A (3:07)

What's going on? What can we do for you?

B (3:10)

Just wanted to write in and I have a unique situation with one of my parents whom I become financially dependent on us. So just wanted to get your advice.

A (3:19)

Okay, so who's the U.S. you have a partner, you have a spouse. What's going on?

B (3:24)

So I am married and for the last six years, my mom has actually been living with us. You know, we're grateful to her. She had essentially given everything she had to us, apparently unbeknownst to us, and kind of discovered that she really hadn't saved anything for her own retirement.

A (3:43)

So.

B (3:43)

So she's kind of moved in with us. It's taken us six years to kind of figure even just understand her financial situation. We've got a plan in place now, which is good news, but we're kind of now at the step of figuring out what the impact to us is and how that changes our plans.

A (4:00)

Kristin, how old are you?

B (4:01)

I am 38 years old.

A (4:03)

And how old's the spouse?

B (4:05)

39.

A (4:06)

And are you guys both working full time?

B (4:09)

We are, yes.

A (4:10)

How much do you guys earn together?

B (4:13)

We joint 410,000 a year.

A (4:16)

Look at you big shots. Nice. How old is your mom?

B (4:20)

She's 65.

A (4:22)

And you guys have kids?

B (4:24)

We have two little kids, three and six.

A (4:28)

Right. Now you said your mom gave you kind of everything she has. So when we talk about the stuff that we're. I'm going to ask you about what you've saved and everything. Do you keep her stuff that she gave to you separately or is it all just co mingled at this point?

B (4:46)

She has her stuff separate. And when I say gave to us, I mean through just spending on us, I suppose throughout her lifetime. So not anything transfer. She has us, you know, she has a few hundred thousand in her retirement accounts, but that's all she has left.

A (5:02)

Okay, so she has retirement accounts not taxed yet. Right, right. Can you give me like, is it like 200, 400? Like how much is in there?

B (5:12)

I'd say 300,000.

A (5:14)

And that's it? No bank account, no CDs. That's that. That's that. Okay, got it. So you guys have a house that accommodates this, or is this, like, do you have to move into a different house? Like, where. What's going on just in, like, two kids, one mom, and the two of you?

B (5:29)

So we actually just bought a house that we kind of bought with the intent that we could keep it as an investment and rent it out if we needed to. So we've just very recently taken on a second mortgage so she could have a proper home.

A (5:45)

Okay, wait, so you're. Wait, she's living with you or you bought a bigger house for all of you?

B (5:50)

She's living in a separate house like a mile down the street.

A (5:53)

Oh, my God. Okay, how much was that?

B (5:56)

415. 415,000.

A (5:58)

What's your current home worth?

B (6:00)

510,000.

A (6:02)

And the first mortgage? The existing mortgage before we did the

B (6:05)

new house for mom, there's 430,000 left on it, but we have a 2.875% mortgage rate on that one, which is nice.

A (6:15)

Yes. Okay.

B (6:16)

And Then hers is 332,000 with 6% rate.

A (6:24)

How is it carrying both of these homes?

B (6:27)

It works out fine. I think right now we're just paying it down. Going to try to pay it down a little bit quicker, I think, on

A (6:33)

that one, but maybe not yet. Before you do that, let's. Let's. Before you put that pressure on yourselves, let's keep going on here. So, okay, so those are the two homes. Your home, your primary, the house for mom, and she's living there. I got the two mortgages, got her retirement accounts. Let's talk about the assets that you guys have saved. So right now in your own retirement accounts, what do you have?

B (6:58)

830,000 in 401ks that have not yet been taxed.

A (7:05)

Correct. Okay, so those are traditional retirement.

B (7:07)

Actually, you know what? They might be split. That's a good question.

A (7:10)

Okay, so we don't know. So maybe traditional slash Roth of 830. Okay. How much are you guys putting into your retirement accounts? Right now?

B (7:20)

We're just maxing out the $24,500 every year.

A (7:24)

Great. Okay, so that's $830,000. Amazing. You're only in your 30s. That's great. Any other retirement assets?

B (7:32)

Yeah, we have $220,000 in Roths. We just do the conversion every year. That's it for retirement accounts.

A (7:40)

Okay.

B (7:41)

Brokerage account, we have 89,000. And in stocks, are you adding to

A (7:47)

this account on an ongoing basis, or is it sort of static? Is it just staying still where it is?

B (7:54)

We've added to it over the years, liquidated it to do. To do certain other investments. And then right now, or right now, we're not contributing. We're not able to contribute it because we've been paying for these additional expenses for my mom.

A (8:07)

Sure.

B (8:07)

And I have a young one in daycare still, but once that daycare is done, that'll go back to contributing maybe 1500 or 2000amonth.

A (8:15)

Okay, that's awesome. What about the just sort of boring emergency reserve fund? What do you have?

B (8:22)

We have like $122,000 in cash and like HSAs. So we probably keep between 50 and 100,000 in cash just for, like, emergencies. That's kind of rolling great.

A (8:34)

And what about for the kids? Do you have 529 accounts or any other savings for them specifically?

B (8:41)

We have 22,000 saved in a 529 that we contribute $2,000 a month to.

A (8:48)

Oh, wow. That's a lot. Fantastic.

B (8:51)

We're trying. It's a little tighter now. It's a little tighter now with my mom's expenses. But this is our old plan, I guess.

A (8:59)

Okay. Okay. Okay. So do we have a basic rundown of everything that's going on for you guys right now?

B (9:05)

The only additional things are we have some kind of alternative investment type things. We actually have two small family business businesses that are kind of early in the stage. So we. We have about 70,000 of income from that.

A (9:21)

Income a year?

B (9:22)

Yeah, like net profit that comes in a year from that. Wow.

A (9:26)

These are from both family businesses.

B (9:29)

Yeah, they're really, really small. They're like kind of side hobbies almost for myself.

A (9:33)

Yeah. But I mean, but still, like, you know, that. That as an. Having something that's generating 70 grand extra a year is pretty nice.

C (9:41)

Yeah.

B (9:41)

And we started them a little bit knowing we'd have to kind of start to generate some cash for my mom. So it's. It's been good. It's been. It was tough the first couple years,

A (9:50)

but I get it. I get it. That's amazing. So that's great. So there's that ex. Alternative. I'll just say extra income. Yeah.

B (9:58)

And Then so there's 65,000 sitting in like a, you know, sitting in cash over in the businesses. And then we also have 130,000 in real estate syndications. That's just. That's. We can't tap it really, till they sell.

A (10:11)

But 130, 000 in. What. What are we.

B (10:15)

What did you have that in real estate syndications?

A (10:18)

Oh, real estate syndication. Okay. Yeah. Okay. Very Texas of you, by the way. It's like a big thing in Texas. I thought you were going to tell me an oil and gas limited partnership, but. Okay, fine. All right. So with all of this, just like the new house, maxing out Your retirement account, two grand a month into your. Into the kids, 529s, money here and there, however, you know, if possible to brokerage. How is your cash flow? How are you feeling?

B (10:52)

It's pretty much money and money out with the exception of we put the 2000. So basically we spend what comes in right now because we've added $5,000 a month for my mom, plus we do the. So technically we're saving because we're putting the 2,000 towards the college.

A (11:08)

Yeah.

B (11:08)

And then we save another $2,000 a month for vacations and things, but that theoretically gets spent. So I'd say, like, we're pretty like cash flow neutral. So we've kind of. My mom probably needs another 2,000amonth just because right now we're just paying for, like, roof over her head and food and stuff. But I don't know. I haven't committed to doing more. So that is one of my questions because we're.

A (11:31)

So right now cash flow is tight, including the savings, but you're saying to me, what? Mom needs another two grand a month, basically. And mom's in good health. Like, how is she?

B (11:44)

She's in pretty good health.

A (11:45)

Okay. And is she drawing down any of her retirement account?

B (11:50)

So we've been working. We've got a financial planner for her, and the plan was if we covered earlier on, her money could sit in there and we'd have more tax benefits when she starts to withdraw those in, let's say, five or six years. So we're trying to. That is one of the questions is it makes sense to have her start drawing and then us cover the back end.

A (12:12)

Right.

B (12:12)

Or leave hers in the tax Advantage accounts and us kind of COVID the shortfall now, which is kind of what we've temporarily been going with.

C (12:19)

Or. Or take that extra 2,000amonth she needs from her. Her account.

A (12:24)

That's all I'm thinking. That's exactly what I'm thinking. Like, why wouldn't. Okay. Mom's filing her own taxes. You're not claiming her as a dependent. Right? Right. Okay. So she's got to be in a very low tax bracket. Am I right?

B (12:36)

Yes.

A (12:37)

Okay. So why wouldn't she take. Let's just say she would be. Have to. You know, she's in the. Let's she gets Social Security, right?

B (12:46)

Yes.

A (12:47)

Do you know how much that is?

B (12:49)

1300amonth.

A (12:51)

Okay. And that's the only source of income for her, right?

B (12:54)

Yes.

A (12:55)

Okay. So if she, but if she had two grand a month net to her, right, she would be able to live a little bit better. Right. Okay. So I look at this and say, well, I mean, why not use the money that is there right now? Right? Because today I feel like you guys like your cash flow today needs to go into the kids accounts, into your retirement. Like, I wouldn't want to float that. I think that to have her do say she takes out $2,500 a month from her retirement account. Okay. She takes out 30 grand a year for the next however many years until it's just depleted. Like that's going to finish. That's going to be done no matter what. Okay. So if we took $2,500 a month out and now, you know, she has essentially like income that keeps her in the 12% tax bracket. And so what? So she lives on it and doesn't it given her, I mean, I don't know, are you guys paying for every. All the bills? Like, does it give her some agency just to have the money in her hands?

B (14:05)

I think money in her hands gets spent. So.

A (14:08)

So you would have to manage it still.

B (14:10)

Yeah, the financial planner would, but yes.

A (14:12)

Yeah. Okay, but if she had $2,500 a month that flowed from her retirement account into her checking account and that's all she's getting. Like she knows that. And the only reason why it's 2500 is it's really 2000amonth. But I don't even. So just send her 2,000amonth. Fine. Because she'll spend whatever she has and then we know that she has a tax she'll have to pay tax on so they can withhold some money for her or you can like have them make sure that at the end of the year there's a few thousand dollars to pay the taxes that will be due. I say take the two grand a month out of there. Use that to help her out, especially in the next, in the first bunch of years. Right. So let's just say that, you know, that lasts for, I don't know, five, seven years, eight years. Because, you know, it's not two, it's $2,000 a month today. She's going to need more going forward with inflation. Right. So let's just say that by the time she's 73 or something, she's done. She's that account is completely done. But you guys are also in a better place because you guys have funded your 529. You kind of had your own life stabilized and I would not use your cash flow to pay down that 6%. I really wouldn't. So I think the two grand a month for the time being comes from mom's retirement account. What's the next issue around, like how you think about this extra expense and what's happening in your lives?

B (15:33)

Well, I mean, when it runs out, it's just kind of kicking the can down the road.

A (15:38)

Yeah, but later, right? Yeah, but it kicks the can down the road when you guys are mid career making good money and your kids are like on a path, right?

B (15:48)

Yeah, I, I guess that's, that is my question. How do I think about that?

A (15:51)

Right? I mean, I just think since she has the money, I feel like if your cash flow is tight now, you guys, it's usually, this is a young family issue, isn't it? Really? Like, hey, my kid's going to be out of daycare as the kids get older. I'm not saying you're not going to have any expenses, but you know, it does get better and you'll be making more money. You're better established. I just feel like the use of her money today before there's any change in tax law, while we know she still gets to be paying at the 12% bracket, just let like, let's use it. It's there for her. Like, what are we waiting for? That's how I see it. Now in the interim, what you could be doing is, you know, you're going to keep maxing out your retirement. Right. And you're going to start to use your brokerage account more. So if you have a little bit of flexibility, that's where I want the money to come from. I certainly don't want you guys to be paying down this mortgage. That's not what, that's not how I would do it. The extra, any extra cash flow right now would have to go into the brokerage account because you know you're going to need like in the next, let's say, you know, you're 45, 50 years old, you know that you're going to have expenses associated with your mom. And we just want, we want to prepare for that. And I think you can prepare for that, but that's how you would prepare. And you know, I think that beyond that, as you approach, let's say you're 50 and you might call me up and say, well, should I do a, a catch up retirement contribution. Maybe you wouldn't. Maybe you just want to make sure you've got enough money in brokerage to help your mom out. But I do think that her money today will help you feel less tight. That's what I think.

C (17:33)

I will say that the family plan, Jill, was for them to get a bigger house with the kids, but they kind of put that on hold because they had to buy the house for the mom. And you know, I know that's still a consideration. I don't know. I don't know if you want to put that pressure on yourselves right now.

A (17:47)

Oh, no, I would never do that. I would not do that. I mean, if you were going to do anything and you like giving up the 2.875 would be just horrendous right now. I think that in the next few years, maybe what I would do is maybe it's like five years, I don't know. But like, I wouldn't add that pressure right now. That's a lot because what kind of house would you have to buy? Like how. If you were going to step up a level, what would that mean for you? $1 million house?

B (18:14)

No, probably more like an $800,000 house. But it wouldn't be like right now. I was just more. At some point, you know, it's really the trade off of when you could retire versus doing some of these things now that we kind of have her burden. Right. So.

A (18:31)

Right. And look, you've taken this on. It's incredible that you've taken this on. It really is still married. I know. You have a wonderful spouse.

B (18:39)

My husband. I do have a wonderful spouse.

C (18:41)

God bless him.

A (18:41)

Yeah. He's probably like, I like her more than you do right now.

C (18:44)

I can hear the pain. I could hear the pain in her voice.

A (18:47)

It's harder when it's your own mother. I think sometimes it's better to be the in law in that part because you're like, I can be very generous and it's none of my anxiety around it or disappointment. I think that if you really are considering this $800,000 or a step up, I think the way that it happens is again, you're putting more money in your brokerage account. Maybe all of a sudden, instead of got you guys making 400 grand a year, maybe you like stepping it up. You are still early in your careers. I mean, relatively speaking, 15, 20 years in. Right. So. So I think that as time goes on, you may be able to do it. Also as time goes on, maybe your Mom's not going to be able to live on her own. Maybe it's going to be like, hey, you know what? We don't need an 8, we need a million dollar home. We're going to sell her house, we're going to sell our house and we're going to have a separate entrance for her, like an in law apartment. But that's the way it's got to roll. I just feel like we don't have enough information right now about like what your needs are. And in that case, then I definitely think let's use her money and get her to float her own life. And you know, eventually, yeah, you're going to kick the can down the road, but you're probably kicking the can down the road when you are actually more able to bear the burden. That's what I think. Mark, do you agree with that?

C (20:03)

I do agree. I mean, I know, you know, early retirement is what they're thinking about. If you guys, if you're able to keep doing what you're doing, you're maxing out your 401ks, you're doing your backdoor Roths every year. You don't pay down the mortgage, you use your mother's retirement assets to pay for that extra 2,000amonth. You know, when you guys are in your mid-50s, in 15 years from now, you're going to have four and a half million dollars, conservatively. So if you can just keep doing what you're doing, you'll get there. One other thing, Joe, she had said that somebody is talking to them about using structured notes.

A (20:33)

No, absolutely not. Absolutely not. In fact, if the day that you can get that real estate syndication, 130 grand, boy, I'd like that liquidity right now, wouldn't you? Um, no, nothing that ties up your money. Absolutely not. No structured notes, no annuity product, no real estate part. Who sold you that real estate syndication, by the way?

B (20:55)

No one sold it to us. We had a general partner that went into a couple properties during like the COVID years when cash was a little bit better.

A (21:04)

You can see the downside of like sinking money into an investment like that. You're at a point in your lives where things can't get tied up. You just can't. Because between the kids, your mom and your own needs, we cannot have your money tied up. It's just, it's just not worth it for you, you know? And so I think that for you guys keeping liquid, staying invested, it's like almost like you don't need anything fancy here. What you need is a discipline plan. Stick with the plan and try to keep that idea of liquidity, access to your money in the front of your, in the front of your mind. Right. So if that real estate syndication money were freed up, let's just say they're like, great, we sold everything, we're done. Here's 130 grand. You know, after tax, it's 120 or 110, whatever it is. Okay. It's an extra hundred thousand dollars. If you had $100,000 right now in your hands, Kristen, what would you want to do with it?

B (22:04)

I would just invest it into. Right, exactly right.

A (22:09)

Throw it in the brokerage account, get some exchange traded funds. You don't have to pick individual stocks. That's sort of like the, the fool's game. Buy some, buy some funds, exchange traded funds, some index funds, big, small, US, international. Not put it in there. Keep that money liquid. Don't mess around with it. So that's the simplest thing. Somebody will maybe come, you, maybe you'll come across something like, oh, maybe I'll throw it into another real estate investor. Don't do that. Maybe I want to pay down mom's mortgage. Don't do that. We want you to remain as liquid as possible. And liquidity is going to be your friend, especially over the next five or ten years. While your mother is going through that, she's going to go through this account. This is like intentional. We are going to get her account, we're going to liquidate it over the next five to ten years. Okay, fine. You have to be prepared on the other side of that to know that you will have to be helping her out in a more methodical way than you're already doing. And, you know, I think you guys, like I said, I think you're. What you've done is incredible. You're so generous and I'm sure she appreciates that. But in the interim, we want to make sure that you're not bearing the burden so much that you're robbing yourself of opportunities in the future. Does that make sense?

B (23:26)

Totally does.

A (23:27)

Okay. You feel okay?

B (23:29)

Yeah, we do.

A (23:30)

I'm feeling stress. I'm feeling stressed for you guys. Do you have your estate. No. Do you have your estate planning stuff done? You have that done?

B (23:38)

We do, yeah.

A (23:39)

Okay, great. And how about life insurance?

B (23:42)

We do, we do have some.

A (23:43)

Okay, you have enough.

B (23:45)

You have some life insurance, you feel like. I think so. Okay, yes.

A (23:48)

If you need that, you know, just obviously buy it right now while you're still young and healthy. That's the time to do it. And other than that, Christine, keep us on auto dial because we're gonna add us to your favorites. Because if you need anything, we are here for you. But again, access to your money, liquidity, that is your friend right now. So that's, that's my main message. And I think, like I said, you're doing what you have to do. You're a good kid, you've done this. Your husband's a superstar. But we also want to give you as much flexibility as possible given the circumstances.

B (24:22)

Okay, very good. Thank you very much.

A (24:25)

Oh, Mark, she sounds very good. I'm nervous. You know, I just gang these are such big decisions. So, you know, I don't think, I think a house is possible. I think that all helping mom is possible. It may not be able to be happening in this minute, like right now, but we'll get there. But as you can all see or hear that having the money to do the things you want to do, that liquidity, that's the key factor here. So if you are helping out a parent, if you are in the middle of your kind of juggling priorities, you need some assistance, get in touch with us. Go to jill on money.com in the upper right hand corner there is a contact us button. Click that button, write us a note. And if you'd like to join us on the air live, just check the box. Mark will do everything else. Hey, don't forget to sign up for the Free week newsletter while you're on the website. It comes out every Friday. That will also entitle you to our blog and you can subscribe to us on the Odyssey app or wherever you find your favorite podcast. Try to lift someone up. Change your work, change your wealth, change your life. Thanks for listening. We'll talk to you tomorrow.

D (25:36)

I'm Brian. I work at United Healthcare.

A (25:38)

So Brian, why do you care?

D (25:41)

I care because I don't want to leave leave anybody behind. I oversee one of the biggest resource center in UnitedHealthcare. I see people walking in my office every day just like my parents. They have no idea about the healthcare. I feel like they are my uncles, aunties. I treated people like family. I'm Brian and I'm committed to care.