Author Topic: Anyone else managing an elderly parent's portfolio?  (Read 1035 times)


  • Stubble
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Anyone else managing an elderly parent's portfolio?
« on: September 24, 2017, 01:22:38 PM »
My widowed mom has a reasonable cash savings that I need to invest for her.  I'm estimating that this needs to last her about 15 more years, based on actuarial tables + family history. 

She has SS and an annuity that basically cover her essential living expenses, but she needs something around a 6% WR of her portfolio to cover some travel (the rest of the family live farther than driving distance) and other expenses that come up such as medical expenses (hearing aids are something that I've recently discovered are ridiculously expensive), home repairs, veterinary expenses, etc.

I find the psychological barriers to making investing decisions for someone else are really difficult to overcome.  It is hard enough to make myself invest my own money in the market while I'm still earning a paycheck and presumably have time to recover from a major recession. When someone needs that money and they don't have a 20-30 year horizon to recover from potentially large market drops, it can be a bit paralyzing.  If the market valuations where a little closer to average, I think it would be more of a no-brainer.   

I'm leaning toward a 3 years expenses CD ladder / money market combination (3 years of the equivalent 6%) and then 25% equities / 75% bonds for the remainder. 

She owns her home, so at some point will sell and move into probably an assisted living type facility. We're thinking maybe in about 5 years.  I suppose that also gives access to reverse mortgage options if there was a real need that couldn't be covered by the investment portfolio. 

Has anyone else struggled with this?  How did you come to a appropriate AA? 


  • Bristles
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Re: Anyone else managing an elderly parent's portfolio?
« Reply #1 on: September 25, 2017, 05:41:10 AM »
I'm going through this with my parents too (dad still alive but not cognitively capable of investing, mom has not been involved in any financial decision in their half a century of marriage).  My advice is this:

1) as you would with yourself, consider both her ability and her need to take risk when setting an AA so you can prepare for the worst case scenario. Also, her goals matter too.  Is she ok with spending every last penny, or does she want to leave an inheritance?  You didn't say how much her stash is relative to her needs, but maybe a 6% WR is ok for her life expectancy if she doesn't care about leaving an inheritance behind.  Once you know what her goal is, you can do some calculations using a site like Firecalc to figure out her odds of success at that WR. 

2) involve her and get her input as much as possible, including educating her as much as she will or can learn about investing (may not be practical but you still should try).

3) consider hiring a fee-only planner, not because you aren't capable of doing it, but, as you alluded, the stakes for failure are so much higher, and there can be a lot of family emotion surrounding mom and dad's money.  Offer to go with her to meet with the planner, be involved, etc., but consider having the decisions made by someone else so that there isn't ever any question of you having a bias or vested interest later, let alone being "responsible" for losing all of mom's money if something goes wrong.  This is especially important if you have siblings or other relatives whose inheritances might be affected by your decisions - even if money isn't an issue between you and your siblings now, it can easily become one in this context. 


  • Stubble
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Re: Anyone else managing an elderly parent's portfolio?
« Reply #2 on: September 26, 2017, 07:43:29 PM »
Thanks for the input Libertea.  Yeah, I actually did take her to a financial planner primarily to sort of emotionally indemnify myself against something going wrong with my investment decisions.  I wasn't particularly impressed with the recommendations.  Nothing bad, really, just unnecessarily complicated in my opinion. The FP recommended an AA across almost a dozen funds (Vanguard funds, but still).  I think I'll use just 3 or 4.   I think they recommend more complicated stuff in part just to look like they are doing something. And possibly they don't even do it consciously. 

My parents retired relatively young and have had a good retirement but they did suffer a big loss in the dotcom bust because, like so many others, they took really bad advice from a 'financial planner' who was really just a broker and had them heavily into a few 'darling' tech stocks that tanked (worldcom, lucent, etc etc).  My father refused to put any more of his money into the stock market after that experience.   

My mom doesn't care about leaving anything behind (which I heartily agree with) so the goal is just to get her through the rest of her retirement.  Hopefully without any particular stress about money.  Like your parents, my father was the only one who ever dealt with financial stuff, so it was a task just to find everything and get passwords, etc. 

It was a lesson about having some kind of written information for the rest of your family so that if something happens to you, they aren't completely in the dark about what's where.  It's hard to do in the information age, where everything is spread across multiple accounts with different usernames and passwords. 



  • Handlebar Stache
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Re: Anyone else managing an elderly parent's portfolio?
« Reply #3 on: September 26, 2017, 09:43:55 PM »
It seems like there are a lot of moving parts to your mother's situation, such as the assisted living, medical expenses, ect.  It's hard to come up with a portfolio AA to achieve goals that have so many moving parts.

It also seems like you are taking responsibility of her finances, which seems unfair to me as she is an adult.  I am in a somewhat similar situation with my parents, they asked me for help and I worked with them on their retirement plan a few years before they actually retired.  I was very up front with them and told them that I can give them possible options and the possible outcomes of those choices.  However, it is their decision and not mine, they are responsible for making the decisions.  Once they settled on a plan, I helped them with all the other important estate planning documents, such as will, health care directive, power of attorney, ect.

Whatever you and your mother come up with hopefully she will be the one making the decision and you helping her execute them.