Author Topic: Looking to help my parents have a great retirement  (Read 2988 times)

Onomatopoeia

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Looking to help my parents have a great retirement
« on: March 16, 2014, 02:34:12 PM »
My parents are getting close to retirement age and I just realized they need help. I don't know everything about their finances, but I'd love to steer them in the right direction. They are in their early 50s and are a couple of years away from paying off their house. They own one car outright and are leasing a pretty anti-mustachian car (they write it off as a business expense). Besides the house, the car, and a meager 401k, they have no other debts or assets. They are definitely not frugal and have enough cash flow to spend money however they want within reason.

I recently spoke to them about 401ks and found out that my father only contributes 4%. A couple of months ago, I convinced them to bump it up so that he can max it this year. I just found out they have been watching their balance daily and get upset when they "lose" money. Because of that, they have been monkeying with their fund allocations. After speaking to them today, I told them about index funds and they are going to move their 401k money into the index fund option.

They work with an accountant, mostly due to my mother's business, and he told them they shouldn't even consider investing until they have $300k in the bank. Some of their friends suggested investing in actual bonds (not a bond fund). The accountant also told them that there would be no benefit to buying the personal IRAs I recommended.

Are there any good MMM posts or forum threads I can send their way? Are index funds the way to go or are their special considerations for their age?

matchewed

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Re: Looking to help my parents have a great retirement
« Reply #1 on: March 16, 2014, 02:44:50 PM »
Index funds are still the way to go. Given that they're more on track for a traditional retirement they may want to go towards traditional Asset Allocations. Outside of more information there isn't much more advice to give... advise them to save as much as possible.

RetiredAt63

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Re: Looking to help my parents have a great retirement
« Reply #2 on: March 16, 2014, 03:44:52 PM »
Send them over to Jim Collins' blog at jlcollinsnh.com.  He is older than they are and has been through the saving for retirement bit, so they are more likely to believe his advice.  He has a great series on his reasons for his choices of investments.  He also has good articles on owning versus renting, lifestyle choice, etc.

Metta

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Re: Looking to help my parents have a great retirement
« Reply #3 on: March 16, 2014, 04:34:03 PM »

They work with an accountant, mostly due to my mother's business, and he told them they shouldn't even consider investing until they have $300k in the bank.


Do you know why he told them this? It seems like surprising advice to me. Is it related to some particular form of risk in your mother's business?

cbgg

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Re: Looking to help my parents have a great retirement
« Reply #4 on: March 17, 2014, 03:41:49 PM »
The accountant also told them that there would be no benefit to buying the personal IRAs I recommended.


I'm guessing this is because they earn beyond the limits established for IRAs?

Firstly - are your parents asking your for this advice?  And have they said that they are in trouble for retirement?  Because I get the sense you might be imposing your philosophy on them?  Regardless of how valid your points, it might blow up in your face if they aren't interested in hearing your message, or if they aren't sharing enough of their financial picture with you for you to give them good advice.

In my opinion, the thing about advice is that most people don't want it.  If they are asking, that's one thing.  If they aren't I think your best path is to just talk to them about the decisions you are making.  This might make them curious about how you are doing so well and get them asking questions/opening up.
« Last Edit: March 17, 2014, 03:43:35 PM by cbgg »

Onomatopoeia

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Re: Looking to help my parents have a great retirement
« Reply #5 on: March 17, 2014, 05:28:22 PM »
Thanks for your replies everybody. I sent them Jim Collins' blog. It seem to be more up their alley and is a better place for them to start. I liked his asset allocation, not 100% stocks. To them stocks=gambling. I've explained how index funds are better.

They definitely don't exceed the income limit on the IRA. My dad makes in the low 100s and the salary my mom takes from her business is much less. Her business isn't risky and she's looking to sell it in a couple of years. What she will be selling is mostly furnishings and clientele, the space they operate in is leased. She talks about then going to work at costco or home depot so that she can get extra income and health insurance after my dad retires.

I've never pushed my financial philosophies on them, they think I'm weird because of my cheapness. It's a family joke, they say I'm so cheap I squeak (when in reality I'm nowhere near as badass as I hope to be someday!). We were having a conversation recently about 401ks and income taxes and they were asking me about what I do. They were really impressed about how much I've been able to save and how I put all extra money in investments. They wanted me to help my dad figure out how much to put it his 401k each paycheck so that he can contribute the maximum this year and so that it reduces his overall claimable salary. While they would scoff at most of the teachings here, they are open and eager about where to put their money.