I’m so sorry for your family’s loss.
I am in my early 40s and have 900k saved in my 401k. I am currently maxing it out. I was thinking of taking a 100k loan from this 401k or stopping contributions. Which is better? I figure it will take about 20k a year to keep my parent in the house. They have 400k worth of equity in the home. The game plan is to keep them in the home until the end. I can pay out of pocket and keep everything going but that would be more stress vs a one time kick in the pants.
For stopping your 401K contributions vs taking a 401K loan - NEITHER is better.
Your situation has similarities to my own family. There is a strong pull to swoop in and “save” mom in some way. I’ll challenge you to consider the definition of “help”.
Do you have a detailed grasp of her assets, income and expenses? Have you seen an attorney to help plan? That would be the first steps…
1. No way to the 401K loan. Doesn’t that have to be paid back immediately if you leave/lose that job? And if you can’t write that check, it becomes a withdrawal, subject to taxes and penalties? Not to mention missing out on gains for the duration of your mom’s life.
—> please do not take from your future, you (and your own family if you have one) will need that money for your retirement and care.
2. Has she filed to get her deceased spouse’s Social Security (if she qualifies)? And any VA, Homestead, income-adjusted benefits (things change sometimes when it’s one income)
3. An opinion: mom’s life needs to be supported by her income. (Unless you kids are wealthy and willing to subsidize.) Do you know how much “in the red” she is? If it’s “only” her mortgage - which you paying some of would help for now, then I’m going to question how secure is the future. I don’t know about you all, but our insurances have seriously jumped, along with utilities and everything else. The trouble (as my mom says) with a fixed income is…it is Fixed. Expenses tend to increase.
I’m not trying to be a party-pooper. Please just consider what is the real problem and if what you’re thinking of doing really fixes it.
4. Spouses are going to have opinions, and there are other needs to consider (in laws that are elders, children, etc.) This situation changes, and you can’t always predict how.
5. Medicaid. It is no fun, but you have to consider it as a potential bugaboo. Care costs are insane, and the level of help each person may need is unpredictable.
Before you put any money into your mom’s home or expenses, please consider seeing an attorney with expertise in elder law and Medicaid. There are ways to do it that do not impact your mom’s eligibility for Medicaid (you do not want to inflate her “income” by accident, I think - not an expert). Also, if you were to put a chunk of change into her home, normal times it’s a gift and you wouldn’t have part-ownership of the house to recoup later ( Medicaid look-back and estate law).
Also, you may think you’re “done” if you take care of the big expense - the house payment. What about when the HVAC, roof, etc needs replacing…Big ticket items are hard to weather on limited fixed income.
Reverse mortgage - is it really at that point? The house has to be maintained and property tax paid, so who does that? and would she get enough money out of it to make an impact (they give a % of the equity in the home, not the full amount)?
Your mom has a great asset in her home. I’m sure you’ll be a huge help to her in navigating what to do.
Statistics: Posted by Freetime76 — Sat Nov 23, 2024 7:05 am — Replies 20 — Views 1350
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