My parents are getting close to retirement age (60 and 61) and don't have much saved. I haven't discussed exact numbers with them, but I'd estimate they have ~100k in savings. Currently my dad makes ~55k as a truck driver and my mom makes 5-10k part time. They didn't work in the US until age 45, hence the lack of savings.
They expect to get 1400/month total from social security once they hit 66. It's not that much, because they won't have been paying in for the full 35 years.
My dad thinks he will have to work until he dies. His job is very hard on him -- most driving is at night, his hours are always changing, and he gets very little time off. Coming home for the holidays, I feel very sorry for him.
I haven't told them, but I'd like to help make it possible for my dad to retire in 5-6 years, around 66. The good news is that their house is paid off, they live in a low cost of living area, and they're reasonably frugal, so if he retired I think they could live on 25-30k/yr.
I'm 24 and in my 3rd year of grad school working toward a PhD. I live on a 40k/yr stipend, plus about 10k/yr from side jobs. I live with 5 housemates on rice and beans, so I've managed to save ~90k since starting grad school. My income should increase to ~80k/yr when I graduate in 2.5 years, and then hopefully keep increasing slowly if I make it in academia. If I don't, it should increase faster. I don't have any debt.
So, the idea I'm considering is: use a large fraction of my savings over the next 5-6 years to buy them an annuity that pays out 1k/month. It appears this would cost me roughly 175k. Combined with social security and their savings, this should hopefully be enough that my dad can retire. This would of course set me back quite a bit in my own finances, but I'm young enough that I think I should still be ok. My parents made big sacrifices career-wise for me and my sister throughout their lives, so I'm willing to take a hit.
I guess an alternative to buying an annuity would be to just set up an automated transfer to give them 1k/month. I like that the annuity is guaranteed, so they wouldn't have to worry that I would stop giving them money for any reason. I think if I proposed to just send them money every month, they would probably refuse. Same for a lump sum gift.
Does this sound like a reasonable plan? Do people still use annuities for retirement? Are there other better ways to help your aging parents?
Submitted December 26, 2018 at 02:15AM by kennicutt http://bit.ly/2T9ju5b
