Author Topic: Stock allocation for elderly parent  (Read 1231 times)

Hula Hoop

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Stock allocation for elderly parent
« on: December 16, 2019, 01:14:20 PM »
Hello - I'm looking for stock allocation advice for my elderly mother.  She is 80 years old and has a lot of savings (proto mustachian) and a great pension as well as great health/LTC insurance.  So she's in a good position generally.  Lately she's met with her pension fund manager and they have asked her what stock/bond allocation she would like for her investments.  She has asked me and my sibling for advice and we're not sure what to advise.  She is in no danger of running out of money so the usual advice to be ultra-conservative might not apply.  On the other hand, she's 80 years old so her time frame is not as long as that for a younger person.  Does anyone have any advice?

Laserjet3051

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Re: Stock allocation for elderly parent
« Reply #1 on: December 16, 2019, 02:26:38 PM »
The advice might vary depending on whether there are RMDs involved.

Rob_bob

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Re: Stock allocation for elderly parent
« Reply #2 on: December 16, 2019, 07:18:35 PM »
There are two ways to look at it. If she has plenty of assets and a steady income she has won the game and doesn't need to take any risk so she can be extremely conservative.

Or if she doesn't need the assets to live on and she wants to leave it for an inheritance then it should be invested with the ages and risk tolerance of the heirs in mind.

Saving in Austin

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Re: Stock allocation for elderly parent
« Reply #3 on: December 17, 2019, 10:02:49 PM »
Every retiree's situation is different. The following information is just to give you an idea of what we are doing but YMMV. My mom and mother-in-law are 79 and 80 years old respectively. One has an asset allocation of 40/60 stocks/bonds and the other has 50/50. They are both living off of pensions and social security and do not need the money in the portfolios.

never give up

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Re: Stock allocation for elderly parent
« Reply #4 on: December 17, 2019, 10:46:18 PM »
I had similar concerns a few weeks back in the post below. I concluded 20-40% stocks. My parents donít want volatility but with cash interest rates so low itís beneficial to have an element of the portfolio capable of beating inflation.

https://forum.mrmoneymustache.com/uk-tax-discussion/investing-when-older-80/

Leisured

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Re: Stock allocation for elderly parent
« Reply #5 on: December 19, 2019, 04:52:59 AM »
I agree with Rob_bob. Much planning on pensions assumes that the retiree will be drawing down assets as they age. If this does not apply, then your mother is in a similar position to old money families, where you pass assets to the next generation, so stock investment is king.

I congratulate your mother.

Hula Hoop

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Re: Stock allocation for elderly parent
« Reply #6 on: December 19, 2019, 01:14:29 PM »
The advice might vary depending on whether there are RMDs involved.

What are RMDs?

Rob_bob

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Re: Stock allocation for elderly parent
« Reply #7 on: December 19, 2019, 03:31:52 PM »
The advice might vary depending on whether there are RMDs involved.

What are RMDs?

Required Minimum Distributions.  Currently when a person turns 70.5 years old they are required to pull out a certain percentage of the total value of the tax differed retirement account each year so the Government gets some tax dollars.  If a person fails to take out the proper amount the tax penalty is 50% of what should have been taken out, plus you still owe the tax too.

This is U.S. tax law, is see you are in Italy soooooooooo?
« Last Edit: December 19, 2019, 03:33:33 PM by Rob_bob »

Hula Hoop

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Re: Stock allocation for elderly parent
« Reply #8 on: December 19, 2019, 06:32:53 PM »
The advice might vary depending on whether there are RMDs involved.

What are RMDs?

Required Minimum Distributions.  Currently when a person turns 70.5 years old they are required to pull out a certain percentage of the total value of the tax differed retirement account each year so the Government gets some tax dollars.  If a person fails to take out the proper amount the tax penalty is 50% of what should have been taken out, plus you still owe the tax too.

This is U.S. tax law, is see you are in Italy soooooooooo?

Thanks.  She's in the US.  I'll have to talk to her and her financial planner person to see what the story is on these.

Goldielocks

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Re: Stock allocation for elderly parent
« Reply #9 on: December 27, 2019, 11:22:24 AM »
Some seniors with a lot of guaranteed money want to start sharing with others while still alive, and leave an inheritance.

If that is the case, I would protect the principal and spend the income that is being generated. So...  Invest in dividend paying investments.   Each year she can choose to spend the income on herself, her charities, or give / buy for relatives.

Some seniors don't travel well, but would like to see relatives, so buy them plane tickets, that sort of thing.  Making the most of life while you can with what you have.

If there is a lot of money, an estate freeze or other planning method may be suitable... and the US has this nifty way of transferreing property when inherited on a stepped up basis that the rest of the world doesn't have.....