Baby boomers in trouble!

[DJM]

Any advice for my 55 yr old parents?

Like the majority of baby boomers they have never invested but still don't own their home.

They bought their house for $90k and today is valued at $360k. They have taken most of the equity over the years and have renovated and spent the rest.

Position: $20k equity in home, $40k super, no other savings or investments.

Talking to dad last night, he has now said he doesn't have to retire at 65 and will get the pension anyway.

Any advice? I'm really worried about them

 

[twobobsworth]

ouch! They probably will find it hard to take any advice from their own children. Or even admit mistakes about not saving.

Do they know what amount of pension they will receive?

You better start clearing out that spare bedroom of yours.

 

[Macca]

Hi DJM,

Don't worry about them, they seem fully aware of their situation.

If they have been drawing down their equity then they are financially savvy, they knew what they were doing.

Some people like to have fun now and worry about it later.

If they are happy to live on the pension then that is their decision.

It would seem you have a different financial outlook than your parents, but that doesn't alter the fact that they can do whatever they want with their money.

There are lots of threads on here that talk about helping relatives to save and / or invest, they all arrive at the same conclusion, if they don't want to, we can't make them.

I have a few in my family, I can't help them because they don't think they need help, they think they are right and tell me I should have more fun

Your parents may well think that you are wrong and you should spend more and have a bit of "fun"

 

[Jase H]

DJM,

Unfortunately I have no suggestions to your parents predicament but I can empathise as the situation described is similar to my fathers'.

He does own his own home outright, but his biggest problem is consumer debt in the way of credit cards maxed out, car laons etc.

He's 62 this year but doesn't have much super and so must work. Worse still he is a builder whose body is slowly failling him and I worry about him a lot. Last year he had to have about 4 months off work due to a rare type of musclar arthitsis and carpel tunnel in both of his hands which had to be opperated on. Work cover screwed him so he had no income over that time and had to sell about 20-30k in shares (which at least he had to sell i guess) as well as max out his several credit cards just to live.

He is working again now but for how long he can continue I'm not sure. Whilst he has invested sporadically over the years and owns he PPOR, he is still in a delicate situation due to a large fact that he has never been frugal but quite the opposite. He's never been one for contingency plans and is too proud to ask for any help at all.

In fact now he has had to leave his wife in Newcastle for a few months to go to Innisfail to work and try to pay off debt.

I feel for him but see no end to his vicious cycle due to his attitude of you can spend as much money as you want as long as you are earning good money. I hate to think of him on the pension in his late 60's onwards but that may be the reality.


Jase

 

[Michael Yardney]

Any advice for my 55 yr old parents?

Like the majority of baby boomers they have never invested but still don't own their home.

They bought their house for $90k and today is valued at $360k. They have taken most of the equity over the years and have renovated and spent the rest.

Position: $20k equity in home, $40k super, no other savings or investments.

Talking to dad last night, he has now said he doesn't have to retire at 65 and will get the pension anyway.

Any advice? I'm really worried about them

It's not too late for them.

The next property cycle should see the value of their house double, and if they are smart and use their equity wisely, they should be able to buy at least one investment property if not 2 in the next 10 years. Then they will have a family home plus at least one investment - not enough to live off - but a start.

They need to change their mindset about debt, equity and spending their money.

And they probably won't listen to you. Get them a few books to read - maybe buy your mum mine - How to Grow a Multi Million Dollar Property Portfoilio - in your spare time for mother's day

 

[lizzie]

michael is right - but i feel you may have to change the mindset at an ever lower level. perhaps rdpd by rk might be a good start. he also talks about it "never being to late" and uses the kfc example in the book (started at age 66).

mother's day is coming up. sometimes it's easier to get thru, thru the woman of the family ...

 

[luce.rocks]

My advice is: do as well for yourself as you possibly can, and take care of your parents when they need it. Accept the fact that you may need to help them out for upwards of 20 years (they probably helped you out for about the same amount of time ). Hopefully, if you invest wisely you'll have enough $$ that it won't feel like a drain and everyone can live happily ever after...

 

[Bricks & Mortar]

michael is right - but i feel you may have to change the mindset at an ever lower level. perhaps rdpd by rk might be a good start. he also talks about it "never being to late" and uses the kfc example in the book (started at age 66).

mother's day is coming up. sometimes it's easier to get thru, thru the woman of the family ...

Without mindset change they might lose their house soon after retirement.
Given that they own 20K but owe 360k even if their house doubles in value as Michael suggests....if their current spending habits continue in the years ahead the pension will be insufficient to both feed and clothe them and make the mortgage repayments.

As far as being to late, only depends on them, whether they can readapt and change.
They have ten years ahead before retirement.
Hopefully some books, talking, with them doing a lot of listening or bluntly stating the obvious might do the trick.

Do they actually know in dollar value how much the pension will be.

I hope they heed you suggestions
Otherwise it may be best to organize yourself into a position whereby you are able to tend to their needs as Luce Rocks suggests.
A spare bedroom, granny flat or purchase of the family home and rent it to them so they get rental assist from the Govt. when they retire might become an option.

Good luck

 

[Les]

G'day DJM,

If they are happy to live on the pension then that is their decision.

I feel for you - it must feel pretty awful watching this happen. But I DO agree with Macca - if people don't find their own way out, then that's the way they've chosen.

Still, I do recall a TV ad (fom some years back) that could help. As I recall, it went something like this:-

"40 year old drives up to the McMansion, parks, goes inside, kisses wife, hugs two kids, then heads out back to where an older bloke is cleaning his patio deck. Says, 'Thanks, Dad, you did a great job' ...."

It's so far back, I don't recall all of the detail, but, a "part-time job" that helps Dad (and your wife and kids) - rather than just dumping $$ into his account each week - could do a lot of good.

1. You are providing Dad with a job (however menial) and $$
2. Dad gets to see grand-kids - probably more than otherwise...
3. You get value from his work.
4. Your $$ to Dad are not seen as "charity" (an important point!!)
5. By helping Dad, you're helping Mum too.

The TV ad didn't go that far, but Mum's are also helpful, and really good with kids and stuff She could also be earning "a wage" if it suited.

That ad was running some 15 years back - and I wasn't "switched on" to investing at that time, so it could've applied to me into the future. I don't recall that it mentioned about Dad's "accommodation" (I took it that he went home after - but maybe he just went to his room after sweeping the patio..... not sure).

Still, it shows "There are ways" that can help BOTH parties, rather than just having you supporting them. A potential win-win methinks,

Regards,

 

[Monopoly]

Any advice for my 55 yr old parents?

Like the majority of baby boomers they have never invested but still don't own their home.

They bought their house for $90k and today is valued at $360k. They have taken most of the equity over the years and have renovated and spent the rest.

Position: $20k equity in home, $40k super, no other savings or investments.

Talking to dad last night, he has now said he doesn't have to retire at 65 and will get the pension anyway.

Any advice? I'm really worried about them

Take the lot and put it on BLACK 22

No seriously......

It is a tough situation but certainly one that needs addressing. Nonetheless as hopeless as it sounds, all is not lost (yet). Your dad does have a few years of worklife in him, as I'm guessing would your mum(?); some people leave it even longer than this and then their health as well as their senior years don't allow for much to be done.

Michael is right, the property market will pick up and when it does the value in their home will double...BUT...what they do with that value when it happens will be the determining factor in the sort of lifestyle they will endure (more perferrably, enjoy) in their golden years. IF they draw down any added equity the market will bestowe on them at that time to spend on pure enjoyment, they will be back to this point (if not a worse one) but if they play their cards right (reinvest into some appreciating strategies) they will effectively put themselves into a BETTER position both now and for the future.

Either way, I'm sure (as a loving son) you will be there for them and do all you can to help (as demonstrated by your concerned post) and in that respect; they are already two of the RICHEST people on earth!!! God Bless, DJM.

 

[topcropper]

Any advice? I'm really worried about them

That is an amazing situation. I had no idea that you could pull that much equity out of ones own home? I wonder how many others are in the same situation? It shouldn't have been allowed to have happened I reckon.

I'm not much help here. I think at that age it would be hard for them to change their habits now.

Maybe if you go on to make a fortune, you could help them out a bit later on.

See ya's.

 

[alexlee]

Sounds harsh but I can't really see them changing their habits in their 50s. The only thing I can suggest is to see them as an object lesson, save and invest yourself, and help them out as needed.
Alex

 

[dave99]

By the way, age pension is currently around $22,000pa for a couple. Around half that for a single. You pay no tax if the pension is your only income. Not much!

 

[BoatBoy]

My old man is probably in a similar situation, and in a previous life was a finnancial planner.

Just had his 60th and bought a house [ppor] 12 mth's back as only asset, and way overpriced in my opinion, after renting for 20 year's.

He reckon's I'm a goose for not having a job, reckon's I should get one and be responsible and then I can go on a holiday overseas every year like him and get in debt buying new car's every cupla year's.

He reckon's we are crazy for doing what Bloss and I are doing.

Get a Job, No thank's, i'm 41 with a partner of 17 years who works, have control of 9 properties between us, have a near completed 50 ft catamaran that we will live on in 12 mth's or so, have little bad debt left on ppor, and I get to go on boaty trip's at my leisure at no expense to me.

We plan on retireing in 2 year's and go cruising with a yearly project for fun and a few $$$$.

The rest of our life will be pretty much a holiday.

Who's the Goose ?

BB

 

[wylie]

Hey BoatBoy. What do you reckon happened to the missing fishermen?

We had a robust argument with the family yesterday with everyone an expert. Most reckon they are alive and have been kidnapped.

Wylie

 

[BoatBoy]

Hey BoatBoy. What do you reckon happened to the missing fishermen?

We had a robust argument with the family yesterday with everyone an expert. Most reckon they are alive and have been kidnapped.

Wylie

Tough call there,

They keep saying they were experienced yachties, but the first thing decent yachties do is get the fenders put away as soon as you are sailing.

So either they arent experienced, or they had a boat raft up allongside that they wanted there, cause they put fenders out, and that encounter turned pear shaped.

My money is on them being inexperienced, and having too much rag up when a squall hit, boat get's a bit out of shape and they end up swimming.

But I still find it hard to believe that all 3 could of got thrown at once, unless they were doing something stupid like having a leak off the side at the same time.

It is a fact that a high propotion of drowned boaties are found with their flie's undone.

Maybe 1 fell in and 2 jumped in to help ???, 3 start's the motor and comes around to pick them up, put's motor out of gear and see's them in difficulties so jump's in to help as well ????. Wind fill's sail and boat sail's off.

Probably just idiot's thinking sailing is easy, and not watching what was going on around them.

Darwinism at work again.

Tough I know, but the sea is not forgiving at all.


BB

 

[nats12]

i am suprised by your comment "Like the majority of baby boomers they have never invested but still don't own their home."

i am only in my 20's but I don't know any baby boomers that don't at least own their own home. most have multiple investments as well.

I'm suprised somebody in their 50's hasn't thought about this before.

Now the way to solve some of the debt issues:

- sell the house and move to a smaller unit. they will still have a mortgage but at least it will be smaller and not so much interest each year to pay.

- if they have 2 cars consider getting rid of 1 all together or at least trade down to something smaller, more economical and cheaper

- do not take a holiday until they've reached a certain equity level target. eg, no holiday until $50k is paid off in principle. with targets they will become more motivated

- get a budget and stick to it

- get a second part time job while he still can!!

i would not recommend he start investing at his age considering the amount of debt he has on his property.

 

[Goldminer]

Over 55 baby boomers will reap rewards

Providing Howard and Costello dont get dumped next federal election, come 1/07/2007 you can get your super tax free as a lump sum or pension. So if your 55-60 your not far off it. Big problem is Rudd and the ALP are going to revert back to the old system, RBL and tax in during and exit plus 15%GST and capital gains tax on PPOR, plus 25% extra carbon tax on petrol and power. Im giong to vote LIberal as per usual. By the way just starting a new job on AWA. $9000.00 more on base salary than previous Union EBA plus keeping holidays RDOs and penalty rates.

Cant beleve what all the media scare campaign is about.

 

[XBenX]

Tough call there,

They keep saying they were experienced yachties, but the first thing decent yachties do is get the fenders put away as soon as you are sailing.

So either they arent experienced, or they had a boat raft up allongside that they wanted there, cause they put fenders out, and that encounter turned pear shaped.

My money is on them being inexperienced, and having too much rag up when a squall hit, boat get's a bit out of shape and they end up swimming.

But I still find it hard to believe that all 3 could of got thrown at once, unless they were doing something stupid like having a leak off the side at the same time.

It is a fact that a high propotion of drowned boaties are found with their flie's undone.

Maybe 1 fell in and 2 jumped in to help ???, 3 start's the motor and comes around to pick them up, put's motor out of gear and see's them in difficulties so jump's in to help as well ????. Wind fill's sail and boat sail's off.

Probably just idiot's thinking sailing is easy, and not watching what was going on around them.

Darwinism at work again.

Tough I know, but the sea is not forgiving at all.


BB

Ouch.

Whilst Im a youngn Ive still done my fair share of sea hours including decent bluewater trips in the pacific.

Thats pretty harsh, judgemental for something/someone you dont know.

I hope they turn up.

 

[hb1]

Providing Howard and Costello dont get dumped next federal election, come 1/07/2007 you can get your super tax free as a lump sum or pension. So if your 55-60 your not far off it. Big problem is Rudd and the ALP are going to revert back to the old system, RBL and tax in during and exit plus 15%GST and capital gains tax on PPOR, plus 25% extra carbon tax on petrol and power. Im giong to vote LIberal as per usual. By the way just starting a new job on AWA. $9000.00 more on base salary than previous Union EBA plus keeping holidays RDOs and penalty rates.

Cant beleve what all the media scare campaign is about.

Hi Goldminer

where did you get the information about what Rudd is doing?

doing a quick google search gives me nothing.

thanks

hb