When I woke up last Thursday, I thought my mother was flat broke. I went to bed with the shocking realization that she’s a millionaire.

Long-time readers will recall that my mother has struggled with her health for a number of years. She’d been living on her own, receiving ongoing treatment for schizophrenia, since my father died in 1995. Things gradually got worse until in 2010 we three sons had check her into a psychiatric ward for a couple of weeks so she could receive intensive one-on-one care. She seemed fine after that, but a few months later she experienced a crisis. She drove her car through the back of her garage.

Mom's garage

We took Mom to the hospital, but the doctors couldn’t figure out what was wrong with her. When she was discharged, we placed her into a “memory care unit” at a local assisted living place (which I call Happy Acres).

“I’m not sure how we’re going to pay for all of this,” my youngest brother (Tony) said at the time. “Mom only has $20,000 in the bank.”

“We’ll figure it out,” my middle brother (Jeff) said. And we did.

Managing Mom’s Money

Jeff and I gained power of attorney, which has allowed us to manage mom’s accounts and to make decisions for her well-being. Although it hobbled the business, we structured it so that the family box factory channeled some of its profits directly to her care. (Since she owns 60% of the company, this seems perfectly reasonable.)

For the past six-and-a-half years, Mom has enjoyed a pleasant routine at Happy Acres. After a short stay in the memory care unit, she moved into an apartment of her own. I took her to the Humane Society to choose a cat. She loves Bonnie and Bonnie loves her. Mom has a group of friends that she eats lunch with every day. Mom is quiet. She doesn’t say much. But she likes it when we drop by to see her. (To be perfectly honest, my middle brother sees and cares for her more than me and my youngest brother.)

At the end of 2017, Jeff sent me an email. “Mom got a letter from Social Security. She has to start taking payments when she turns 70 in April. I have no idea how to deal with this. Can you handle it?” Can I handle something related to personal finance? You bet!

Last week, I drove down to the box factory to take a look at the paperwork. I opened the envelope containing Mom’s statement of benefits from the Social Security Administration. “It says here that she should get about $2161 per month,” I said.

“Wow!” Jeff said. “That much?” I’m not sure he’s ever looked at his own statement of Social Security benefits before. (Later today, I’ll share how you can check your current statement online.)

“Yes, that much,” I said. “And she’ll probably need to start taking required minimum distributions from her IRA.”

“What are those?” Jeff asked.

“Once you reach a certain age — 70-1/2, I think — you have to start pulling money from your retirement accounts. Here, let’s look it up.” We pulled out her most recent statement from Vanguard.

Mom is a Millionaire!

Our research revealed that mom has $243,400.80 in a SEP-IRA (a self-employed IRA). Running the numbers through the Vanguard website revealed she needs to withdraw a minimum of $8883 per year — or about $740 per month.

Required Minimum Distributions

“It looks like she’ll be receiving roughly $2900 per month in benefits,” I said. “Not bad. That’ll help defray some of her costs. It might actually let us increase her standard of living, too.”

Then something occurred to me.

“Jeff, does the box factory own this land or does Mom own this land?” I asked.

“Mom does,” Jeff said. “Why?”

“Let me look it up on Zillow.” I pulled up the current estimate of the land value for the box factory. Zillow believes those two acres are worth $349,000. Then, for kicks, I pulled up the value of Mom’s house. (She owns a small home on two acres, the home where my father grew up in the 1940s and 1950s.) Zillow estimated the value of that property at $414,225.

“Jeff,” I said. “You’re not going to believe this. Mom isn’t broke. Mom is a millionaire.”

“WHAT?!?” Jeff said.

“I’m serious. When you combine the value of the two properties with the value of her retirement account, she has a net worth of $1,006,625. She’s a millionaire. Plus, she receives rent from the tenants in her house and rent from the box factory. Meanwhile, because she owns 60% of the business, she’s getting a chunk of the profits every month!”

We were shocked. Mom is a millionaire! For years, we’ve believed that she’s broke. Her bank account barely has enough to support her monthly expenses. But all this time, she’s been sitting on a pile of wealth.

Looking to the Future

The sad part, of course, is that Mom isn’t able to enjoy that wealth. She’s not in any condition to travel the world, to enjoy luxury accommodations, to buy fancy clothes. She’s nearly seventy years old and suffering from both physical and mental ailments.

Yes, we can employ that net worth to make sure she receives the best care possible, but she’s not going to be able to have fun the way a seventy-year-old millionaire should have fun.

Mom’s situation also demonstrates why some people do not include home equity when calculating net worth. They understand that money is a portion of their wealth, but it’s also illiquid. It’s wealth that cannot be accessed quickly or easily. So, some people leave it out of their net worth calculations. (My argument is that net worth has a precise definition. I understand the reasons for wanting to leave home equity out of your considerations, but the number you’re calculating is then not net worth by definition.)

In the short term, Jeff and I plan to get Mom’s Social Security benefits and retirement distributions flowing to her bank account. After we see what that cash flow is like for a few months (or a year), we can make more informed decisions about her future. Long term, we’re not sure what should happen. We know for certain that we’ll sit down and have a chat with her to see if there’s anything we can use this wealth for to make her life better.

Mom is a millionaire, after all. She should enjoy her wealth!

Mom and Bonnie

17 Replies to “My mom is a millionaire!”

  1. Wise Money Tips says:

    Absolutely she should enjoy her wealth. At the very least she’ll be able to get the necessary comforts and care to help her deal with her ailments.

    Proper recordkeeping and estate planning are very important in making it easier for children to take care of their parents later in life.

  2. Dave @ Married with Money says:

    I’m sure that was a nice realization with everything going on. With family health on the line the last thing anyone wants to have to worry about is money. Sounds like she’ll have some cash coming in to help and if selling some of the real estate is an option too that could help, but like you said maybe wait a few months or a year and see how it all shakes out.

    Good luck!

  3. Monica says:

    Great story – so nice to hear that your mom will be comfortable – but surely you, as a personal finance expert, (and because of common sense!) that the land/house had value and that she qualifed for social security etc?

    • J.D. Roth says:

      Yes, naturally I was aware that Mom’s Social Security payments would start soon. And of course I knew that the land had value. But I had never bothered to think about the implications of all this. Back in 2010 and 2011 when we were figuring out how to fund Mom’s life at Happy Acres, the property values were lower. It never occurred to us to access the equity. Then, like anyone else, life got in the way. It wasn’t until last week that I actually started to think things through. Yet another example — one of millions! — of how I continue to make financial mistakes even after twelve years of reading and writing about this stuff.

  4. Joe says:

    Good job taking care of your mom. It’s tough when parents get older.
    My mom will be 70 this year and she is having some issue too. She has a little dementia and she can’t live by herself anymore. It’s tough to see the gradual mental function decline. She taught math in college, but now she can’t do simple arithmetic and needs help arranging her pills.
    She is living with us full time now. Your mom is in a great position because she has some assets. My mom has nothing and she depends on us kids for support.
    Anyway, my lesson from all this is you can’t wait until you’re 65 to retire. You never know if you’ll be able to do things you put off. Travel and other hobbies could be out of reach with various health issues.

    • Sheila says:

      I’m sorry about your Mom–that’s tough to watch.

      As someone relatively close to 70, I agree with your last paragraph, which is why my DH (even closer to 70) and I are doing as much as travel and fun stuff as possible. We did wait until regular retirement age, though, but we’re still in good shape (hopefully our kids agree!).

  5. Tina in NJ says:

    I had a similar revelation a couple of weeks ago (before the stock market went into convulsions). Mom owns her house and her investments have done nicely in the bull market. Not counting Social Security and two pensions, her net worth is about a million bucks. At 85, Mom has trouble seeing and hearing, but she still likes to travel, lives alone (with her cat), and is active in her church.

  6. Sequentialkady says:

    How fortunate that your mother has a good and loving family to take care of her — that is the greatest wealth.

    I suggest that you sit down and have a talk with mom about what she would enjoy doing with her money. Yes, upgrade her to plusher quarters. Are “get-away weekends” possible with her health issues? Perhaps she’d enjoy a few of those? Is there a charity she’d like to support?

    My husband and I are currently in the process of evaluating plans for my dad (76) should my stepmother, Marcie (78) pre-decease him. It’s never pleasant to have to think about these things, but better to have a plan than have to scramble.

  7. S.G. says:

    I ran the numbers for my mom a year or so ago and found the same thing. Her assets are mostly illiquid (like yours). But knowing it’s there is good.

    My mom has what I’ve heard described as “bag lady syndrome”. She has an unfounded fear of running out of money, so I have to remind her she has plenty.

  8. Frogdancer says:

    Good on her!
    There would have been many little sacrifices as she and your Dad were building up this portfolio. I want to do the same thing for my kids – to be in a position where I never have to come to them for money.

  9. JC Webber III says:

    It sounds like between SS and RMD and rentals your mom is going to do alright. So I would not recommend liquidating the real estate. If you sell it you loose the rent. If she does not need the extra cash, hang on to it.

  10. stellamarina says:

    I have often wondered how things turned out for your mother after you wrote about her problems a long time ago. Thanks for the update and I am glad that funds and support are there for her. I remember telling my kids after reading the old post about her problems, that they should be keeping a watch on my check book as I get older……problems show up there as an early warning as in your mother’s case.

  11. Debbie says:

    Glad things financially turned out so well for your Mom. More money always means better quality care. She is lucky to have three sons looking out for her best interest. Love seeing her with Bonnie.

  12. Ben says:

    Hi JD,

    This was a great article. Thanks for taking the time to share the journey into your Mom’s finances. It’s great to hear that finances are one thing she (and your family) won’t have to stress about too much. Selfishly, I would LOVE if you spent more time on topics regarding tackling finances of a parent.

    My step-father passed away last year. We were fortunate that we had a chance to sit with him before he passed away to get the details on all his finances (and computer passwords – this was incredibly helpful). Growing up he kept this mostly to himself and took care of my Mom’s finances as well. Now that he’s gone, I’ve jumped into the driver’s seat to understand their finances. I’ve still not really come up with a plan for my Mom yet (she’s wonderful but oblivious to finances).

    I feel confident in my own finances, but planning for (and taking action on) the finances of my Mom (age 66) is a new learning challenge. Also, I’d be very keen to do an “Ask The Readers” post. If you’re interested in something like that, reach out to me and I’ll share more details about her scenario.

    Thanks for all your work over the years!

  13. Sheela says:

    Why did you out your mother as a millionaire? And, with a picture no less, and, a description of her living quarters? There are enough people out there – kin, friend & foe – who could take advantage of your mother’s situation. Please have more respect in making your financial point next time.

    • J.D. Roth says:

      If my mother’s net worth were liquid, Sheela, I might be more worried. (Although to be honest, I probably wouldn’t.) But her net worth is NOT liquid. Plus she doesn’t have the ability to sabotage herself.

  14. Carol says:

    Why did you not include the value of the equity your mom has in the box factory in calculating her net worth? Obviously the business value is dependent on many factors, but if it is generating sufficient monthly cash flow to fund her living expenses in a memory care unit, it sounds like that ownership interest would be valuable. And yes, the business is illiquid but as you point out, so is the real estate.

    Just a thought – she may be closer to a multi-millionaire 😉

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