My parents visited us during the week of Christmas. We always look forward to them coming for the holiday and it's a great time to be together. It's too bad that we live far apart and can only do this a few times each year. But this year the shortness of the trip wasn't as bad since we knew we would be going on a two-week cruise with them in January.
At one point the conversation turned to retirement. We would LOVE to have my parents retire and move closer to us, but it just doesn't appear to be in the cards. They love rural Iowa (where I grew up) and are "set in their ways."
That said, my dad has a physically demanding job. He owns his own trucking business and hauls/spreads rock, lime (for farmers), sand and the like. He's over 70 now and it's a rough job for someone who's 30.
But it's a double edge sword. The physical activity that's increasingly difficult for him is the only form of exercise he gets. He also doesn't have many interests -- work, TV, and family are about it -- so I don't know what he'd ever do if he retired. But this post isn't about the non-financial aspects of retirement, it's about the financial side. Specifically it's about step #1 in the retirement planning process -- something my dad hasn't yet addressed.
I am at an interesting point with my dad when it comes to finances. He's very good with pricing, margins, and getting a good deal -- things that make a successful business person. I know these in part, but he's lived them for over 40 years. However when it comes to the principles of wealth building and managing money, I have been living it for 25 years while dad doesn't really know much about personal finance. He hasn't really given it much thought over the past few decades. He simply spends a bit less than he earns and is ok with that. He's got some savings and the assets in his company, but is not sure he has enough to fully retire.
How do I know that? He told me. In conversation he summed up his retirement plan: work forever. I suggested that may not be realistic given his age and the demands of his job.
"Well, I can't afford to retire," he countered. "I don't have enough saved up."
I asked him how he knew this -- if he'd ever run the numbers.
"Let's start at the beginning," I said. "How much do you need to live on each month?"
At this point a blank expression crossed his face. Then he attempted to list his expenses.
"Well, I have taxes, " he started. "Then of course food. Our mortgage will be paid soon. So I guess that's about it."
Really? How can someone know business finance so well and yet not have his personal finances under control? Unfortunately, it's not an uncommon thing. In fact, more often than not, people who are great with a business's money are often sloppy with their personal finances. Oh, the stories I could tell of one colleague after another! But that's for another day.
So dad has no clue what he needs to retire and how close he is to it.
The conversation ended soon thereafter, shortly after I said something like, "Don't you think it's important to know how much you are spending and need to spend each month?" I think my mom came in and offered us some ham, so we had better things to consider.
This conversation isn't over, it's just delayed. It's clear to me that my parents' financial issues (whatever they may be) could become my financial issues. So I want to be sure they are set up for success as soon as possible. It will be an awkward process I'm sure, but we need to make progress.
So it looks like I have a topic for our Easter visit to Iowa. I hope I don't get derailed by the ham again. :)