How to Set Up a Great Financial Plan for Your Parents' Retirement Overseas

Retirement is a daunting task but it doesn’t have to be.

“If you aim for nothing, you will hit it everytime” – Zip Ziglar. Random quote because it sounds cool.

To begin with, there isn’t a right or wrong way to plan for your parents’ retirement; I am merely sharing my approach since I’m super nerdy and like to look at the stats and odds. Since this is Part 2, I suggest that you read Part 1: the Background and hit it with a like since I think it’s an awesome read that breaks out the positives and negatives of retiring in Haiti. Additionally, I also drafted an aux reference guide (checklist) for millennials who are preparing to take action in securing their parents for retirement.

Table of Contents

The Unfortunate Realities of Retirement

If you are like me, the granmoun (old folk) didn’t plan this far into the future. If we had to be honest with student loans, credit card debts, best life status updates for Instagram, work, food, and relationships; we aren’t looking 40 years ahead either.

74% of people are not ready and that’s a PROBLEM. You need to figure out how much income versus how much expenses will the family have to incur for your parents’ retirement plans.

The Big Retirement Talk:

Serge Renaud, the President of the National Alliance for the Advancement of Haitian Professionals (NAAHP) once stated that “the key to leadership is to understand your audience and to learn to reach and communicate to them where they are”.

It’s doubly true when holding this conversation with a parent. This can escalate to a battle royale or even a Partial Shutdown if you come underprepared.

Going into the whole Retirement planning talk, remember you are dealing with:

(Highly Capable and Undervalued) People who struggled their entire life,

(Courageous) People who had to humble themselves so that they can earn a living to support their families,

People who are fiercely proud, and

People who really still see you as their child; as such they still want to protect you (even from themselves and their failings).

The Solution:

Take it slow. Work with them. Never belittle their efforts. Find out who they were, what they love/loved, and even what they’ve lost along the way. Empathize with the struggle and find a way to ensure that their hard work has paid off and will continue to pay off. Importantly, remind them that this is a family thing. It matters to you and it ultimately matters to them.

Things you need to consider:

The median income of single Black women is about $26k. In a recent Student Loan Hero study, women had an average of $45,614 socked away for retirement, whereas men had $90,189.

Women often bear the brunt of the financial hammer, putting family first and themselves last. It’s hard for a mom to say, “No”. She birthed you. It’s time to step up and allow her to move fwd.

My mom is pretty much an outlier in my opinion. Smart as a tack in regards to numbers (accounting) however, I don’t think she really reaches the salary figures that she really could have commanded (ie $120k annually easy). Paired with an insane work ethic and a spendthrift personality, she managed to really pull it through.

The quick stats

She didn’t make much. No more than $28k-$30k annually however, she managed to nab some stocks and savings/investment figures of upwards to $250k-$300k. Additionally, she has a 1/2 stake in a single-family home. Not too shabby. This squarely puts her on par (which makes things easier for me). However, not everyone will be so fortunate. Health issues can present a significant drain on long-term finances. If that’s the case, it is time to really dig deep.

Additionally, my mom and I recently purchased a rental property for supplemental income in retirement. That lady had perfect credit for 30 years straight. *Consistent 1-2 Rentals come with their share of risk, however, the reward speak for themselves.

And finally, she has about 6-8 years to retire (if they force her lol).

With those odds, I figure (human calculator mode) – she will get at least $1.5k for Social Security (SS) benefits, + $1.25k in rental income, + Option X ($350/month dividend income or another $1k in rental income). Grand total = $37,200/annually or $45,000/annually ⇢ not a bad haul.

*Let’s say prices for goods and services inflate by 5%: she will still be looking at $35k or $42.75k. More than she made working. Please note: It’s also very obvious that health issues can complicate these assumptions. It is still OK to dream and think positively.

You are likely asking yourself, “How Sway?” Here’s a cheat sheet:

1. NET worth roundup.

Find out what’s their net worth (All of it). You need to know the assets and the liabilities, especially if their liabilities can become your liabilities. Check out Mint.com or Personal Capital so you can plug and chug away. It takes a bit of work but once you complete it, you will be able to see the full financial picture.

Important Note: Don’t judge how they got there, move FWD to what happens next.

Example layout:

Find out how much Social Security Benefits that they have by simply creating an account with them, at mySSA.gov. This site will break out their anticipated yield at the retirement age of 62 (early), at the full retirement age of 67, or at the max of 70. Bonus: you can also do yours. Although, I’m not telling you to bank on this (social security) for forever.

Example (breakdown to the dollar):

3. Retirement Calculator

Check out Nerdwallet Retirement Calculator; just for kicks. Here’s a financial planning video for people in their 60s. Short and sweet.

4. House for Sale?

To Sale or Not to Sale. The home or lack thereof is a huge factor in retirement and family planning. You can 1. keep the home long term (especially if it’s paid off), 2. reverse mortgage that sucker (which I never recommend), 3. Rent out space (which is nice if you have a basement), 4. Rent it out (outright), 5. Sale it for the profit and downgrade to a smaller space, or 6. Sale and CoSpace (meaning sale the old home for profit, renovate the basement or ground space as an inlaw suite). The benefits of the latter are endless since grandma/grandpa can help babysit to save on rising daycare expenses.

5. So what’s next?

For workaholics like many Haitians are; you really have to ask your parents what they want to do. Work part-time, not work at all, starting a small business and/or really going for their dreams. Some parents will likely want to travel the world, or even live overseas. You will need to think about the schedule and play around with all the what-if scenarios. And remember, when life loses purpose; the flame extinguishes quicker. Take mom and/or dad to the task and find their spark.

*wow it’s the same main black guy (top pic) with a different family. mind blown. Savage at 100%

6. What about life insurance?

Slow your roll buddy. Life insurance is like the end game. People are living longer. So expect the peeps to be around for another 20-30.

7. The round-up.

Once you decided and discussed all the key components. I suggest going with the basics; Social security, Pension (if they got it), Investments (if 401k, Stocks, IRA, HSA), and/or *Home considerations (which can include rentals).

There are ways to improve your wealth in retirement through dividend investing. The goal is to survive interest rate drops in recessionary periods.

Example #1: Jessica Augustin St. Louis (avg. Single mom) at 67 with no significant health issues with a penchant for chants d’esperance. Jessica decides to live in Haiti (house paid for). SS at $1,600/month ($19,200 annually). No pension. *Investment Savings of $11,000/annually ($275,000 at 4% withdrawal rate includes $100k from home sale) – you can use this calculator. For this example, I’m forgoing any real tax liability (let’s say it’s just an expense during the year). Grand total: $29,200 > her cost of living in Haiti ($16,000).

Example #2: Samantha Jean-Francois (avg. Single mom) at 67 with significant health issues which raise her expenses. SS at $1,700/month ($20,400 annually). No pension. *Investment Savings of $4,000/annually ($100,000 at 4% withdrawal rate). Grand total: $24,400. The significant health issues might be a detriment in regards to living overseas. As stated in part 1, you have to consider hospitals, specialists, insurance, roads, and proximity.

Example #3: Mr. and Mrs. Frantz with mild health issues which raise expenses, love to travel. SS at $2,300/month ($27,600 annually). 1/2 Pension of $15,000 annually. *Investment Savings of $16,000/annually ($400,000 at 4% withdrawal rate). Minus $15,000 Travel annually. Grand total: $43,600. Still living like kings overseas.

Wrap Up:

Wow, that was a bunch… I’ll see I can make an easy handout and calculation page and post it here sometime this week. It’s about that time to have the Talk.

Please feel free to ask questions, Suggest how to improve these articles, or even the hard number for the annual cost of living in Haiti. Sidenote, check out this retirement living website (don’t worry I have zero sponsorship just sharing info). Rhum Barbancourt, one of the world premier rums and Haiti’s luxury brand (IMO) started to sponsor signature events such as “Soirée Tapas and Cocktails“. There is even a Jazz scene (Festivals anyone) as well as Restaurant weeks (a la Le Burger Week). It’s going to be a booming post-retirement market.