Retiring with a house, Social Security, and nothing else?

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Dear Community,

My in-laws just turned 60 and while they are still working, I found out that they have no savings, save a $20,000 IRA and about $200K of equity in their house. Every penny of what they earn now goes more or less to paying the mortgage on their house.

I asked them what their plan is, and they told me that they plan to work as long as they possibly can, that is, until they are medically unable. Thereafter, they plan to live in some kind of senior community / assisted living facility.

Is this even possible, given their assets, however limited they are? Of course, they would have no income, but by then, I would think that they would have to be disqualified from everything else.

In addition, what kind of quality of life could they really anticipate on SS as their sole source of income alone?

Any insight would be appreciated.



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I do not know if you have access to a good elder care attorney, but a great gift you could give them is a session with one who can explain the ins and outs of retirement planning.

What I am wondering is this....would they be open to selling their house, putting the equity proceeds into an annuity or trust that benefits their future care needs. Then they get a small low income or rent controlled senior apartment in an area were services are readily accessable. In my locale, one of the small rural towns has "Section 8" low income townhomes that are really cozy yet very nice. Check out what type of Section 8 housing is available in your area.
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Welcome to the new american dream. They are not alone in this situation,, many of my friends are as well.. and I am in my late 50s Credit card debt, high mortgages. etc have done us in. Never mind health care!! Failing businesses and the like. It sucks... and it is the new reality for so many caregivers.. who have to figure out how to help with this and our elders.. People live alot longer now, and I think alot of our elders didn't think about this. And alot of people in my age group never did either.. retirement pay is a lost dream for alot of people. My company stopped it a few years ago.. thank God I am grandfathered in!
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Jessie, I remember many years back long before ACA when I was an independent contractor and had to buy my health insurance on the open market, it was constantly climbing plus I had $2,500 deductibles. Eventually I switched over to a salary position where the company paid for my health insurance. Whew, what a relief.

I can understand if someone leaves the work force to take care of an elder, the cost of health insurance on the open market is costly compared to a workforce group rate. And I ran into the problem years ago having a pre-existing condition [was allergic to wheat] and found it difficult to find health insurance. Guess they thought I would OD on a loaf of bread :P So that jacked up the cost. Now a days that wouldn't happen with the new ACA law about pre-existing conditions.

I think many of us didn't really think about the cost of retirement until we found out dealing with our own parent(s) the cost of a nursing home, or independent/assisted living. Yikes, even the high price of Depends. My parents never took care of their parents, so my parents never passed on their experience to me, and what to look out for.

On the news yesterday, the younger generation in their 20-30's are saving much more money then those in their 40-50's. And they are living smaller, instead of larger. No McMansions on their bucket list.
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nyccaregiver, the circumstances of your in-laws are common in the US. Many people go into their retirement years with little savings. Some have ample debt, even. Your in-laws at least have some equity in their home. If all of their income is going into paying the mortgage, someone bought a house that was beyond their means. I believe the advice is to pay about 25% of your income toward housing. That percentage may have changed now that houses are so gosh-awful expensive. Do they have insurance on the home so that if one of them dies, the house will be automatically paid off? That would make things a little better.

It would be nice if people saved more. I can kind of empathize with their situation. I have savings for retirement, but I'm using money early because of the ACA and my caregiving responsibilities. (I had to take out enough from my IRAs to qualify for a subsidy when my health insurance premiums doubled.) I imagine a lot of baby boomers will be in the same rocky boat and some will be under water when they retire.
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Thank you Freqflyer. They work jobs but their only health insurance is one that offers minimum value, which I suppose is as it sounds. To me, I believe that their ultimate goal is to rely on Medicare or Medicaid.

In either event, I think you confirmed that absent any real savings, their living options will be limited. AND, I know that they will want to retire with some dignity.

However, what are the mechanics for living options? I must assume at the outset that Medicare and Medicaid only offer long-term care / housing options for those who have medical necessity.

Suppose that they receive Medicare. Are retirement housing options tailored to the Medicare reimbursement, or is there some amount above and beyond what the Medicare recipient must pay? I guess I am just trying to help them pin down whether it would be conceivable to save enough between now and the young age of 70, to live independently; or if they are best off spending down what they have, applying for some kind of subsidized housing when the time comes, and relying on Medicaid?
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In todays world 60 is still young. Do they work at full time jobs that offer benefits such as health insurance, if yes, it would be in their best interest to keep on working up to and beyond 65 when they are to get Medicare at 65.

If they can keep working until 70, then if a company benefit is health insurance, then they can possible get secondary health insurance from 65 to 70.

I will be 70 this year and I am working part-time. It's nice to get out of the house and go to a job that I really enjoy. I plan to keep working for as long as I can. It keeps the mind active. And one is out and about around other people.

As for later down the road moving into a senior retirement community, your in-laws need to check the prices. They might run into sticker shock as retirement communities are not cheap. My Dad [94] pays $4k a month for his apartment but he saved big time for this "rainy day", plus he paid off his mortgage 30+ years ago.
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If you have a mortgage at 60, you did not plan well. A $20K IRA shows you did not invest well either. My gut feeling is that they plan on having their kids take care of the loose ends.
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