Please can I get some advice for my dad that retired early

Passiveincome

Hi there,

Need some advice from the MSE community on how you would approach this topic for my dad on investments and budgeting... Apologies for my long post, however thought more background would be useful.

I recently moved back home due to virus (30 yo son), work in fintech with hedge funds. Good understanding of personal finance.

Scenario: 

- My dad is 65 years old. Type 1 diabetic. 

- Dad retired 3 years ago from being a quantity surveyor. Mum still works the odd bank shift as a nurse because she enjoys the job. 

- Last two years... mum and dad had been traveling the world for 6 months of the year. Due to the virus can't travel. Unlikely to be travelling until 2021. 

- Currently dad is staying at home and watches daytime TV. Feel that he is just becoming stagnant and is a bit forgetful as not stimulated. Especially now since lock down, he is hooked on Facebook and doesn't understand the dangers of social media e.g. Seeing ads on crypto and other get rich schemes...

Since retiring he has become ultra frugal and doesn't spend any money. He was on a decent salary and took early retirement. This is causing many money arguments between my mum and dad. I feel that they are fine from a financial perspective and shouldn't be anything to worry about. Fully paid off house... His pension now (600k) however has been shot because of the downturn in markets. He has spare cash (~300k) and a load of other savings. He has seen a financial advisor before, however hasn't done anything with the advice. Find that he is in this state of paralysis by analysis and ends up taking no action. Tempted to suggest some stuff that i invest in and have a balanced portfolio etc, not sure on the best approach as he didn't do anything after talking to a financial advisor before.

Problems that I feel: 

- they haven't got a budget, so don't know how much they can spend and how much they can enjoy each month. 

- they need to set clear goals if they do choose to invest 

- need hobbies to keep them busy and reconnect with friends/family on the phone or video more often.

Any advise on how you would approach this situation in regards to retirement life style and personal finance? What has worked and anyone else had a similar pattern of parents post retirement?

Many thanks in advance!!

whizzywoo

Me and my husband are both in our sixties and recently retired.  If either of my two kids started trying to give life style and personal finance advice I'm pretty sure we'd both be as mad as hell.  Just warning you!  

They seem to be pretty well off as regards retirement income.  Certainly compared to me and my hubby.  The virus has probably depressed your Dad a bit because he can't do any travelling at the moment.  I know my hubby is fed up because we can't go anywhere in our motorhome at the moment.  We would normally be driving up and down the Pyrenean mountains and we had planned a trip to overland trip to Norway this June.

Maybe test the water by asking what trips he's planning for next year?  Ask about any hobbies you remember him having in the past.  Just don't go in all guns blazing with advice about this that and the other!  

Good luck! 

LHW99

If you are worried about his understanding of money matters and is therefore in danger of falling for scams, dodgy ads etc, why not suggest some of the blogs / videos recommended on here - Lars Krojer & the Escape Artist come to mind, but others are mentioned.

Alternatively have a look for some of the free online courses - make sure the supplier is a known name.

https://www.futurelearn.com/courses and https://online-learning.harvard.edu/catalog/free come to mind, but Google will show plenty.

Albermarle

His pension now (600k) however has been shot because of the downturn in markets

There is a common misconception that Covid has badly affected pensions/investments etc . There was a big drop in the markets initially but most pensions are not 100% invested in share markets so would only have seen a part of that drop. In the meantime markets have recovered to different degrees and most pension pots should be back where they were around 12 months ago, although it depends on how they are invested exactly.

. His pension now (600k) however has been shot because of the downturn in markets. He has spare cash (~300k) and a load of other savings

As they have reached the magic Million Pounds , they should be fine even if the money is not invested in the most efficient way, especially if they not huge spenders.

Currently dad is staying at home and watches daytime TV. Feel that he is just becoming stagnant and is a bit forgetful as not stimulated.

Are you sure it is just a lockdown issue and not the start of some kind of age related brain deterioration?

Dox

Passiveincome said:

Problems that I feel: 

- they haven't got a budget, so don't know how much they can spend and how much they can enjoy each month. 

- they need to set clear goals if they do choose to invest 

- need hobbies to keep them busy and reconnect with friends/family on the phone or video more often.

Any advise on how you would approach this situation in regards to retirement life style and personal finance? What has worked and anyone else had a similar pattern of parents post retirement?

Many thanks in advance!!

The post is all about the problems you feel your parents have. They are both adults and if they are content with their lot, they may not welcome their little boy (in the eyes of our parents we never grow up!) 'interfering', or may feel their finances are not a matter they want to discuss with you. 

Your dad saw a financial adviser and took no action, so probably no point going that route again. He isn't going to listen to you, however well informed you are, for the same reasons children don't listen to their parents. It's a relationship thing.

You say you have a good understanding of personal finance, but if you did, you wouldn't be referring to his pension as being 'shot' by the current financial climate. As someone else has pointed out, if he's invested in equities, the markets will recover and values will bounce back up. 

I'd stick to trying to help him (and your mum) grasp just how many scammers and fraudsters there are in today's world - and possibly having a chat with your mum if your comments are falling on deaf paternal ears?

JohnB47

"Since retiring he has become ultra frugal and doesn't spend any money. He was on a decent salary and took early retirement."
This is exactly the position I was in when I took early retirement. I became very focused on money saving. I didn't even want us to go to a cafe for a cuppa. I found that pouring over a spreadsheet with all our in comings and outgoings eventually, over a period of some months, helped me to settle down and realise that there wasn't really any problem.
I also, quite quickly after retirement, took on a part time job - the first of three I've had over the last 13 years.
I would give him time.
You could, of course, convince him to start a spreadsheet but maybe that would not be appreciated.

Albermarle

Some people do not think at all and just keep spending until the money runs out . Others get paranoid about spending money when they are not earning any more .
If you get over to your Dad that with over a Million quid he should be able to have an income of £30Kpa and more like £40K if the money was invested better. Plus the state pension. So in reality he will have more income than probably 75% of the population and a house etc.

p00hsticks

If he's looking for something to do in lockdown, you might suggest he explore some of the free Open University short courses

https://www.open.edu/openlearn/

There's even an introduction to cyber security and staying safe online

https://www.open.edu/openlearn/science-maths-technology/introduction-cyber-security-stay-safe-online/content-section-overview?active-tab=description-tab

OldMusicGuy

These books by John Edwards are frequently recommend on MSE. They helped me, and if your dad had followed the simple advice in some of these and from folks like Lars Kriojer, his DC pension would not be "shot". Why not buy them for him and suggest he reads them?

DIY Pensions: A Simple Guide to Pensions, SIPPs & Retirement Planning
DIY Simple Investing: A Guide to Simple but Effective Low Cost Investing

Apodemus

I wonder if instead of risking a backlash from him by trying to help him, you could turn it round and ask him to help you with your pension planning? You would then have a reason to discuss and compare experiences, investments, risks etc.

Passiveincome

Thanks all! Really appreciate the honest advice. They do just need time to normalise into retirement.

Agree the main hesitation was due to the perception that I am seen as their little boy giving them advice on what to do. Tbf my dad has been fairly open to financial conversations - ive talked about what i do for my pension (I.e. not the default, understanding the fees, asset allocation, low cost index funds etc) and how he holding a lot in cash feels safer - which is fine... He acknowledges that it isn't getting him any return, however feels stuck. His pension is in the company default fund (I.e little equities and more FI with high fees, which is eroding away his pot) and took a large dip according to him. He was talking about taking it out and moving more to cash, however trying to convince him to speak to an independent financial adviser before he takes action.

He has openly mentioned about his recent bad experience with a financial advisor... essentially just given him bog standard information on annuities and draw down, then felt that they tried to sell him some of their products. He doesn't feel confident with investing, however not too keen on learning so holding back on suggesting material like intelligent investor or common sense investing. Think he would benefit from watch some of the video by Lars Kriojer and FI blogs.

Regarding the deterioration - Think it is a combination of lockdown and old age. Hopefully this is just short term... He is starting to connect with friends after getting zoom set up for him, which is helping with his energy and mood.

Apologies if I came across a bit controlling - it is just difficult to see parents arguing about money, which really shouldn't be an issue given their position. At the end of the day, it is there decision on what to do and they need to figure it out between them...

Thanks again!!