My dad said that I owed him $400 a month when he retired. Is this fair?

Dear Petunia,

In the past year, as I learned more about finances, I realized that I grew up in a financially illiterate family, and so did my husband. We both grew up in the company of poor but thrifty parents. So far, our thrift has helped us through the difficulties.

We have credit cards, but we pay them off every month. We have paid off our two used cars, and before the birth of our two children, we also pinched a few cents to pay off our school loan. We bought our first house in June 2020, and the monthly repayment is about $1,600, so our only debt is a mortgage. I am a full-time parent, and my husband’s salary is 70,000 USD before taxes, insurance, etc. are deducted. Currently, there is approximately $13,600 between our checking account and savings account, my husband has a 401(k) through his employer, and the matching rate we use is 50%.

But the problem is: when I was in college, some of my financial aid fell through. I have to face the fact that I cannot go back after that summer. I am upset because I am young and stupid and can only miss my friend and boyfriend (now my husband).

I don’t remember how it became smooth, but it does. I was allowed to go back. Once again, I was young and stupid and didn’t think about it anymore.

After a long time, I learned that my father borrowed in his name to pay for the expenses not covered by my financial aid. He used his and my mother’s retirement savings to pay off these loans. I didn’t realize this until it was completed.

Now they are talking about retirement in the next few years. (The dates are changing all the time, but they are currently talking about 2025, 69 and 68 years old respectively.) They are missionaries living overseas and plan to move to the United States to the same state where my brother and I live.

Because they currently have about $6,000 in total (no debt, but no other savings), my brother-who is financially better than me-bought an apartment this year and rented it out until my parents retire. My understanding is that he and his wife must take care of various things to complete this work. But they think this real estate investment will help fund their own retirement life, not just provide a place to live for our parents.

My father now wants me to help pay for his and my mother’s retirement expenses because he helped pay for my college expenses. The total loan amount is US$39,769, but he must pay interest. At first, he wanted us to repay $45,000 from the month they retire, divided into a monthly payment of $400, until $45,000 is repaid in about 10 years, or they both pass away, whichever comes first.

Now he says that because of inflation, he wants us to “pay” about three days of retirement living expenses per month during the first 15 years of retirement or until death-no matter what the inflated dollar figures happen to be. “Whichever comes first.” This is a quote from his email to me. He calculated this number by dividing their current monthly income (21 working days per month on average) by $400 per month (that is, 3.3 days of their current income).

Since buying a house last year, our current level of savings has stabilized. I realize that we have a few years to prepare to pay $400 or any monthly fee, but I don’t know what to do or where to start. I am also worried that we have not saved enough money for our retirement. What if we end up having no choice, like my parents, and harm our own children’s finances in the future?

I have been trying to understand bonds, Roth IRA, etc. I feel overwhelmed by how little I understand.

This is not a legal debt, but I still owe my parents. If I do not pay the money, they will not be able to retire. My brother has prepared houses and used cars for them, and has done a lot of things. I can’t ask him more. In addition, it was my fault that my parents did not save for retirement, not my brother’s.

Can you help me decide what I should do next? Do we hire a financial planner to provide us with customized guidance? Do I need to read books and take classes to understand how to manage all of this because the Google results are beyond my mind?

I am considering a part-time job so that all of its income can be used to repay my parents, but I don’t know if this is also the right move. I can’t work full-time now, because our children are all of elementary school age, and paying for childcare will consume almost all of the salary.

Don’t let me start talking about my in-laws, they live in different states. My father-in-law is imprisoned. My mother-in-law lives only on social security payments in my sister-in-law’s apartment. My sister-in-law is single, has two elementary-age children, and is working full-time while trying to get a teaching degree. Compared with the family side, we are rich. We also want to help them, but we feel trapped!

-At a loss

Dear at a loss,

Your parents cannot retire, it is not your fault. The responsibility for this matter lies on your parents’ shoulders.

The money your father paid for these loans will definitely help your parents. However, even if your parents have given up the investment, $45,000 is unlikely to be enough to buy a comfortable retirement life.

If your father is going to let you repay the college loan, he should discuss this with you at that time. But I am not sure if this is really his intention at the time.It sounds like your parents are panicking because their Retirement is approaching. Now they are going back and trying to use some labels to attract you, plus meaningless inflation adjustments.

Your problem is not financial illiteracy. You and your husband have done a good job of managing your money. The problem is that the $70,000 salary can only end here. Your husband’s income is enough to feed your family of four. But this is not enough to pay for your parents’ pension or the needs of your in-laws.

I don’t think you should agree to help your parents yet. This does not mean that you swear to never help them. But you need to focus on your savings first.Since you have two young children and you are completely dependent on your husband’s income, you can establish a six-month Emergency fund In addition to retirement savings should be the primary goal.

You can honestly say: Tell your parents that you cannot currently pay $400 a month, and you don’t know if you will be in 2025. Say you thank them for their sacrifice. But make it clear that you did not know that they are searching retirement accounts to pay for your education.

What you should avoid is to let your parents fully understand your financial situation. Hope that every piece of information about income and obligations you provide will be used to prove that they need your money more than you. Don’t give them that kind of bargaining chip. “I can’t give you $400 a month, and I’m not sure if I will be like this in four years” is enough.

Knowing that their daughter is not a guaranteed source of retirement income can help guide their financial decisions in the coming years. Regardless of whether you choose to help in the future, do not make a decision based on the level of support your brother provides. This is about what you and your family are willing and able to give.

Robin Hartill is Penny Hoarder’s certified financial planner and senior writer.Send your tough money questions to [email protected] Or chat with her Penny Hoarders Community.

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