Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Location: Chapel Hill, NC, formerly NoVA and Phila
9,776 posts, read 15,776,851 times
Reputation: 10881
Advertisements
how long would you plan for? And what percentage rate of withdrawals would you use?
(Wasn't sure if I should ask this on personal finance or here)
Anyway, here is the situation. My MIL is 85 years old and has been healthy up until now. She has been living on her own in a townhouse, driving, and cooking, etc. We figured out that she recently had a stroke and is starting to get some medical care. Most affected are her memory and reading (she can see but not read or comprehend). Based on what happened, we don't think she'll be able to drive anymore and would probably be better off in an independent living facility which has a shuttle bus, has people similar her age, feeds her once per day, etc.
My question is financial. The facility we looked at has rent a lot higher than she had been paying on her mortgage (which she just finished paying off). But being that she is 85 years old, I don't think the "typical" withdrawal rate suggestion of 4% makes sense, does it? I want to estimate how much she can withdraw each year without outliving her money. Her only income is social security, I think, so a lot would be coming out of her assets. We are planning to evaluate her assets to see if she could afford living in this facility and for how long. Her mother lived to age 91 or 93.
Does it make sense to plan that she'll live another 10 years and base the withdrawal rate on that? I don't believe she has a whole lot of assets, but my husband is going to talk to her today so we can get a full picture. She DOES have a lifetime long-term care insurance policy so I think she is covered if she gets much worse.
Thoughts? Words of wisdom? Thanks!
I might come back here with the details of her financials and more questions when we get them.
how long would you plan for? And what percentage rate of withdrawals would you use?
(Wasn't sure if I should ask this on personal finance or here)
Anyway, here is the situation. My MIL is 85 years old and has been healthy up until now. She has been living on her own in a townhouse, driving, and cooking, etc. We figured out that she recently had a stroke and is starting to get some medical care. Most affected are her memory and reading (she can see but not read or comprehend). Based on what happened, we don't think she'll be able to drive anymore and would probably be better off in an independent living facility which has a shuttle bus, has people similar her age, feeds her once per day, etc.
My question is financial. The facility we looked at has rent a lot higher than she had been paying on her mortgage (which she just finished paying off). But being that she is 85 years old, I don't think the "typical" withdrawal rate suggestion of 4% makes sense, does it? I want to estimate how much she can withdraw each year without outliving her money. Her only income is social security, I think, so a lot would be coming out of her assets. We are planning to evaluate her assets to see if she could afford living in this facility and for how long. Her mother lived to age 91 or 93.
Does it make sense to plan that she'll live another 10 years and base the withdrawal rate on that? I don't believe she has a whole lot of assets, but my husband is going to talk to her today so we can get a full picture. She DOES have a lifetime long-term care insurance policy so I think she is covered if she gets much worse.
Thoughts? Words of wisdom? Thanks!
I might come back here with the details of her financials and more questions when we get them.
I don't suppose you have considered taking care of her rather than sticking her someplace? Just wondering.
Location: Chapel Hill, NC, formerly NoVA and Phila
9,776 posts, read 15,776,851 times
Reputation: 10881
Quote:
Originally Posted by 20yrsinBranson
I don't suppose you have considered taking care of her rather than sticking her someplace? Just wondering.
20yrsinBranson
We actually have considered it. But she has trouble walking (uses a cane) and our home is two stories with only a half-bath on the main level and no private room on the main level, so she couldn't walk up the stairs. She also has strong community ties and is very involved with her religious group, so she wants to stay in her city which is about 1 hour 15 minutes from where we live. Not to mention my 6 and 8 year old would probably drive her crazy. She has lived on her own for over 35 years when she became a widow so she is used to and prefers her solitude.
And we're not actually "sticking her someplace." Several of her friends live or have lived in this retirement community and it is quite nice. She is the one who suggested it to us, since I'm not that familiar with her city. It's an apartment complex that has more amenities that are geared to the elderly like the shuttle bus, activities, and meals (optional), so I think she'd rather enjoy it more than where she is now since as of a few weeks ago, she cannot drive and is pretty much housebound unless my husband or one of her friends takes her somewhere.
The 4% withdrawal rate you mentioned is largely based on a potential 25 year time horizon that excludes possible gains (4% x 25 years = 100% of savings used) - e.g. retire at age 65 and live 25 years until age 90. Your MIL at age 85 is well beyond that 25 year length of time horizon. Therefore, the simple answer to your question is - if you believe she'll live another 10 years (which I'd say is a reasonable number) then a 10% withdrawal rate works out well. Beyond this, your main 'financial' focus for the future should be that she have adaquate medical and drug insurance coverage, and insurance for what she may need in terms of in-home help or long-term care and/or assisted-living.
Location: Chapel Hill, NC, formerly NoVA and Phila
9,776 posts, read 15,776,851 times
Reputation: 10881
Quote:
Originally Posted by highcotton
The 4% withdrawal rate you mentioned is largely based on a potential 25 year time horizon that excludes possible gains (4% x 25 years = 100% of savings used) - e.g. retire at age 65 and live 25 years until age 90. Your MIL at age 85 is well beyond that 25 year length of time horizon. Therefore, the simple answer to your question is - if you believe she'll live another 10 years (which I'd say is a reasonable number) then a 10% withdrawal rate works out well. Beyond this, your main 'financial' focus for the future should be that she have adaquate medical and drug insurance coverage, and insurance for long-term care and assisted-living.
Thanks, high cotton! That's what my initial gut was thinking - 10 years life span, 10% per year - but I wasn't sure if I was missing some complicated math formula. Good point about the medical insurance. She has medicare but I don't know how much it will change for the upcoming year. And I want to use the most accurate expenses as possible to see whether this is feasible for her. She likely won't do anything until spring time anyway, since she is okay for the short-term.
We actually have considered it. But she has trouble walking (uses a cane) and our home is two stories with only a half-bath on the main level and no private room on the main level, so she couldn't walk up the stairs. She also has strong community ties and is very involved with her religious group, so she wants to stay in her city which is about 1 hour 15 minutes from where we live. Not to mention my 6 and 8 year old would probably drive her crazy. She has lived on her own for over 35 years when she became a widow so she is used to and prefers her solitude.
And we're not actually "sticking her someplace." Several of her friends live or have lived in this retirement community and it is quite nice. She is the one who suggested it to us, since I'm not that familiar with her city. It's an apartment complex that has more amenities that are geared to the elderly like the shuttle bus, activities, and meals (optional), so I think she'd rather enjoy it more than where she is now since as of a few weeks ago, she cannot drive and is pretty much housebound unless my husband or one of her friends takes her somewhere.
Thanks for your concern.
Well, it sounds like you are doing the right thing then. You might also consider having someone come in to care for her in her home. If she likes her solitude, she might feel a little overwhelmed with all the people and stuff going on. Although, most places do not "force" participation, being an introvert myself, the last thing I would want is to deal with a bunch of old people all the time. By having someone come in your mother could stay in her home and have more control over her lifestyle.
Keep in mind, that as you plan, she will recover more abilities after her stroke. What abilities she will have will not be known until about 18 months, at least that's the rule of thumb. I've seen people who were really affected by a stroke recover surprisingly well. I'd suggest you take that into consideration as you plan. Obviously, most of her recover will be early, and that assumes she doesn't have another stroke. You might also consider that 1/2 of all people who make it to 85 have some signs of Alzheimers.
Location: Chapel Hill, NC, formerly NoVA and Phila
9,776 posts, read 15,776,851 times
Reputation: 10881
Quote:
Originally Posted by 20yrsinBranson
Well, it sounds like you are doing the right thing then. You might also consider having someone come in to care for her in her home. If she likes her solitude, she might feel a little overwhelmed with all the people and stuff going on. Although, most places do not "force" participation, being an introvert myself, the last thing I would want is to deal with a bunch of old people all the time. By having someone come in your mother could stay in her home and have more control over her lifestyle.
20yrsinBranson
Yes, that is a consideration, too. She actually is pretty social, but has always lived alone - since 1977 anyway. But we are going to look at all of her options. Thanks.
Location: Chapel Hill, NC, formerly NoVA and Phila
9,776 posts, read 15,776,851 times
Reputation: 10881
Quote:
Originally Posted by augiedogie
Keep in mind, that as you plan, she will recover more abilities after her stroke. What abilities she will have will not be known until about 18 months, at least that's the rule of thumb. I've seen people who were really affected by a stroke recover surprisingly well. I'd suggest you take that into consideration as you plan. Obviously, most of her recover will be early, and that assumes she doesn't have another stroke. You might also consider that 1/2 of all people who make it to 85 have some signs of Alzheimers.
Thank you so much for that information. Good to know about the 18 month rule of thumb. Yes, we don't want to be too hasty in moving her. She loves her independence and would probably like to stay in her house as long as she can.
We were actually a bit in the dark about the stroke because she didn't tell anyone that things weren't right and was perhaps hiding it some. When we visited her in early October, we noticed she was acting a bit funny, so we're not exactly sure when it happened, but suspect it was about two weeks before we saw her. She is currently having her heart evaluated and was given medication to help prevent future strokes. But it would be great if some of her memory and reading abilities come back! The reading part has been very frustrating for her. She did seem to have a better few days this week, so I am hopeful she will improve at least some. We would likely wait until spring to do anything anyway, since that is when she would have a better chance at selling her house.
By the time one reaches 85, it's a little late to 'start' planning to outlive one's assets. One thing she could change, however, is to spend or give-away her available assets to the point where Medicaid/Medicare will pay her facility living expenses. There is a 3-year 'window' for that, but, if her health prognosis is such that you expect her to potentially live another 10-years, it could be well worthwhile.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
