advice to give parents

[eddieryan]

My mother is getting an inheritance in the coming weeks and has little to no knowledge on investing. As far as I know, she has only 7,000 at this time for her retirement and she is 61 and will work for another 10 years or so. She is going to a family meeting out of state with the administrator of the estate and I told her not to let anyone talk her into putting the money in the hands of a financial planner who will make sure they extort her with high fees. Being a rather new mustachian, I told her to make sure the money goes into tax sheltered vanguard accounts. I recommended 55% bond/ 45% equity split between vanguard total stock market index and total int'l. I then realized I wasn't sure to recommend a traditional IRA or some other tax sheltered account. She is a realtor so income varies year to year--no 401k. Does that ratio of bond to equities seem to risky given her age? Any suggestions?

[MDM]

How much inheritance?  Are the inherited funds already in a tax-advantaged account?

The 55% bond/ 45% equity seems perfectly reasonable, at least for a start and maybe for good.  Would need to know more (e.g., Soc. Sec. options?  Annual income range?) to suggest more.

[eddieryan]

Unfortunately I don't have figures on this inheritance and it was only described as "a lot, a lot, a lot" by another respectable member of the family which can be interpreted in many ways. Mom is a realtor and income fluctuates largely year to year. As far as social security, I assume that is paid by self employed individuals? Basically we're talking about someone who doesn't have much of a nest egg here...she has been a realtor for about 20 years and I would imagine an average of 50k annual income earned over 20 years. Lets just assume the real estate market doesn't gyrate too much over the next decade and annual income is 50k. Lets also assume we're talking about an inheritance of 50k--100k just for practical purposes (I imagine it could be more). There is a living trust she will get a share of and I'm not sure of the legal process on how she would, or if she even has a right--to get those funds transferred into a vanguard account. Does she need her own attorney? I would like for her just to be prepared for this meeting coming up and have very little knowledge on estate planning.

[MDM]

As far as social security, I assume that is paid by self employed individuals? Basically we're talking about someone who doesn't have much of a nest egg here...she has been a realtor for about 20 years and I would imagine an average of 50k annual income earned over 20 years.

Soc. Sec. "options" referred to how much she could receive at age 62, 65, 70, etc.  If she doesn't know, she should get an account at ssa.gov and find out.

Lets just assume the real estate market doesn't gyrate too much over the next decade and annual income is 50k. Lets also assume we're talking about an inheritance of 50k--100k just for practical purposes (I imagine it could be more).

Given those numbers, and the lack of a nest egg, it seems she'll need to reduce spending to make it through retirement - with the possible exception that if she is paying a large mortgage now and will pay it off soon.  Some retirement cash flow projection could be useful.

There is a living trust she will get a share of and I'm not sure of the legal process on how she would, or if she even has a right--to get those funds transferred into a vanguard account. Does she need her own attorney? I would like for her just to be prepared for this meeting coming up and have very little knowledge on estate planning.

Perhaps she could get the information first and not sign anything that day (other than an "I received this information" if needed).  Once she knows how much is involved it will be easier to decide how much expert help to enlist.

[Capsu78]

I would help he open a VG account right now, prior to the meeting, so she has (1) a mental place in her mind where the funds are landing and (2) an "It's already in place" excuse in case someone wants her to make a quick decision in another direction (financial planner).   Saying "I'm with Vanguard" is like garlic to a vampire FP-