Author Topic: Investing Advice For Seniors  (Read 908 times)

njmoney

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Investing Advice For Seniors
« on: February 17, 2021, 11:04:16 AM »
Looking for some advice from the community.  My sister and I are in the process of selling my mother's home.  My mom is 75. She moved out of the house a few months ago and into an assisted living facility due to suffering from dementia for several years now. 

Right now she has about $250K in assets that are in CDs and fixed rate IRAs.  So, extremely conservative, low return investments.  The sale of the house will net her about another $425K after fees.  We're trying to determine where we should put the money from the sale of the house that is going to provide a better return than the CDs and fixed rate IRAs but also have fairly low risk.

After selling the house, her monthly expenses will be between $6K and $7K because assisted living is not inexpensive and costs will continue to rise as her health continues to deteriorate.  Ultimately, we want to try and make sure the money lasts through the rest of her life or as long as possible.

I appreciate any advice!       

cool7hand

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Re: Investing Advice For Seniors
« Reply #1 on: February 17, 2021, 11:10:39 AM »
You might consider Ray Dalio's All Season's (aka All Weather) Portfolio. It's a low volatility portfolio that should provide better gains with less risk. Give it a Google.

njmoney

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Re: Investing Advice For Seniors
« Reply #2 on: February 17, 2021, 11:23:18 AM »
Interesting. Will check it out in more detail. Thanks!

MustacheAndaHalf

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Re: Investing Advice For Seniors
« Reply #3 on: February 17, 2021, 11:37:11 AM »
Unfortunately making assets last is not compatible with low risk.  If you'll pardon me, I checked life expectancy tables for average 75 year old females.  Half of those 75 year olds lived more than 12 years, and half lived less.

Using Vanguard's nest egg calculator, you can make estimates of what might happen over 12 years at a 12% (very high) withdrawal rate:
100% cash: zero chance of success
100% stocks: 45% chance to last 12 years
50/50 cash/stocks: 17% chance to last 12 years
https://www.vanguard.com/nesteggcalculator

Right now 10-year treasury bonds earn 1.09%, and you might find a CD with a 0.50% rate of return.  My guess is someone doesn't want new fangled equities now, and might want to stick with cash.  Whatever allocation to equities your family can tolerate has the highest chance of the portfolio lasting.  It may be worth mentioning the nursing home is a big change and a big expense, and maybe investments need to also make a big change to cover that big expense.  Good luck.

theoverlook

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Re: Investing Advice For Seniors
« Reply #4 on: February 18, 2021, 12:09:36 PM »
Does she have some social security or retirement pension income that would help?

njmoney

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Re: Investing Advice For Seniors
« Reply #5 on: February 19, 2021, 09:27:45 AM »
Thanks for the responses.  I appreciate it.  Social Security is the only other revenue stream at about $1,500 a month.

cool7hand

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Re: Investing Advice For Seniors
« Reply #6 on: February 19, 2021, 09:52:16 AM »
I forgot another option we explored with the pension. We got some free quotes for insurance products to cover the monthly income difference between the 100% and 50% survivor benefit. For example, a 15 year term policy to bridge the years between FIRE and social security still would have netted us something like a $2?? month increase in benefits. But for the reasons above, we also rejected those options.

Saving in Austin

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Re: Investing Advice For Seniors
« Reply #7 on: February 19, 2021, 04:24:39 PM »
My mother-in-law (81 years old) and my mom (80 years old) are using the Golden Butterfly.

https://portfoliocharts.com/portfolio/golden-butterfly/

So far, so good.

Here are all of the various asset allocations from Portfolio Charts:

https://portfoliocharts.com/portfolios/




yachi

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Re: Investing Advice For Seniors
« Reply #8 on: February 21, 2021, 12:07:38 PM »
I'm sorry about your mother's dementia.  I'm sure she will get the care she needs at this facility and, importantly, your family can have the support you need.  I believe your mother's financial situation is better than many her age, but the cost of her care is significant compared to her assets.

I put the following into Firecalc:
Sending: $78,000
Portfolio: $675,000
Years: 14
Other Income: $18,000 (social security, starting this year)

Portfolios with 50%, 75%, 85%, and 100% stocks are successful less than 66% of the time.  I used 14 years because actuarial tables put the life expectancy of a woman 75 years of age at 12.9 years.  I think you actually should plan for 20 years.  At 20 years, FireCalc doesn't provide success rates above 50%.

So I think you should plan for the eventual possibility of your mother's funds running out and transitioning to medicaid.  Check into the assisted living facility's guidelines for residents switching over to medicaid.  Many continue to provide the same standard of care to someone who came in as a cash payer and needs to make the switch. 

We be free if we try

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Re: Investing Advice For Seniors
« Reply #9 on: February 24, 2021, 09:51:08 PM »
Iím really sorry about your momís dementia. If she has had dementia for several years, and requires assisted living for her care, she has an existing condition which makes standard actuarial tables inaccurate. It may be unlikely she will live 10 more years. If she has Alzheimerís, you can find estimates of remaining years based on her current level of functioning. (My dad died of Alzheimerís last year, though he lived at least 12 years after first being diagnosed.) Best wishes for her smooth transition into assisted living.