The OP's mother probably needs at least $5,000 a month on top of her pension and SS to cover her assisted living costs. So she'll need to pay a premium of at least $500,000. She doesn't have that.In a similar recent thread, dpbsmith wrote:For a premium of $100,000, Vanguard's Income Solutions shows an available policy for an 85-year-old-woman that pays $950 a month the first year, increasing 3% per year thereafter, and several others in the same ballpark. In other words, a life annuity for an 85-year old woman can easily pay well over 10% of the premium per year.
Costs don't put you at risk. Wellesley is not high cost in any case. You could do far worse than Wellesley.biasion wrote:You should get out of wellesley because it is an active fund. It is index like but the incremental costs, trading costs, and overall allocation put you at more risk.
Since she'll pay no federal tax anyway, probably doesn't make any difference where you hold stocks. State tax may make a difference, but most states don't give favorable treatment to capital gains and dividends, while Treasurys are exempt from state tax, so the usual rule of thumb of stocks in taxable is probably turned on its head.biasion wrote:Keep 10% in Vanguard's total US, 10% total international or equivalent. These should be in taxable.
This would appear to be the bulk of her funds, since she may have as few as 3 years' expenses.biasion wrote:1-2 years living expenses in the money market
I'm not sure either is appropriate for such a short time horizon. I recommend putting the bulk of her money in bank CDs that match up with her expected expenditures, e.g., first year's expenses in MM, second year's expenses in a one-year CD, third year's expenses in a two-year CD. It's more important that you focus on how you are going to cover her living costs when she runs out.biasion wrote:divide the remainder in half: half each in TIPS, half in intermediate treasuries.
Alex Frakt wrote:My grandmother is in a somewhat similar situation (smaller savings, but her assisted living is much less expensive). I kept it simple and had her put everything into Target Retirement Income. All interest payments are forwarded to her checking account.
Bob's not my name wrote: The OP's mother probably needs at least $5,000 a month on top of her pension and SS to cover her assisted living costs. So she'll need to pay a premium of at least $500,000. She doesn't have that.
HoneyBee wrote:I had never considered an annuity, would it really be worth it at her age?
HoneyBee wrote:Her annual gross income is approximately $30,000.
her assisted living costs are high
$30,000 annually is $2500/month. If her assisted living expenses are only slightly higher than that (=$3000), that's not high at all. I've paid assisted living expenses in three states and it's always been at least $8000, but that's with a lot of services. If her costs are really that low then disregard my prior recommendations, but do consider converting her IRA to Roth in annual increments that are tax-free.HoneyBee wrote:Her total assisted living expenses are slightly more than her monthly income.
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