Help for parent nearing retirement (unsolicited)

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rhlhj
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Help for parent nearing retirement (unsolicited)

Post by rhlhj »

Based on several conversations I've had with my mom, I think it's best that she sit down with a fee-only planner as a check-up for retirement.

She will be 67 later this year and may already have enough to retire already - but wants to work a few more years.

She knows what her base is between pension and social security ($75K), but she has not determined a number she needs on a monthly basis in retirement. I did not ask the exact value of her investments, but I did ask how much she has in equities and how much she has in fixed income. She doesn't know.

I asked whether she might be taking on too much risk this close to retirement and she said she had a number she wanted her portfolio to get to (so still thinking accumulation?) and was assuming a 5% withdrawal rate in the draw down phase. She also said this would give her more cash flow (take-home) on a month to month basis than she has right now as if that were the goal.

She has admittedly been an ostrich since the financial crisis and has not opened statements in years (something I wouldn't worry about, except for the fact that I don't really think she has an overall investment philosophy). Proportions of her asset allocation are bound to have shifted considerably in that time and I just don't think she knows where it is or where she should be.

I have mentioned to her on a couple of occasions that she might be too exposed to equities this close in. She said she really just needs to make it a priority to sit down and look through everything. I don't think she has done it to this point because it's a daunting task: 401K, IRA, a trust, and some funds she has given over to an adviser at the bank).

She's smart and has been DIY-ing her investments her whole adult life, but about a decade or more ago, I think she just stopped paying active interest to them given the time it was taking (though she is not invested in passive instruments, unfortunately). I really think the best thing to do is to take a couple of hours to go through her situation, assess where she is at and where she wants to go. I don't think she will want to give over control of her portfolio to anyone, but needs a roadmap for the next few years to retirement.

I was thinking of referring her to NAPFA.org or the Garrett Planning Network as a follow-up to our conversation so she could interview some local fee-only planners who might be able to help her get there. She's not asking for any of this advice.

Does this seem like a logical recommendation? Does anyone have any advice about how to present this suggestion that has gone through something similar?
NoVa Lurker
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Re: Help for parent nearing retirement (unsolicited)

Post by NoVa Lurker »

Given what my wife and I are going through with our respective parents (the details of which would not be helpful to you), I admire your mom's apparent health and financial position.

In terms of financial advice, let her know that you are there for her, if she wants it.

If not, it sounds like she has a guaranteed annual income of $75k, plus lots of assets, plus she doesn't even want to retire yet, at age 67. I don't see a problem or a need for you to intervene. Enjoy your time with your mom.
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BL
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Re: Help for parent nearing retirement (unsolicited)

Post by BL »

Is she taking SS now? If not, there are choices to be made whether to delay up to age 70 and whether she has widow's or divorced spouse options.
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rhlhj
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Re: Help for parent nearing retirement (unsolicited)

Post by rhlhj »

She's not taking SS now. She's still working and earning a high income. She plans to continue to do so until she is around 70 and plans to delay SS until then.

Again, these are all prudent financial decisions.

NoVA Lurker - I fully understand and appreciate your advice. I do not want to meddle.

But I am honestly concerned she has no idea how much exposure her portfolio has to equities versus fixed income right now. We cannot predict the future but a number of people are saying the market is overvalued and we are due for a correction. I don't care because I'll be invested for 30 more years. She shouldn't care if she has a plan and has a predetermined amount of equity exposure for someone a few years from retirement. But she should care about the unpredictability of tomorrow's market returns because I do not think she's determined a proper amount of equity exposure for her situation and does not know if her holdings fit that criteria or not.

If she already has enough to meet her needs in retirement (which I think is possible), I think she should be acting in the interest of asset preservation right now.
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retiredjg
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Re: Help for parent nearing retirement (unsolicited)

Post by retiredjg »

I understand your concern. However, it is her money and it does not appear she wants to make a change at this point. Otherwise, she would have already made it a priority to sit down and figure it out. You should almost certainly stay out of it.

However, if the earlier conversation was amicable, you might make one last stab at it and offer your time and support or give her the name of an hourly fee advisor in the area (fee only can also mean assets under management) or even give her a "gift certificate" for 2 hours of such an advisor's time. That might get her started and that might be all she needs.

If the earlier conversation was more along the lines of "none of your business or don't bother me with that", I'd just gracefully bow out and hope for the best.
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rhlhj
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Re: Help for parent nearing retirement (unsolicited)

Post by rhlhj »

These replies are all helpful.

The earlier conversation was amicable enough. At the end of our conversation she said she really just needs to make it a priority to sit down and go through it herself. I've mentioned this idea to her in the past, though, and she has said similar things - that she really ought to sit down and go through things. So I think that she means to do it, but (I'm guessing due to the time or effort involved) she prioritizes other things.

I was fully planning on offering to pay for an hourly planner, though I know she would refuse this (my money). I just thought that knowing she has a scheduled time to go through things with a knowledgeable person might be what she needs so she can can do something she seems to agree that she should prioritize.
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BL
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Re: Help for parent nearing retirement (unsolicited)

Post by BL »

She is going to have to find and look at her stuff even if she has a planner. Finding a reliable planner might not be so easy. If she has accounts at Vanguard, that might be a place to trust, but otherwise the risk is great that she might run into expensive "advice", such as annuities or life insurance.

She sounds smart if she is delaying SS to increase her payout (the best annuity around) but if she is thinking it is because of her income, that doesn't count after FRA. If she is eligible for ex-spouse or widow (or spouse if married) then she could be drawing on that at FRA and her own at 70.
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Christine_NM
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Re: Help for parent nearing retirement (unsolicited)

Post by Christine_NM »

A visit to a financial planner can force a person to get everything together in a presentable form. That might be useful.

Can your Mom create spreadsheets to help her stay organized? I have one spreadsheet design that has kept me in one piece financially for at least 15 years. She would need to evolve her own design that suits her situation.
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Watty
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Re: Help for parent nearing retirement (unsolicited)

Post by Watty »

Does this seem like a logical recommendation? Does anyone have any advice about how to present this suggestion that has gone through something similar?
If she is open to it then I think that the first thing to do would be to just get all her paperwork together and simply list all of her accounts and the balances, without worrying about what the holdings are. She likely just got her quarterly statements so this could likely be done pretty quickly.

If you do decide to talk to advisers then the more organized you can get her paperwork ahead of time the better.

For the retirement accounts where taxes are not an issue then you might be able to get her to use a target date 2015 or 2020 mutual fund to simplify her holdings and to have a more appropriate asset allocation while she is deciding what to do for the long term.
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rhlhj
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Re: Help for parent nearing retirement (unsolicited)

Post by rhlhj »

Thanks for everyone's suggestions.

I think you are all correct that she might think that gathering the paperwork is tedious and that could be part of the problem. Though I can offer to help, that's really up to her because only she has access to her accounts.

I think at this point, I just really need to assess whether or not she is serious about wanting to do this in the short term and, if so, figure out if there is some way I can help. Once she has a snapshot of her holdings, she decide if she feels its worth while to see a professional or not.

If she really has no interest in doing this right now, I'll back off. It's not up to me and there is little I can do make it happen unless she is on board.
Last edited by rhlhj on Mon Jul 14, 2014 5:40 pm, edited 1 time in total.
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rhlhj
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Re: Help for parent nearing retirement (unsolicited)

Post by rhlhj »

BL wrote:She sounds smart if she is delaying SS to increase her payout (the best annuity around) but if she is thinking it is because of her income, that doesn't count after FRA. If she is eligible for ex-spouse or widow (or spouse if married) then she could be drawing on that at FRA and her own at 70.
My dad's passed and I'm not sure whether she has claimed any of the death benefits. My guess is no. As you suggest, it looks like she could be claiming them once she turns 67 this year she could be eligible to take these as they will max out at her full retirement age.
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rhlhj
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Re: Help for parent nearing retirement (unsolicited)

Post by rhlhj »

Christine_NM wrote:Can your Mom create spreadsheets to help her stay organized? I have one spreadsheet design that has kept me in one piece financially for at least 15 years. She would need to evolve her own design that suits her situation.
She used to maintain spreadsheets to keep track of investments but I believe has let them lapse years ago. She might be able to use the same format, but would probably need to pretty much start form scratch.
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rhlhj
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Re: Help for parent nearing retirement (unsolicited)

Post by rhlhj »

Watty wrote:For the retirement accounts where taxes are not an issue then you might be able to get her to use a target date 2015 or 2020 mutual fund to simplify her holdings and to have a more appropriate asset allocation while she is deciding what to do for the long term.
She's never really gone for simplicity in her investments. It is possible that as a result of talking to a planner, she may decide to change what she's holding (it's all in tax-deferred accounts) to more index-oriented investments. But that has never been her philosophy and it's not my goal to get her to change the types of assets she holds -just that she has awareness of the risks she's taking on right now on the eve of retirement so she can make appropriate choices.
livesoft
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Re: Help for parent nearing retirement (unsolicited)

Post by livesoft »

Hey Mom. I am using Vanguard for all my investments. You've been a lifelong investor. Can you please take a look at my investments and tell me what you like and where you think I am doing it right and where you think I am doing it wrong?
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BL
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Re: Help for parent nearing retirement (unsolicited)

Post by BL »

rhlhj wrote:
BL wrote:She sounds smart if she is delaying SS to increase her payout (the best annuity around) but if she is thinking it is because of her income, that doesn't count after FRA. If she is eligible for ex-spouse or widow (or spouse if married) then she could be drawing on that at FRA and her own at 70.
My dad's passed and I'm not sure whether she has claimed any of the death benefits. My guess is no. As you suggest, it looks like she could be claiming them once she turns 67 this year she could be eligible to take these as they will max out at her full retirement age.
She should probably see the SS people ASAP and figure out which gives her the most continuing income: if his is greater now, then she would want to claim that. If hers will be greater at 70, perhaps she would get his now and delay hers until age 70. There might also be a slight age difference on the two FRAs, but I don't know that for sure.

Perhaps she would like Vanguard's active Wellington and/or Wellesley funds. They have done well over the years and are fairly low-cost.
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rhlhj
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Re: Help for parent nearing retirement (unsolicited)

Post by rhlhj »

BL wrote:She should probably see the SS people ASAP and figure out which gives her the most continuing income: if his is greater now, then she would want to claim that. If hers will be greater at 70, perhaps she would get his now and delay hers until age 70. There might also be a slight age difference on the two FRAs, but I don't know that for sure.

Perhaps she would like Vanguard's active Wellington and/or Wellesley funds. They have done well over the years and are fairly low-cost.
Thanks. Hers will definitely be higher, now or at 70.
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BL
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Re: Help for parent nearing retirement (unsolicited)

Post by BL »

rhlhj wrote:
BL wrote:She should probably see the SS people ASAP and figure out which gives her the most continuing income: if his is greater now, then she would want to claim that. If hers will be greater at 70, perhaps she would get his now and delay hers until age 70. There might also be a slight age difference on the two FRAs, but I don't know that for sure.

Perhaps she would like Vanguard's active Wellington and/or Wellesley funds. They have done well over the years and are fairly low-cost.
Thanks. Hers will definitely be higher, now or at 70.
In that case, let her SS grow, take his ASAP. They may be able to go back a few months. I think she may have been eligible at age 66.
Lafder
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Re: Help for parent nearing retirement (unsolicited)

Post by Lafder »

Gathering all of the account information is the hardest part. Taking it to a financial advisor is easy once you have all of the information.

You can get a free assessment (from multiple perspectives) if your mom, or she allows you, to post her portfolio here. Which you will be ready to do once yo have the information gathered for a financial advisor.

I would personally post here before I went to a private financial advisor so I have a better understanding of options and what to ask.

I helped a relative sort out her finances. It took hours and hours over a year to find all statements, and accounts.

Yes it was her private information.But she wanted the help and was just never getting around to figuring it all out and sorting through it on her own.

You can help your mom sort out which accounts if any are online, and which are paper. You can gather the papers she has (all of the unopened statements!) as well as put all new mail in one place to figure out the miscellaneous. Some $ (such as my relative's annuities) only sends statements once a year, so it is easy to miss a statement.

For me it was a fun puzzle to solve to gather my relatives information in one place.

After sorting it all out, my relative put her $ the way she wants it, not the way I would have done if it was up to me. But she did listen to suggestions and asked many questions for me to help her research. Vanguard was great about allowing us to do conference calls to answer her questions with me on the line. I am glad to know she has looked through and located everything and understands her expense ratios for the first time ever and has made thoughtful decisions on where to keep her $. She did consolidate a lot at Vanguard. But like may people, she has held on to some of her original investments in spite of at least one being worth less now than 15 years ago do to expenses!

I am not a direct beneficiary of hers. But I like saving anyone $ and she worked hard her whole life and saved saved saved.

Sounds like your mom could use some help and has been unable to face her accounts and finances. Luckily it also sounds like she is in a relatively good position.

Best wishes.
lafder
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