wealth-positive strategies for supporting aging parents

[mginwa]

Over the holidays it became clear to my siblings and I that we need to strategize supporting our mother financially in the near future. Basic facts: she's 62, twice divorced. She has been a stay at home mom her entire adult life, with kids spread out over 19 years. She has health issues which make full-time work unrealistic, and while she has had jobs over the years, she is most likely to work at something with clerical duties and relatively low pay. My kid sister is 17 and applying to colleges, my middle brother is doing the live-in-a-garage-startup thing, and I'm doing the high-income-high-stress-expensive-city thing on the opposite coast. All of us love what we're doing, are doing great for our own life phases, and aren't able or willing to change.

All this to say: mom can work some over the next few years, but not a lot and not super long. Her current assets and spousal social security aren't enough to retire on. Child support is currently her main source of income, and it ends this summer. She and my sister have been living with mom's boyfriend, but that relationship is also ending. None of us kids can or will take her in for the next 5+ years. Her family history indicates that she will live to her late 90s.

I have two ideas for how to partially support my mother now without undermining my own financial health, and I would appreciate any additional ideas and suggestions you have.

Idea 1: I buy a house in an inexpensive area where Mom can live. I don't mind the tax write-off of mortgage interest and can pay the house off when I want to, so basically it's a crappy savings account for me that she gets to live in. She can work part time until she hits full retirement age at 66 and let her savings grow in the meantime.

Idea 2: Mom's a caregiver, at heart. I buy a property that she can live in and manage as a Bed & Breakfast, inn, or AirBnB of some sort. She has some experience managing an AirBnB property and she really enjoys it. This idea would create a job for her, so she would have an income and a sense of purpose, would give her a place to live, and again would be an asset I would own. I recognize that this would be challenging work and she could not realistically do everything herself, so I'd have to hire additional help, particularly as she gets older.

These are solutions for the next 5-10 years, which is fine. The plan is that 5-10 years from now I'll be financially independent, one of my brother's startups will have succeeded, and my kid sister will be a doctor. If we are all rich then, we can solve for mom's next life phase more easily. If we impoverish ourselves now, it's worse for all of us.

Any other wealth-positive ideas would be appreciated! Thank you!

[wenchsenior]

We were in a nearly identical situation 7 years ago. Mother ending her ability to work due to health issues and the recession striking. She was in her mid 60s with zero assets, no car, and a bit of credit card debt. She had only spousal social security to look forward to for income. Three kids, scattered across the country, with only myself having any financial flexibility.

We took option 1. We moved her across the country to our town (thankfully low COL) and bought a small second house. We needed to take out a home eq loan to do it. She took SS about 9 months before full retirement age, we gave her our old beater car, we bought a new car, and we paid most of her bills for the first 4 years (she was only responsible for groceries, gas, and miscellaneous/fun).

I won't lie. That first 4 years really sucked for us because we went back into major debt to do it. However, we busted our asses to pay off the home eq loan and the new car loan, and eventually we refinanced our main mortgage a few years later at a lower rate, with enough equity pulled to pay off the second, higher interest mortgage.

In year 4, she inherited enough money that, once invested, she was able to cover most of her utilities and car repairs with the generated interest.

Now 7 years on, we're all pretty stable. We are hoping she can nurse our old car to the 20 year mark, and that she can remain independent in her own house another 5 years at least.  At that point, we might consider all consolidating households but we would need a larger place, because we didn't all love living together for the 6 months we did it when she first moved down. We would need separate living areas.

Cross that bridge when we come to it.

This worked out for us once we convinced her/decided to commit to it. However, my mother was quite cooperative with being transparent with her situation and have me somewhat involved in her finances.  My mother in law is similarly destitute, but is wildly unreliable and so we would not have done this for her, given our finances.

Good luck.

[MrsPete]

Idea 2: Mom's a caregiver, at heart. I buy a property that she can live in and manage as a Bed & Breakfast, inn, or AirBnB of some sort. She has some experience managing an AirBnB property and she really enjoys it. This idea would create a job for her, so she would have an income and a sense of purpose, would give her a place to live, and again would be an asset I would own. I recognize that this would be challenging work and she could not realistically do everything herself, so I'd have to hire additional help, particularly as she gets older.

This is pretty much brilliant.  It would need to be a spot in a touristy area, or you wouldn't get customers.  Is she computer-savvy enough to handle reservations? 

A similar thought:  At one point we hired a woman to spend several hours a day with my grandmother -- to drive her places, to take her to the grocery store, to make her lunch, to manage heavier cleaning.  If you could find something similar, especially if it were a situation where the elderly person needed someone to live in, it could be a good deal for her.  We found a woman to help my grandmother through our pastor; we asked him, and he knew of a mom whose kids were in school during the day, and she needed income but had no real skills -- for a couple years, it was a great situation. 

[mginwa]

Thanks for the responses! We're researching both to see if the inn idea is even feasible or if it's a better choice just to buy her a place to live. @wenchsenior thanks for the insight on your experience--seems like it was very tough but a few years later, the better choice for your family, particularly since your mother was open about her situation and needs.

[chrisgermany]

When you explore options, also consider exit options. A b+b might be more difficult to sell than a small house.
Does she select bad boyfriends? You might need a strategy to not risk your investment.

[anotherAlias]

Thanks for the responses! We're researching both to see if the inn idea is even feasible or if it's a better choice just to buy her a place to live. @wenchsenior thanks for the insight on your experience--seems like it was very tough but a few years later, the better choice for your family, particularly since your mother was open about her situation and needs.

Another idea that kind of falls in between your current ideas, buy a duplex in a low COLA.  The second unit could offset most of her housing expense for a fairly minimal effort. 

[wenchsenior]

Thanks for the responses! We're researching both to see if the inn idea is even feasible or if it's a better choice just to buy her a place to live. @wenchsenior thanks for the insight on your experience--seems like it was very tough but a few years later, the better choice for your family, particularly since your mother was open about her situation and needs.

Another idea that kind of falls in between your current ideas, buy a duplex in a low COLA.  The second unit could offset most of her housing expense for a fairly minimal effort.

This is a good option, too. This is one we also considered for our situation. The idea was that we would buy a duplex in the city Mom was originally living in (not the city where we live and where we eventually moved her), Mom would live in one unit and we would 1) rent the other unit; or 2) preferably rent the other to my sister that also lived in that city (possibly in a rent to own situation so she could build have equity value). In some ways, this would have worked better because my sister would have been close to my mom, my mom could have stayed where she was, and my mom could have worked a few additional years. However, we just couldn't afford the mortgage in that city at that time.

However, if we were facing the same issue now, this is likely what we do, since now we could afford it.

[mginwa]

I really like the duplex idea, also, or a property with a mother-in-law suite, garden apartment, guest house, or similar. Then Mom can airbnb the spare unit, probably pull more income out of it than with a regular tenant, and give her something to do. (I really want her to make a contribution and have a sense of accomplishment, rather than a sense of dependency.) Maybe this is a way for me to get a place at a beach somewhere :)