Complicated household finances
May 20, 2016 10:36 PM   Subscribe

What experts do my fiance and I need to help us figure out our complicated multinational financial situation?

I am American. Fiance is from a more socialistic country with full healthcare, affordable education, decent state pension system, etc. We are going to live in America and this is non-negotiable. We are in our late 30s. We have not yet started the immigration process.
Fiance has no retirement savings and they are not able to receive their home country pension if not living in country. Fiance is also expected to practically and financially (supplementing state pension) care for their aging parents and will have to allocate a portion of their income for a carer's salary (early on will be basic housekeeper, but as time goes on healthcare too) and parents' household expenses (back of the envelope calculations at 1-2k US a month). Caring for parents is non-negotiable. Fiance is well-educated but in a sector that does not pay that well.
I am divorced with children and have a lot of personal debt from the divorce as well as educational debt. I am well-educated but in a sector that does not pay well. I put as much as possible toward my 401k but I am low for someone of my age, in part because I have to pay down the debt (which I actively and aggressively do).

With less than 30 working years left, how can we possibly put enough money away for retirement when fiance has no retirement savings and we have all of these other financial obligations? I also fear that we won't be able to afford to have children together or buy a home. I realize that vacations and other luxuries are out of the question for us, although fiance will want to visit their parents every few years. Fiance and I have also discussed moving fiance's parents to the United States, if it seemed that it would be more affordable and if we have children they could provide childcare, but we don't know how immigrant retired people could access healthcare and social services and how much that would cost.

We would like to know if there are financial specialists that can advise us on our best savings strategies and if so, what sort of title should we be looking for. We know that we need to see an immigration attorney soon. Any other recommendations are welcome too.
posted by anonymous to Work & Money (12 answers total) 1 user marked this as a favorite
This is a very simple question, but are you sure they can't withdraw pension from their home country? In many EU countries, they won't pay the pension into a foreign country account but they will pay the pension into a bank account opened in the country in which you built up the pension. Most EU countries will allow you to take at least part of your built up pension.

I will tell you from sorry experience in a similar situation to get a prenup drawn up and look into wills right away. This is not because you will plan to divorce or die, this is because it can happen and then often two different countries look at assets much differently. For instance, in most countries pensions are excluded from communal property. They can also look at assets belonging to children much differently. However, what two countries view as a legal pension can vary wildly. Doing a prenup as part of your financial planning will also help you clarify your assets and priorities.
posted by frumiousb at 12:11 AM on May 21, 2016 [1 favorite]

moving parents means they won't get state health care.
posted by andrewcooke at 4:51 AM on May 21, 2016

Basically, if you had to fund your fiance's parents right now (since it's non-negotiable), how would find the money to do that? Do that, then start saving that money right now.

I don't think this is actually that *complicated*, just really, really difficult. You need, between the two of you, to have enough cash to pay off your debts, fund your own retirements, and pay for your fiance's immigration. You also know that you will happen to have an extra $12-24k per year expenses for, say, 20 years (even if it makes sense to bring the parents to the US, I doubt you'll actually come out much ahead financially; they will lose their pensions and healthcare, for one).

The way to do it is basically to increase your income and/reduce your expenses, and use the extra money to (in rough order of importance):

1) pay off high-interest debt
2) fund your tax-advantaged accounts like 401k and IRA
3) pay off lower interest debt including mortgage if any
4) save in non tax-advantaged account

A financial planner could give you this advice, and would tell you how to invest your money, but can't make the money exist in the first place.

Meeting your goals is possible, but it's going to take lifestyle changes, job changes, and possibly serious sacrifice from both of you. It's impossible to say how *much* sacrifice without the numbers.

Also, is your debt situation bad enough that it's worth looking into bankruptcy?
posted by mskyle at 5:04 AM on May 21, 2016 [5 favorites]

Would it be feasible to retire to your fiance's country or even move there sooner? Are you in bankruptcy territory because of your divorce?
posted by BibiRose at 5:05 AM on May 21, 2016

Your need an financial planner.

The easiest way to fix this is to make more money. Can you switch to a career path that pays more? It may not be your dream but you have financial obligations. At some point, eating Ramen and having uncomfortable shoes drives you to work in sector x (for some people, including me. I like fresh veggies, comfy shoes and financial security more than low stress at work).
posted by Kalmya at 5:13 AM on May 21, 2016 [2 favorites]

It sounds like you have a set of obligations (fiance's parents, your debt, and retirement needs, not to mention basic living expenses) that exceed your income. You can tighten things to a point, but beyond that it won't be possible without finding a way to raise your income or change the parameters of your question. (One question, without challenging the non-negotiable parts of your question, is what you should do if it turns out that the math works to stay in Europe but not for a return to the US? Are there employment options that would allow you to shift back and forth to cover family needs without being exclusively based in one country?)

Definitely for your fiance, and perhaps for you if you have lived outside the US for a long time, it will be a shock how much gets put on the individual here that in a European social democracy is state-funded. Healthcare tends to be a major expense, even after the ACA; rents are not controlled and public housing basically doesn't exist; public transport usually isn't great so most people own cars; and so on. Those things are going to change your budget numbers and will make it harder to hit your goals without a high enough income.

How much you need for retirement is another question entirely, and one that I think most people don't really have figured out beyond hoping that a combination of their savings and Social Security might carry them through. House buying versus renting is a purely local decision, and the rent/buy decision will come out very differently based on your future location.

Kids, I'd say have them if you want them and figure out the finances as you go along. There are a lot of scary statistics about the expenses of kids, but the people I know with them are not going to the poorhouse because of having a couple of kids.
posted by Dip Flash at 6:49 AM on May 21, 2016

You are a parent so you need to put your children's financial needs before your fiancé's wants (unless you had children as a teen and they are now adults), I thought it odd that you didn't mention them or things like funding their education.

I would actually suggest both you and your fiancé use the public library to do a lot of the research yourselves, there really isn't a magic answer you can pay a financial planner to find how to get blood from a stone.

There is, however, some psychologists that focus on working out our personal relationship with money and help us make better choices. The fact that several times you are rigid and say things are "non-negotiable" that aren't in your, or your children's, financial interest makes me wonder if there is some emotion guiding your choices instead of logic or the cold hard reality that there isn't enough money to do what you want. A good psychologist would be able to help you realign to more realist priorities that work for you, your children, your fiancé, and their parents (in that order of importance).

I also n'th that cutting back on expenses only takes you so far, you need to increase your income and your fiancé needs to increase their income to accommodate their increased needs ($12,000-$24,000+/year to their parents, $2,000/year for travel back home, + middle class living expenses, and saving for retirement would put their needed annual income over $100,000 in my area). If they aren't able to increase their income they need to re-prioritise their spending so that relying on you to fund their choices is not an option. With a blended family you can work together collaboratively on finances but you also have to acknowledge you have different individual financial priorities that you are both independently responsible for.

I'm sorry this is so hard when all you want to do is be with the person you love, but getting the financial logistics worked out now will hopefully help stop the stress of money from breaking your relationship later.
posted by saucysault at 7:21 AM on May 21, 2016 [3 favorites]

Get a notebook or Word document and write down all your options.

Option A: fiancee moves to the US and retires there. What are the financial repercussions of this?
Option B: fiancee moves to the US but both of you retire in her country (assuming that you can access your pension funds in her country).
Option C: And so on and so forth.

Research some key facts and figures, such as, her income bracket working in a more lucrative field or which parts of the country could afford you a lower cost of living so that you can save more. One possibility: the both of you retire in a third country with a cheaper standard of living.
posted by kinoeye at 7:57 AM on May 21, 2016

I am assuming that living in the US is not negotiable because of your existing children?

Okay. So, step 1 is to pay off your debt asap because you can't really make any further plans with that hanging over your head. You need to both reduce your current expenses and increase your income to do this. When I was in this position, I did not have a car, lived in a cheap basement apartment and did some babysitting on the side. I managed to save $10,000 in a retirement account and pay off 15k in student loans while earning less than $30,000 a year. You have to look at some short-term sacrifice here. You have to be prepared to work hard.

When that stabilizes, then you make yourself a budget. Put 10% right off the bat into your and her retirement accounts. Pay yourself first, or your children will grow up paying for you the same way you are paying for your fiancé's parents. Then take out for rent, food, phone service and other fixed costs. Whatever is left over is how much you have for vacation, extras and supporting your fiancé's parents. You might not be able to find their lifestyle as it is now. That is a very high ask, to expect you to support a whole extra household like that. If what you have left for them is less than you would like, you need to earn more money. I don't really see how a financial planner could offer you a solution other than that.
posted by JoannaC at 8:22 AM on May 21, 2016 [3 favorites]

I think a good resource for you would be other immigrants from your fiancé's home country, who may be dealing with similar issues. If there are any tricks, workarounds, or supports for the pension/immigration/care-taking issues you are facing, that is who will know them.

I guess I wouldn't be counting on a conventional retirement age in your shoes. And aggressively pursuing career opportunities that would both increase income and support the possibility of working as long as your health permits.
posted by Salamandrous at 8:37 AM on May 21, 2016 [3 favorites]

Does the back of the envelope calculation for contribution to your fiancé's parents include the maximum available social services? In the part of Canada where I live, for example, folks who have a need for housework help and personal care can receive some of this kind of assistance through the health care system. (To be clear, this is for people who are physically not able to do housework [as assessed by a health care professional like an occupational therapist], not for people who prefer not to.) But this service isn't super well-known in the community. It may be worth carefully exploring what services the parents will have access to as you plan what kind of contribution your family will need to make.
posted by snorkmaiden at 10:38 AM on May 21, 2016

It sounds like you're going to need to increase your family's earnings. It sounds like you don't have any assets, but if you do it might be worth looking into housing that pays for itself, like buying a duplex and living in the modest part and renting the other unit (if that makes sense for your area) or looking for a superintendent couple position. Also, one of you might want to change careers or at the very least see if you can get a position in an organization that has old-school actual pensions. Or you may need to find a way to work more than 2 jobs between the two of you.

I sort of feel like you're asking for a financial expert when it seems clear to me one issue is the expectation that your future in laws will be supported at a level that exceeds their means. I understand this is highly cultural but I think my message is that cultural expectations don't live in a vacuum...if the expectation has evolved in a country where your fiancé wouldn't need to save as aggressively for retirement due to the same expectations, it's going to be hard to transplant that to an American context. I hope you are able to come to a middle ground.
posted by warriorqueen at 11:13 AM on May 21, 2016 [4 favorites]

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