Family and money can be wonderful…however family finances can also be the cause of the majority of your stress and headaches in life.
Despite your best plans and investments will family mess up all your plans?
Family Finances – Time to Retire
This topic came up because of a recent visit to my parents and the surprising number they gave me that they had saved for retirement.
My parents live about 30 minutes away and they invited me to dinner one night when my wife and daughter were gone on a girl’s trip with a neighbor’s family.
My mom was just a month or two away from retirement and every single day for the last several months she sent me an email with a countdown of the number of days left she had at work. She worked hard for many years as a school teacher and was anxious to retire since my dad had already been retired for nine years. She already had trips to Hawaii, Washington D.C., and Europe lined up.
So Mom & Dad How Much Do You Have Saved Away?
“Did you already visit with the retirement people at the school district,” I asked my mom at dinner?
“I met with them last week and they said I was good to go,” she told me.
“So how much do you and dad actually have saved away?” I asked.
My parents and I have had a really open relationship about money. I have known about their financial situation ever since I was a teenager. I knew how much my dad made and they showed me how they paid off their house early and how we survived as a one-income family with my dad being a schoolteacher.
(My mom went back to work when I left to go to college.) We have been upfront about money so asking a question like this at dinner is no big deal because we frequently talk about finances.
“We have $………. for retirement,” my mom said proudly. (amount redacted)
I about fell out of my seat.
I am in big trouble. My parents have less saved away than I do and I am 24 years younger than my mom.
Suddenly my mind was racing about the situation and what was going to happen in 15-20 years. There was no way they were going to be able to support themselves down the road.
My mom was so proud of the amount, but to me, it was not significant at all. Maybe if you were in your 40’s it would be great, but not your 60’s.
“Really? The mom that isn’t a lot of money,” I said. “I have more than that already.”
My dad immediately glared me down. Needless to say, he isn’t paying for any more restaurant dinners anymore since I am so “rich.”
But We Have a Pension
My dad was ticked at my comment, but my mom was actually very proud of the amount that my wife and I have been able to invest and save.
My mom and dad then explained their pension plans and how they were going to make six figures each year while being retired.
The sense of relief that came over me was immediate…then made me wish I had a pension but those days are gone for most people…that is why I have invested so much early on so I can plan for my future. I am creating my own pension plan.
Do You Know Your Family’s Plans?
I watch how much it costs for my grandpa to stay at an assisted living center. The cost of a tiny studio apartment is three times my mortgage. Granted there is a lot going on there as well, but getting old can be very expensive.
What would you do if your parents ran out of money or one of your brothers or sisters? Would it be a liability to your plans and family?
I had always been comfortable because I knew my parents had their house paid off and were pretty conservative about their spending. It’s actually fun to see my mom and dad spend a little bit now because they have worked hard for four decades and did everything right so they can enjoy their time and money.
But my good feelings about my parents almost crashed when I heard what they had saved for retirement. Who was their financial adviser that said they were okay with that amount? However, with the pension why would they save away so much when they have so much coming in each month? The truth is they will likely never even have to touch what they saved in the last four decades.
So how well do you know your family’s situation, and could it derail your plans?