re: Providing advice for parents who do not have enough for retirement (long)

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You jest but my initial advice was that they needed to stop looking at retirement as a vacation and think of ways to generate more income.

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This. Maybe it’s a cultural phenomenon but I’ve seen so many in this age group buy in to the notion that they are “required” to abandon any usefulness they have left once they hit 60. Why? Because generations have done it before them. It was the great American ideology. But that was then, and this is now. 60 is the new 40.

I empathize with their health issues, but my advice to you is to place opportunities before them that they may not be aware of. Redefining their usefulness may be the best gift you could ever give them.

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They have some debt with their mortgage (about $100k left). I'm not sure what they're paying per month, but I think it's around $1000. Their house could sell for $225k, so they have equity if they need it.

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One thing you should definitely start looking at NOW are the Medicaid rules in the event that they will need to be put in a nursing home.

The reason why it's important to do this NOW is because there is a 5 year look back rule in most states.

Further, different states have different rules and approach Medicaid differently.

For example, I believe in just about every state, Medicaid recipients are allowed to keep their home, a small amount of furnishing, a burial insurance policy, and a beater car with a nominal value while they are in an assisted-living facility. However, pursuant to Medicaid laws, the government has a lien over all of his/her property when he/she dies. Some states rigorously enforce this rule while other are lax.

However, if you gift the property to relatives more than five years before death the date of the initial Medicaid application, the heirs can keep the home and are not required to turn over all proceeds to the government.

Of course, getting older people to gift their home is a HUGE undertaking. Many are afraid that they will be forced out of their home as soon as they need any help. There must be a tremendous amount of trust between the parent and the donee.

In any event, there are numerous books on Medicaid planning and you should look into getting one - preferably one that covers your state's individual rules.


ETA: If you know anyone who runs a nursing home, those people know the Medicaid rules better than any lawyer alive. They work with them EVERY DAY of their lives.

I disagree with it being his moral obligation to take care of them. If they were responsible and something outside their control happened? Ok, step up. If they are irresponsible and fail to heed sage advice? No sir. Your lack of discipline doesnt put me on the hook...ESPECIALLY when i made it clear 10-15 yrs in advance. If u think otherwise, we just agree to disagree

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One thing you should definitely start looking at NOW are the Medicaid rules in the event that they will need to be put in a nursing home

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Or an assisted living facility and I hate to break it to the OP but the days of $2500 a month per person to be in an assisted living facility are gone. My mom shares a room and her bill is $3800 a month and my uncle has his own room and his bill is $4900 a month. It doesn't end there. You still have medications, diapers, etc. This is in Front Royal, Virginia so it isn't like the bills are for Northern Virginia assisted living. Those places are nearly double what they're paying.

6,000 a month should be plenty if they can pay their house off in the next few years but it looks like that would be a long shot with them. Disney world and renovations should be going to principle on house, spending money wastefully like that is a huge blunder.

The very best thing your father can do is to continue working and delay filing for SSA until his FRA (I'm assuming age 66 and 10 months). By filing early, his SSA benefits will be reduced by about 24%. It sounds like your mother may be receiving a pension not covered by SSA, if so, any SS benefits on her record or as an auxiliary on your father may be reduced under WEP and GPO provisions.

Following this plan, the house will be paid for, plus extra savings accumulated.

If your father is set on retiring at age 63, he needs to file a RIB/DIB concurrent claim. If he is approved for disability, which will be a near certainty, the 24% reduction will be removed.