Hello all!
I'm a 27-year-old recent grad and new convert to Mustachianism. My partner and I are currently in the process of straightening out our finances and making plans for the future. One major part of these plans is to be able to offer a home to his parents when they retire in 2 to 3 years - they are immigrants from Latin America with working-class type jobs, limited education, and zero retirement savings. We figure that with no rent to pay, Social Security and Medicare should enable them to live in reasonable comfort. They can pay us back by helping us with the kids we hope to have. Both DH and I are very satisfied with this plan.
The parents are in their early sixties. The fact that they are broke is partly due to the sacrifices they made to bring their children to the US and get them educated (all three kids graduated from college and have decent jobs), partly due to the fact that are low-wage workers in a HCOL city, and partly because my FIL tends to gamble away any extra money they do happen to acquire.
MIL, to mitigate her husband's irresponsibility, periodically deposits small amounts of money in DH's bank account, asking him to keep it for her and not tell his father. She now has about 2000 dollars in savings parked with us.
While DH and I are aware that secrecy between partners about money is far from ideal, it seems very unlikely either that FIL will change his ways or that MIL will divorce him. I certainly wouldn't put up with his behavior but, well, she's from a different generation and and a very different culture, and I think she is a pretty awesome person on the whole - doing the best she knows how in a challenging situation. In addition, FIL is not in good health and really can't take care of himself at this point. He's got his issues, but nobody wants to see him suffer more than necessary as he grows increasingly old and sick.
So, as I'm learning more about financial planning, it occurs to me that it would be great if we could put MIL's money in a Roth IRA - invested conservatively, it could still be a nice supplement to her SS income in 10 years or so, or the principal could be used to cover any big medical expenses that come up. And I guess I also hope that getting her started with investing will help her be more proactive and empowered about money management in general.
DH spoke to her today about the idea of opening a Roth but she is hesitant because she doesn't want her husband to know that she has any savings. Her fear is that if he does find out, he'll nag her till she gives in and lets him spend it. (He is often an asshole, but we have no reason to think him physically abusive.)
My understanding however is that, as long as tells Vanguard to mail correspondence to OUR address, rather than her own, there's no reason he should find out about the account. I checked the IRS web site and it confirmed that you don't have to declare the existence of a Roth IRA when you do your taxes - as long as you don't want to claim the Saver's Credit.
I would love to know if anyone has definitive information on this subject, and also if anyone has any other suggestions about how we can help them prepare for retirement at this point. Note: we don't have much of a stash yet ourselves (face punch!) although DH has good income and I hopefully will soon as well.
(I know there are a lot of "broke, dysfunctional family members" threads on this forum and I think I've read all of them. Many thanks to all who have shared their stories.)
Obviously if she declines to open a Roth we could open a taxable investment account - in DH's name - with her money. But the she would lose out on the age-related tax benefit, as well as the potential personal-growth benefit that comes with being in control of one's own financial life.