Author Topic: Allocation for retired parents  (Read 1541 times)

FastStache

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Allocation for retired parents
« on: April 23, 2014, 08:44:15 AM »
My parents are needing some financial advice on how to allocate their 401K. 

I'm hoping to help them more their money from their 401K (pre-tax) to a traditional IRA. Is this a simple process with Vanguard?

Their hope is not need the money and leave it as an inheritance, but they would like to conservative in case they need it. I'd rather see them have all the money they need than to worry about getting it as an inheritance.

The amount is slightly over 50K. They both get social security and have low expenses other than some medical expenses.

I'm thinking
50% - VBTLX - Total Bond
10% - Prime Money or something else extremely safe
40% - VTSAX - Total Stock

matchewed

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Re: Allocation for retired parents
« Reply #1 on: April 23, 2014, 08:53:37 AM »
Yes a 401k rollover is an easy process when the individual has left their employer. Generally you cannot rollover an active 401k (while the person is still employed with the employer who is administrating the 401k).

Other than that there is no good answer. If they do not need the money they can be as aggressive as they want with it. This is really going to be up to them and their risk tolerance and goals for the money. You seem to have mixed in your desire for what the money should be for with theirs. That is generally a bad thing as it is their money and not yours although I'm certain you mean well.

That allocation is very conservative. I wouldn't expect much growth out of it.

FastStache

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Re: Allocation for retired parents
« Reply #2 on: April 23, 2014, 08:59:24 AM »
I appreciate the response. My parents are not financially savy, but they live well within their means.

They all the bulk of their money in one stock and this was just brought to my attention. They asked me to manage it for them last night and they just care to keep it safe.

I feel if I was just managing it for myself it would be a 90/10 or 80/20 split.

matchewed

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Re: Allocation for retired parents
« Reply #3 on: April 23, 2014, 09:24:03 AM »
I appreciate the response. My parents are not financially savy, but they live well within their means.

They all the bulk of their money in one stock and this was just brought to my attention. They asked me to manage it for them last night and they just care to keep it safe.

I feel if I was just managing it for myself it would be a 90/10 or 80/20 split.

You're going to need to tease out a bit more about what they mean by safe. If they pass in the next 20 years are they looking to pass on the 50k? Are they looking to pass on more? Do they want to keep it just in case or is it you who wants to keep it just in case for them? They may not be financially savvy but you can still get a gauge on what expectations they have for the money and work with them to build an appropriate plan. Personally all the questions you are asking us should be rephrased and asked of them in a manner that they can digest and answer.

FastStache

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Re: Allocation for retired parents
« Reply #4 on: April 23, 2014, 10:24:56 AM »
I will give them a call tonight, and see what they wish to do with it. The money will stay in their names and my brother and I would be beneficiaries.

Good questions to ask
1. Likelihood of them needing the money? I don't know how much cash and how much income they get from social security.
2. If they do need it, how many years from now would that be?
3. How much fluctuation in the 50K can they stand? Would they be upset if they need it and it's down to 30K? Realistically, I should be able to help them out if need be.