Advice, please

[Embel]

My mother is in her 60s and is selling her home. She will have some money from the sale, but probably only about 50k.

She has no life insurance. No pension. No 401k.

She wants a portion of the money to be set aside for funeral expenses. Other than just creating a bank account for that purpose and putting the money in, any suggestions?

Thanks.

 

[stsomewhere]

Some funeral homes allow you to prepay for your funeral.

 

[mom2AidanAndEli]

Some funeral homes allow you to prepay for your funeral.

This exactly. Find out where she would like the services to be and talk to them about pre-paying.

 

[writermommy6]

I would do some research before pre paying for a funeral. There have been cases where funeral homes have closed and the money is gone in the wind.

 

[Marionnette]

Invest conservatively. Stay away from the stock market and bond funds. Look at secure savings such as money market accounts and CDs. Yes, they pay a very low interest rate, but the money is safe. At her age and with no retirement savings, that little amount of money is what she is going to need to rely on to pay her bills. She doesn't have years and years ahead of her to be able to ride out any huge swings in the stock market. If she were younger, it would be a different story.

 

[lost*in*cyberspace]

Is this $50,000 and eventually social security her only income? That is really, really scary. I would be more concerned about how she is going to be able to support herself than paying for burial expenses. I agree, that she should investigate a pre-paid plan. Look into the Neptune society.

I don't see how investing this money is an option if she has no income. You certainly can't live off investment income for such a small amount of money.

 

[crisi]

Don't do a pre-paid funeral - in addition to the risk the funeral home going under, things happen like "this casket your mother picked out is not longer made, we suggest this one which is very similar to her wishes (and will cost you an extra $3k). My grandmother's "prepaid" funeral cost her estate $15k (oh, no...flowers weren't included in the pre-pay). After the $15k she had already paid.

Instead focus on her wishes - and don't focus on things like caskets - what are the songs she wants played. Does she want a visitation. Make sure you know whether its cremation or burial. We did my brother in law's funeral for $5k (cremation) - and could have gotten by a lot cheaper had my mother in law not had sucker written on her forehead in her grief.

As to the money, have her set it aside somewhere safe. Have her live as much as she can off her social security plus - at 60 assuming she is in decent health - a retirement job - and use that money to supplement.

 

[Pea-n-Me]

Sorry, I know you only asked about funeral planning, but is it possible for your mother to stay in her home and make it work that way? Maybe rent out rooms? Ride out the housing crunch? She has to live somewhere, right? Sometimes it's hard even to get into a low-cost senior apt if there is that much money in the bank, at least where I live. Bank statements have to be shown and it is fraudulent to lie about it.

Would it ever be possible for you to buy the house and make her an in law apt? Or you buy a house with an in law apt? Just thinking outside the box. (We did an inlaw apt 20 yrs ago and it's worked out well.)

I don't know that I'd be worried too much about funeral costs right now - unless she's terminally ill. (I sure hope not.) There are places that provide a very inexpensive cremation. A friend of mine took his aunt himself in a basic pine box to the crematory. IIR it was under $2K - which was a stretch for him.

Forgive me if I read too much into it. It would be helpful to know more details, like is she still working and where she plans to live, etc.

I agree to proceed with caution about pre-paying for her funeral, for a variety of reasons here. If you're trying to spend down, though, it might make sense. In some ways it's more confusing, but talking to an estate planning attorney and financial planner would be sensible. You don't want to do things based on assumption and then find out it was a big mistake.

 

[Pea-n-Me]

Is this $50,000 and eventually social security her only income? That is really, really scary.

It is scary, but taking the judgemental piece out of it, there are many, many people in this same situation in our society and it's probably helpful to talk about it, since many simply suffer in silence, especially on a board like this.

There are many reasons something like this could happen. There could have been (and not saying this is the case with OP's mom, necessarily) mental illness, health crises, job loss, business closing, death, divorce, etc. - any number of life events that caused a person to not develop, or lose, a retirement plan (or other financial planning). And yes, sometimes it's just poor planning.

Moving forward, let's see how to deal with it.

 

[APiratesLifeForMe2]

Just throwing out another idea: What about a final expense policy or a limited pay life policy? The final expense is basically just a small policy for funeral expenses so the premiums are lower. (down side is this becomes a new monthly or yearly bill depending on how you pay) The limited pay policy typically means you pay premiums for 10 years and once the 10 years is up the policy remains in force until you cancel or the insured person dies. (down side is you still have a monthly/yearly bill but only for the next 10 years) Depending on the premiums, it may make more sense just simply to set aside money or do the pre-paid funeral plan.

If she wants to be buried, you could go ahead and look into purchasing the plot and then leave the funeral expenses for later since as others mentioned, things can change and what your prepaid may not be available any longer.

 

[tvguy]

Is this $50,000 and eventually social security her only income? That is really, really scary. I would be more concerned about how she is going to be able to support herself than paying for burial expenses. I agree, that she should investigate a pre-paid plan. Look into the Neptune society.

I don't see how investing this money is an option if she has no income. You certainly can't live off investment income for such a small amount of money.

She needs to sit down with a financial advisor. There is far too little information for any of us to give any reliable advice. I will say, having spend a year managing my mom's finances, that there are cases where social security can cover a persons expenses. In my mom's case, going back over her financial records, her monthly expenses never exceeded 80% of her social security check in 27 years of retirement. But she had the comfort of a pension and a 401k, but that money was all her cruise and travel the world money.

 

[lost*in*cyberspace]

It is scary, but taking the judgemental [sic] piece out of it, there are many, many people in this same situation in our society and it's probably helpful to talk about it, since many simply suffer in silence, especially on a board like this.

There are many reasons something like this could happen. There could have been (and not saying this is the case with OP's mom, necessarily) mental illness, health crises, job loss, business closing, death, divorce, etc. - any number of life events that caused a person to not develop, or lose, a retirement plan (or other financial planning). And yes, sometimes it's just poor planning.

Moving forward, let's see how to deal with it.

I was not being judgmental and it's not my business to give the OP financial advice. She was simply asking about paying for a funeral.

 

[elaine amj]

She needs to sit down with a financial advisor. There is far too little information for any of us to give any reliable advice. I will say, having spend a year managing my mom's finances, that there are cases where social security can cover a persons expenses. In my mom's case, going back over her financial records, her monthly expenses never exceeded 80% of her social security check in 27 years of retirement. But she had the comfort of a pension and a 401k, but that money was all her cruise and travel the world money.

Great planning on your mom's part! This is what I'm hoping for my own retirement. As long as I can resist the lure of lifestyle inflation

 

[Pea-n-Me]

She needs to sit down with a financial advisor. There is far too little information for any of us to give any reliable advice. I will say, having spend a year managing my mom's finances, that there are cases where social security can cover a persons expenses. In my mom's case, going back over her financial records, her monthly expenses never exceeded 80% of her social security check in 27 years of retirement. But she had the comfort of a pension and a 401k, but that money was all her cruise and travel the world money.

What were her housing expenses like?

 

[Pea-n-Me]

I was not being judgmental and it's not my business to give the OP financial advice. She was simply asking about paying for a funeral.

I was speaking generally.

 

[yoopermom]

Would it be possible for someone in the family to buy her out in a reverse mortgage type situation, where she could stay in the home for awhile, at least? That's what my DSIL is doing for my in-laws, she pays them every month towards the purchase of their home, so that they have enough to live off of (both only have s.s.), and yet they get to stay in their home, at least until they are physically not able to...

And I would *never* prepay for a funeral after seeing what happened with my grandmother's funeral last year, they really tried to nickel and dime us to death, and tried to pull that "oh, she outlived her prepayment policy so now you owe us X more" crap. Ridiculous....

Terri

 

[eeyorethegreat]

Some funeral homes allow you to prepay for your funeral.

This would be an easy way for her to pre arrange what she would want and it takes the stress off the family to have to make the preparations.

 

[scrapquitler]

My mother is in her 60s and is selling her home. She will have some money from the sale, but probably only about 50k.

She has no life insurance. No pension. No 401k.

She wants a portion of the money to be set aside for funeral expenses. Other than just creating a bank account for that purpose and putting the money in, any suggestions?

Thanks.

Consider purchasing a smallish (15-20K) term life policy to cover the funeral expenses.

 

[tvguy]

What were her housing expenses like?

Gardener $90 a month.
Homeowners Insurance $100 a month.
Flood insurance $30 a month.
Electric and gas $50 a month (no water bill, she had her own well).
Property taxes $50 a month.
Satellite TV $35 a month.

House had been paid for for 53 years when she passed away, so no house payment. Also explains the low post Prop 13 property taxes in California.

 

[tvguy]

Great planning on your mom's part! This is what I'm hoping for my own retirement. As long as I can resist the lure of lifestyle inflation

That is exactly what everyone said when I was settling her estate. She bought a life insurance policy in 1946, that had a cash value of $10,000 when she rolled it into an annuity in 1976. That annuity paid her over $100,000 from 1985 until 2013.