Author Topic: Where to get the best interest rates  (Read 436 times)

partgypsy

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Where to get the best interest rates
« on: October 12, 2017, 09:05:46 AM »
My Mom is (finally) downsizing, and after she pays off debt, should have 230-240K left over. She will use that and her small ssn to live off of. I estimate she will need 2800 a month from that pile. At this time she is planning to rent, and also may be open to idea of buying if she relocates to a lower cost area. What is the best place that she could put her money so it accrues something?  What would you advise her to do with her money to last the longest possible? Ladder of CDs? Ally account at less than 2% interest?
She is conservative but I am also open to hearing other ideas as well.
« Last Edit: October 12, 2017, 09:08:30 AM by partgypsy »

dandarc

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Re: Where to get the best interest rates
« Reply #1 on: October 12, 2017, 09:19:24 AM »
You're talking about a 14% withdrawal rate.  You're looking at this money lasting 6-10 years, max.

How old is she?  Is there more that can be cut?  If she could cut another $1,000 from the monthly budget, she'll be in much better shape.

She might be a good candidate for an annuity - she doesn't really have enough to take enough risk to get good returns, but if she's old enough, and can make some cuts, you might find an immediate annuity that makes her budget work.

frugaliknowit

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Re: Where to get the best interest rates
« Reply #2 on: October 12, 2017, 09:28:39 AM »
Not enough information here to help us. 

Age?

How much is her SS?

You say, "I estimate she will need 2800 a month from that pile".  Which pile are you referring to?  Is there only the pile of 230-240 you refer to, or is there another?

Any debt?

Does she work (outside the home for a salary)?

partgypsy

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Re: Where to get the best interest rates
« Reply #3 on: October 12, 2017, 09:28:45 AM »
Sorry, I didn't see the message before I posted. She is 74 years old. Her ssn is approximately 600/month. The "pile" is 230, 240K. That will be after she sells house for 393 and settles all debts. No other debts. Does not work, and honestly health-wise couldn't work even if she wanted to. Has a car she can get more years out of, still runs well. The apartment will have some utilities included in rent. The rent is 1150 a month, which is her biggest expense.

Yeah, I estimate that she has maybe 7 years before she is out of money. The issue that she is moving to a 2 bed, 2 bath apartment because she insists on living with and financially supporting her alcoholic son, who has recurring costs in cigs, booze, and cable tv, and medical bills (My Dad's spare money flows to that area as well). She could live on much less if she was willing to move in with either me or my lil brother, but she refuses because we won't also take in brother. So any creative ideas are welcome. And yes in case you were wondering brother neither works nor has disability.
« Last Edit: October 12, 2017, 09:32:51 AM by partgypsy »

dandarc

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Re: Where to get the best interest rates
« Reply #4 on: October 12, 2017, 09:33:27 AM »
So her plan is to move herself and her son to the homeless shelter in 5-8 years then?

dandarc

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Re: Where to get the best interest rates
« Reply #5 on: October 12, 2017, 09:45:18 AM »
240,000 can buy a $1500-1600 per month annuity for a 74 year old.  Not inflation adjusted.  So in terms of reliable income, she's got maybe $2200 / month available, and if I'm reading this right, she's spending $3400 / month.
 
That move to a LCOL area might be an imperative - particularly if she insists on continuing to support the son, although the real solution is to remove the leach, as even in a LCOL area, someone bent on spending another persons money gets real expensive.  Also needs to consider applying for welfare benefits / food stamps and so on - in this tight of a situation, a few hundred dollars per month can be a big help.

The other thing is, time is of the essence on getting the budget to balance - every month she's drawing too much will make the austerity that much more difficult to deal with.  At 74, her life expectancy is around 13 years, although you may know more about the health situation that would make you think it might be longer or shorter than that.  If she can adjust lifestyle further today, she can probably make this work more to her liking, but if she waits even 1 year, she may burn through enough of her nest egg that she has no choice but to take you / your brother up on your offer.

partgypsy

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Re: Where to get the best interest rates
« Reply #6 on: October 12, 2017, 09:52:35 AM »
240,000 can buy a $1500-1600 per month annuity for a 74 year old.  Not inflation adjusted.  So in terms of reliable income, she's got maybe $2200 / month available, and if I'm reading this right, she's spending $3400 / month.
 
That move to a LCOL area might be an imperative - particularly if she insists on continuing to support the son, although the real solution is to remove the leach, as even in a LCOL area, someone bent on spending another persons money gets real expensive.  Also needs to consider applying for welfare benefits / food stamps and so on - in this tight of a situation, a few hundred dollars per month can be a big help.

The other thing is, time is of the essence on getting the budget to balance - every month she's drawing too much will make the austerity that much more difficult to deal with.  At 74, her life expectancy is around 13 years, although you may know more about the health situation that would make you think it might be longer or shorter than that.  If she can adjust lifestyle further today, she can probably make this work more to her liking, but if she waits even 1 year, she may burn through enough of her nest egg that she has no choice but to take you / your brother up on your offer.

Thanks for all this information. So it sounds like more focus will be on how to get her spend rate down, both now and long-term, than focus on where to park the money? Honestly, the most likely thing will be, once she spends all her money she will move in with me or sibling, and brother will be on the street. She will have no money and no options, but this is what she is insists on doing. I have no idea how to estimate life span. Both of her parents died in their mid or later 70's, she takes horrible care of her body (no exercise, cigarettes, lives off sweets) but she does have some long-lived members of her family.  For me I just estimated the 3400, based on what I spend. but it could be more, could be less. She is very secretive about money matters, which has made this whole transition difficult.
« Last Edit: October 12, 2017, 09:54:51 AM by partgypsy »

dandarc

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Re: Where to get the best interest rates
« Reply #7 on: October 12, 2017, 10:45:39 AM »
I just looked up the life expectancy on the social security website - your average 74 year old woman in the US is expected to live another 13 years.  Smoking like a chimney, lacking exercise, bad diet would all make the expected life-span lower, but of course that's on average and she could buck all the odds and live a very long time.

So yeah - she'll be OK, given your and your siblings' generosity, but your brother is going to have a big change coming sooner or later.

Honestly, the best thing given all this information is probably to just put the money into a CD ladder or savings account and just let it run out eventually - that will at least get her a few years of the lifestyle she seems to want.  Maybe the dwindling balance will be a good motivator to make some changes as well.

affordablehousing

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Re: Where to get the best interest rates
« Reply #8 on: October 12, 2017, 11:13:01 AM »
is she a mother or a piece of meat? this sounds like a situation where a social worker might be able to help your mother evaluate her best options.

partgypsy

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Re: Where to get the best interest rates
« Reply #9 on: October 17, 2017, 07:28:44 AM »
She screamed at me when I called her local social services when things were particularly bad (he wasn't allowing her to fix things around the house, including a trip hazard). However now that I read that New Yorker article about strangers becoming guardians of senior citizens, I don't think I will call social services again. My little brother is becoming more involved, but honestly she even said she would rather "die" than have anything bad happen to older brother. My elderly father also throws money at the problem, giving him money weekly for his booze and cigarettes, because they want to avoid his blow ups and tantrums. I don't agree at all what they are doing, she can't afford it, but I can't stop her.  The latest thing I found out, is that she is letting him drive her car. His license was revoked due to drunk driving (and he has some level of alcohol in him at all times). So now there is the potential she will lose her car (God forbid anything worse) because of this.
« Last Edit: October 17, 2017, 07:31:44 AM by partgypsy »