My parents ignored investing their whole lives and have less than $250k for retirement – what’s their best financial move now?

The Confucian Retirement Safety net

Mao Zedong’s “One Child Policy” wreaked havoc on China’s population, and is responsible for the abnormal male to female ratio. Although presently at 104.3 males to females, it was as badly skewed as 118 males to females in 2008 and 112 males to females in 2021. While many in the West decry the preference for male babies and the higher level of abortions of female ones on “patriarchy”, there is a cultural reason that Mao’s policy sought to undermine in China.

For over two thousand years, Confucian principles have been an inextricable part of Chinese culture and tradition. Filial piety, which stresses the importance of the family and the duties of the next generation to respect, honor, and revere their previous ones, was an obstacle to the Marxist and Maoist doctrine of Communist prerequisite of unwavering loyalty and fealty to the State. 

For centuries, China’s retirement safety net was one’s children. Since daughters would marry to become part of their husbands’ families, sons were expected to not only carry on the family name, but to care for their elderly parents until their demise. Mao’s “One Child Policy” edict, which deprived families of food, money, and other necessities if caught in violation, brutally stuck tens of millions of families between a rock and a hard place: have a son, or face a miserable, lonely existence in one’s golden years. 

Sadly, there are a sizable number of baby boomer aged Americans heading into retirement who, ironically, may wind up forcing their children into a traditional Chinese retirement safety net. Much of it is due to naivete, blissful financial ignorance, lack of interest in current events, and a reliance on obsolete lessons from the preceding “Greatest Generation” about the capabilities of Social Security that sadly fell to the wayside, due to profligate Congressional overspending. 

When Long Term Fiscal Inaction Chickens Come Home To Roost

A 30-ish Reddit poster who was possibly facing a Chinese retirement safety net scenario sought tips for ideas pursuant to visiting a financial advisor.  His parents refused to invest personally for their entire lives, likely out of fear over market risks, and were facing a looming retirement with relatively paltry savings. The details are as follows:

• The poster’s father is retiring in a few weeks.
• His mother will be retiring several months afterwards in the same year.
• While growing up, the poster implored his parents to invest their money, only to have his pleas fall on deaf ears, which the poster suspects was due to fear over financial risk.
• The parents have a mortgage with $170,000 remaining.
• The poster and his brother have agreed to purchase the house in two years for $350.000
• The father has $210,000 from his job retirement account, since he lost almost that same amount in 2008, during the subprime mortgage banking meltdown (panic selling).
• Based on an uncle’s advice, the father plans to take the $210,000 out and is considering  low risk Guaranteed Investment Certificates (GIC) or some other investment through a bank.
• Any subsequent attempts to discuss the matter with his parents ended with the father storming out, refusing to listen to any advice from the poster. This could be from a combination of shame, frustration, indignation, and other emotions. 

Pros and Cons of Advising Parents On Fiscal Matters

Among the respondents, the consensus indicates that the cons of attempting to advise a parent in this scenario outweighed the pros. Assuming that the father is accustomed to handling things in his own way and that he already had a game plan, forcing the issue contained more downsides than upsides.

The likelihood that the parents’ GIC or some kind of annuity to supplement Social Security benefits would be meagre, but liveable seemed to be the prevailing attitude. Perhaps Confucius’ advice towards parents which seems to transcend race and culture and cuts to the heart of human nature, applies to this scenario as well:

• Remonstrance (gentle corrections) should be conducted reverently and gently without any indication of disrespect.
• Respect for parents, even during a disagreement, is a fundamental principle of Confucius’ Analects.
• Care should be taken for the desire to be helpful not be construed as disobedience.
• In this way, filial piety can be maintained.

This article is written purely for informative reasons. As indicated earlier, a financial advisor was going to be consulted, and should be for any more in-depth questions or counsel. 

The post My parents ignored investing their whole lives and have less than $250k for retirement – what’s their best financial move now? appeared first on 24/7 Wall St..