recommend buying something so she has no mortgage payment, even better if you can find something with little HOA fees. If you buy a condo for $60-80k and put the rest in the bank so she can take a small amount every month to subsidize.

GizmoTX

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Re: how to make my Mom stretch her money
« Reply #3 on: May 26, 2017, 10:34:43 AM »
The problem is that eventually Mom will be unable to live alone AND you don't want her to run out of money. Ownership compounds this. We faced this with my MIL; she was living so long that her friends in her neighborhood had all died & she was becoming a hermit. Her house was a serious fall hazard & money pit to maintain. She initially wasn't happy about moving, but my SIL was no longer willing to drive 3 hours RT several times a week to keep her company. MIL could no longer safely drive her car & we didn't want to wait until an accident happened.

The solution was a CCRC (Continuing Care Retirement Community) located 10 minutes from my SIL. She used some of the proceeds from the sale of her house (& car) to buy a share in the CCRC. Her CCRC has a main building with 1 & 2 bedroom apartments, a number of one-story duplexes that allow residents to initially move into a house-like setting first if they prefer, & an assisted living building should residents eventually need that. Some now offer a memory care facility. MIL chose a 1 bedroom apartment & paid a monthly fee that covered 2 meals per day & weekly housekeeping services. This place was like a nice hotel, with a staffed exercise room, craft room & regular projects, library, game room, computer room, bank, beauty salon, small convenience store, bistro grill, & a dining room with waiters (college students). The intangible benefit was that she made friends again & had activities. It has a 100 year old chapel incorporated into the place so she could walk down her hall & go to church services every day if she wanted to, an important part of her life that she was missing in her house. While it is run by a religious organization, this is not a requirement for residency. We credit this place with allowing my MIL much improved quality of life, not to mention many more years. When she finally died at 99, 90% of her share price was returned to her beneficiaries. If she had exhausted her means to pay the monthly fee, the CCRC would allow her to stay while tapping her share each month.

The 'catch' to a CCRC is that you must move into it while you are still healthy enough for independent living, even though it offers an eventual transition to assisted or memory care facilities.



MrMoogle

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Re: how to make my Mom stretch her money
« Reply #4 on: May 26, 2017, 11:04:33 AM »
Not sure OP's Mom can afford a CCRC:
https://www.agingcare.com/articles/defining-continuing-care-retirement-communities-104569.htm
Quote
Entry fees in most parts of the country range from $40,000 to $90,000 or more for a single occupancy studio apartment and in the $200,000 to $300,000 range for a two bedroom cottage. Monthly fees range from $1,500 to $5,000 (or higher in the most expensive parts of the country).

wenchsenior

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Re: how to make my Mom stretch her money
« Reply #5 on: May 26, 2017, 11:11:38 AM »
The problem is that eventually Mom will be unable to live alone AND you don't want her to run out of money. Ownership compounds this. We faced this with my MIL; she was living so long that her friends in her neighborhood had all died & she was becoming a hermit. Her house was a serious fall hazard & money pit to maintain. She initially wasn't happy about moving, but my SIL was no longer willing to drive 3 hours RT several times a week to keep her company. MIL could no longer safely drive her car & we didn't want to wait until an accident happened.

The solution was a CCRC (Continuing Care Retirement Community) located 10 minutes from my SIL. She used some of the proceeds from the sale of her house (& car) to buy a share in the CCRC. Her CCRC has a main building with 1 & 2 bedroom apartments, a number of one-story duplexes that allow residents to initially move into a house-like setting first if they prefer, & an assisted living building should residents eventually need that. Some now offer a memory care facility. MIL chose a 1 bedroom apartment & paid a monthly fee that covered 2 meals per day & weekly housekeeping services. This place was like a nice hotel, with a staffed exercise room, craft room & regular projects, library, game room, computer room, bank, beauty salon, small convenience store, bistro grill, & a dining room with waiters (college students). The intangible benefit was that she made friends again & had activities. It has a 100 year old chapel incorporated into the place so she could walk down her hall & go to church services every day if she wanted to, an important part of her life that she was missing in her house. While it is run by a religious organization, this is not a requirement for residency. We credit this place with allowing my MIL much improved quality of life, not to mention many more years. When she finally died at 99, 90% of her share price was returned to her beneficiaries. If she had exhausted her means to pay the monthly fee, the CCRC would allow her to stay while tapping her share each month.

The 'catch' to a CCRC is that you must move into it while you are still healthy enough for independent living, even though it offers an eventual transition to assisted or memory care facilities.

We had a widowed and childless great aunt who did this, and it worked great for her and she lived many more years, transitioning through the 'levels' until her death.  However, I think these are quite expensive facilities, though I am not certain of that. ETA: Thanks MrMoogle, that's what I thought.


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partygypsy, we faced a similar situation with my mother, except she had no assets at all and her SS check was slightly bigger.  I paid off her debt (several thousand) and we bought a second home for her, then covered her basic bills for ~5 years.  Obviously, this is not an option in your situation as I know from your other threads.

However, after 5 years, I think our mothers' situations were fairly comparable, in that my mother received a modest inheritance (not perhaps as much as if she had owned a modest home and sold for equity, but enough of a chunk to invest and generate a few thousand $ per year).  So now she is essentially self supporting except for the fact that we own/pay for her housing.

Your mother might qualify for low income assistance, but it varies by state. In our state, the fact that my mother had 'free' housing automatically disqualified her from all the assistance programs. This was a good tradeoff in terms of $, though, because the $ value that would have been given by the state was less than the $ value we offered (i.e., her standard of living would have been worse on state assistance). At any rate,  I doubt you are in a position to offer any financial assistance to your mother, but if at some point you do so, you will need to look into these tradeoffs.

If your mother is set on buying another property, I would strongly encourage her to downsize to a very small condo/apt, etc.  Upkeep on a house becomes problematic.  My mother is quite vigorous and is an avid gardener, so we bought her a small house with a big yard.  But 7 years later she is unable to keep up with it, and has hired a handy man for yard upkeep etc.  And of course, the house requires constant upkeep, which falls primarily on myself and DH.  I figure if we hold the house another 3-5 years, it will have essentially been a 'break even' $ proposition after 15 years of ownership (as opposed to us having sunk money helping her rent a place for the past 15 years). 

Bottom line is, consider the most modest, lowest upkeep residence possible for your mother.

The other challenge is managing money over and above that sunk into housing.  The biggest problem comes with having just a little nest egg but not one large enough to generate meaningful cash flow.  Even a small nest egg can sometimes make qualifying for low income assistance challenging, and gifting the money away to meet assistance requirements (while legal) comes with some tricky loopholes/traps to navigate in order to make it work.

It's all very complicated.  For sure, as soon as you have an idea of what your mother's final assets and income will be, see a state employee who specializes in social programs for the elderly to see what the options are for her situation, run the numbers, and go with what works best.


mxt0133

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Re: how to make my Mom stretch her money
« Reply #6 on: May 26, 2017, 11:13:17 AM »
My Mom is (finally) working on selling her house. There are a lot of variables which I do not know, namely how much she can sell her house for, and what is the exact amount of debt she has. The hope/plan is that she can sell her house, pay off debt and clear 100-150K. Her only income is around 600/month in social security. She is in her early/mid 70's. She has a number of health problems, but people in her family usually live a long time.

the main options I see is her buying a very inexpensive place, and living extremely frugally on the rest.
the other option is to take that money and invest it somehow, so she could live off 4% of that and social security.
Am I missing anything else that she can do?
(there are more complications than this, but I am simplifying for the purpose of this question).

At that income level she should qualify for Section 8 housing assistance, SNAP, and other benefits which can open up more options for her.

marion10

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Re: how to make my Mom stretch her money
« Reply #7 on: May 26, 2017, 12:15:34 PM »
CCRs can be great but I do not thing she can afford one- entrance fees are usually higher and you have monthly fees on top of that. I would contact your local county Area Office on Aging and see what housing options are available. If nothing else, she can get on some waiting lists.

partgypsy

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Re: how to make my Mom stretch her money
« Reply #8 on: May 26, 2017, 12:21:04 PM »
I talked with my lil brother. The "complications" that I didn't mention was that my brother and sister live with Mom. My mother supports my brother, it's a bad long term co-dependent situation. He is a controlling alcoholic parasite. A lot of her bad financial situation is due to him. She can't say no to him but just can't afford to pay for him once she sells the house because of her budget. My sister works part time, but doesn't save any money or contribute much financially to the household, for a number of reasons. Also has some issues which makes her difficult to live with.

My lil brother is willing to have mom move in with him but NOT either sibling. In a total pinch I would also let my mother move in with me as well, at least temporarily, but also not my siblings. I did live with sister for a couple years, but not going to go into details but it almost broke our relationship. It's possible she's matured but I would be very leery of getting in that situation again. My brother: no way in hell. As my lil brother put it he'd rather walk in front of a speeding car than live with him. My brother thought maybe in 2 years sis could move in, with many conditions including paying rent, which she may not accept. So he would rather say no, than be in a situation of having to kick her out.

So needless to say both siblings are freaking out and esp my brother trying to actively sabotage Mom selling her house. It's a frustrating and dispiriting situation because there is no good solution what will happen with siblings.

Well need to sell house first, rest can be figured out later.
« Last Edit: May 26, 2017, 12:27:17 PM by partgypsy »

GizmoTX

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Re: how to make my Mom stretch her money
« Reply #9 on: May 26, 2017, 01:41:49 PM »
OP, this is truly distressing. People who don't want the status quo to change WILL sabotage a house sale. It is useless to try to sell the house until the sibs are out of there. If your Mom won't let go of them, she's likely to stay put until she faces a really bad situation with her finances or her health. The house sale is a distraction. Your Mom must decide if the sibs will continue to live with her, because she can't afford them. Family members too often end up ignoring what they agreed to.

If she does manage to sell the house, how will she manage the proceeds? My mother sold her house in her mid-60s, cleared about $100K, moved to Las Vegas, & her money was gone in 2 years because she'd never managed that large a sum before & honestly thought it would last forever. Sadly she asked my advice only at that point. In your mom's case, the sibs will very likely 'help' her spend it if they are around.


wenchsenior

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Re: how to make my Mom stretch her money
« Reply #10 on: May 26, 2017, 02:00:56 PM »
OP, this is truly distressing. People who don't want the status quo to change WILL sabotage a house sale. It is useless to try to sell the house until the sibs are out of there. If your Mom won't let go of them, she's likely to stay put until she faces a really bad situation with her finances or her health. The house sale is a distraction. Your Mom must decide if the sibs will continue to live with her, because she can't afford them. Family members too often end up ignoring what they agreed to.

If she does manage to sell the house, how will she manage the proceeds? My mother sold her house in her mid-60s, cleared about $100K, moved to Las Vegas, & her money was gone in 2 years because she'd never managed that large a sum before & honestly thought it would last forever. Sadly she asked my advice only at that point. In your mom's case, the sibs will very likely 'help' her spend it if they are around.

Agree 100%.  The only reason we did as much for my mother as we ended up doing is she agreed to all our conditions of transparency about money and living conditions.  We never had big conflicts about how to manage her money, but I know based on her past history that if she hadn't agreed for me to take over management of her finances it might well have gradually been frittered away.

And that is without 'leeches' or manipulators of any kind being in the picture.

Without full agreement, openness, and cooperation of the person you are trying to help, I suspect the whole enterprise will go south.

Freedomin5

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Re: how to make my Mom stretch her money
« Reply #11 on: May 27, 2017, 07:09:40 AM »
In this case, it sounds like you're only option is to wait it out while making preparations to take care of your mom as a back up plan, in case mom is unwilling/unable to set boundaries with bro and sis. It is very likely bro and sis will bleed mom dry. This might mean gathering information on low income housing, healthcare, food bank/seniors meal delivery, and/or thinking/planning to have mom move in with you/lil bro. Other bro and sis can fend for themselves.

Axecleaver

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Re: how to make my Mom stretch her money
« Reply #12 on: May 27, 2017, 07:53:03 AM »
Having many of these issues with my Mom, too. Following the thread to see if I can pick up anything new.

The comment from wenchsenior about transparency is 100% accurate. I had to require this from Mom after she lied about some of her debts, which made my advice change. She could not afford her house, so we just got done with a year long, emotional process of getting her moved out and her things sold off/given away/thrown out. With your siblings living with her, this will be 100% necessary so you can protect her from being financially abused.

Engaging the social safety net through: Medicaid, SNAP, Section 8, and Office for the Aging should be done immediately. These all take time to work through, and can be a lot of work for you as her advocate. Start with the Office for the Aging, they should connect her to the other agencies, too.

o2bfree

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Re: how to make my Mom stretch her money
« Reply #13 on: May 27, 2017, 08:58:22 AM »
I talked with my lil brother. The "complications" that I didn't mention was that my brother and sister live with Mom. My mother supports my brother, it's a bad long term co-dependent situation. He is a controlling alcoholic parasite. A lot of her bad financial situation is due to him. She can't say no to him but just can't afford to pay for him once she sells the house because of her budget.

Sounds like my brother, except that it was dad who always gave in.

I wonder if your mom would consider going to an Al-Anon meeting, which is for family and friends of alcoholics? Or at least reading some of their literature?

affordablehousing

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Re: how to make my Mom stretch her money
« Reply #14 on: May 27, 2017, 10:31:01 AM »
One other vote for getting your mom into Section 8. Senior affordable housing developments are often age restricted and that would make trouble for your brother and sister moving in with her, but if she was able to get a voucher, she would be locked into contributing no more than 30% of her gross income - $180 a month, toward rent, the government, pays the rest. Depending on where you live the waiting list may be many years so perhaps that is the compromise with your siblings that don't want anything to change, she waits for a voucher and when she gets close, they sell the house.

partgypsy

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Re: how to make my Mom stretch her money
« Reply #15 on: May 27, 2017, 02:04:41 PM »
Talked to my lil brother and indeed older brother is actively sabotaging the house being fixed up in prep for sale. And Mom is freaking out because sibs are freaking out. Not helpful.  I am glad my brother and my nephew are helping fixing it up. But you are right, she may not be able to get to a place of feeling comfortable showing the house and selling it. In that case my lil brother knows of a religious charity who takes in seniors. So there is a last case scenario so that Mom won't be on street, but if that happens the process won't be pretty esp with siblings, as they seem to expect some indefinite free ride at this point.
Glad I live down here.