Thank you again for all of the replies. Here are my responses to the various questions in the thread and an update on the current status.
1. SPIA: A SPIA would require nearly all of her savings ($225,000). I looked into a medical rider or being “rated up” but have not gotten a definitive statement on whether her specific condition will merit increased payments. I don't want to rush into this very big decision so we will continue to carefully evaluate this as an option.
2. Reduce expenses? We revisited her expenses in detail and I think she can manage $1,000/month, which will help extend her savings. This represents income in addition to social security ($1,950).
3. Financial Advisor: Her financial advisor is a local certified financial planner. He is proposing to charge either $170/meeting @ 4 meetings a year or half a basis point. As high as these fees sound, this is much better than the previous situation in which he had her invested in 32 different funds with extremely high ER’s that were funding his services. My Mom would like to continue using him, so my approach is to work with him to set up her asset allocation and corresponding fund choice so that the $170 meetings will consist of simply confirming the AA and rebalancing. Over time we can shift to semi-annual, then annual, and then as-needed.
4. Sell home: As far as selling her house, it is a very nice condominium that is perfect for her right now. An important goal of this planning exercise is for her to be able to stay in her house as long as she is able to take care of herself.
5. Simplifying via VTINX: Seems logical except that I notice the fee (ER = 0.17%) is much higher than individual admiral index funds (blended ER = 0.10%). Would the more frequent re-balancing in VTINX offset the higher expense ratio?
6. Proposed AA (me vs. advisor):
--Vanguard Total Stock Market Index Fund ($67,500) ER = 0.06%
--Total Bond Market Index Fund ($78,750) ER = 0.10%
-- Vanguard Inflation-Protected Securities Fund Admiral Shares ($56,250) ER = 0.11%
--Local Savings Account ($22,500)
--Power Shares Dyn Large Cap Value – 9% ($20,250) ER=0.61%
--SPDR Barclays High Yield Bond (treat as equity) – 7% ($15,750) ER=0.40%
--Schwab US Large Cap Growth – 6% ($13,500) ER=0.07%
--I-Shares S&P Emerging Markets Infrastructure – 5% ($11,250) ER=0.75%
--Vanguard Short-Term Bond – 35% ($78,750) ER=0.11%
--Vanguard Intermediate-Term Bond – 19% ($42,750) ER=0.11%
--PowerShares International Corporate Bond – 8% ($18,000) ER=0.50%
--Local Savings Account ($24,750)
So that is where we stand right now -- thanks again for your advice!!
P.S. Please ignore the cash being in a savings account. My Mom prefers it to be in a local bank and the difference in earnings is probably negligible.