Advice for 60 year old parents
Posted: Tue Dec 27, 2016 10:29 pm
Hello,
I'm starting a SEP Ira for my dad. He's 60 years old, salary around 200k. Kids are grown and self sufficient. 150k inheritance on my moms side is really their only retirement savings at this point (I know I know, not good...but they are where they are). Both him and my mom have entrusted me to basically completely take care of their investments-they trust my judgment. I, in turn, trust the judgement of many posters on this board immensely.
For the basics lets say that Dads salary is 200k, and moms is nothing. My 2 primary questions are
1) order of contribution, what should go where, and in what order. Options off the top of my head are
- SEP Ira, which I setup for him tonight, 53k limit there
-Personal IRA's for him and my mom, thats a 6.5k per person limit, correct? Also with his salary, believe he cannot contribute to a Roth, but he can contribute to a traditional IRA. Not that it matters, because I'm certain that he's making WAY more right now then he will be in retirement.
I know he has until April to make these 2016 contributions. I prodded him for an estimate on what he thinks he can invest this year, TOTAL, and he ballpark-ed that around 25k. So lets say 25k is the number we're working with for 2016 contributions. Would you...
- put all 25k into the SEP Ira, and then allocate according?
-Max out the traditional IRA for him and my mom (about 13k I guess...unless their eligible for more with some type of catch up program)? And then put the remainder into the SEP IRA
-Is there something I'm not thinking of?
2) Asset Allocation- I'm pretty well versed in asset allocation, however I felt it would be prudent to ask this on here because I feel that my need, willingness, and ability to take risk is on such a different planet than my parents. So, focusing on my parents, here are some important factors.
-Both parents are around 60 and in relatively ok health. Dad is a little overweight, some manageable diabetes, gets physical therapy for back problems but otherwise is more-or less OK for now. The reason I provide this information is that its worth considering that a day could come when working becomes difficult for him...hes not one of those 60 year olds who hikes in the mountains and runs every day. His health is OK, at best. He says he'll probably work for the rest of his life, jokingly...but in the back of my mind this is worth considering.
-Obviously, they're retirement savings are not immense. With about 150k, plus whatever they can put together in the remainder of my dads career. I think that this probably calls into question how much risk they should be taking.
-On the plus side, I am not worried about them "panic selling" during a downturn, unless I advised them to. They understand enough about investing that they're hope is not to touch this money until retirement, and hopefully let it grow for awhile.
Is 60/40 too risky for the couple described above? Should they be more like 50/50? Again, this isn't a a concern about their reaction to market ebbs and flows...but more so perhaps it is prudent to take into account their ability to take risk being 60, having low retirement savings (I guess need is high, ability is so-so)
I know this is a personal decision,however I do request specific recommendations on the above things. Thanks in advance for any helpful replies.
I'm starting a SEP Ira for my dad. He's 60 years old, salary around 200k. Kids are grown and self sufficient. 150k inheritance on my moms side is really their only retirement savings at this point (I know I know, not good...but they are where they are). Both him and my mom have entrusted me to basically completely take care of their investments-they trust my judgment. I, in turn, trust the judgement of many posters on this board immensely.
For the basics lets say that Dads salary is 200k, and moms is nothing. My 2 primary questions are
1) order of contribution, what should go where, and in what order. Options off the top of my head are
- SEP Ira, which I setup for him tonight, 53k limit there
-Personal IRA's for him and my mom, thats a 6.5k per person limit, correct? Also with his salary, believe he cannot contribute to a Roth, but he can contribute to a traditional IRA. Not that it matters, because I'm certain that he's making WAY more right now then he will be in retirement.
I know he has until April to make these 2016 contributions. I prodded him for an estimate on what he thinks he can invest this year, TOTAL, and he ballpark-ed that around 25k. So lets say 25k is the number we're working with for 2016 contributions. Would you...
- put all 25k into the SEP Ira, and then allocate according?
-Max out the traditional IRA for him and my mom (about 13k I guess...unless their eligible for more with some type of catch up program)? And then put the remainder into the SEP IRA
-Is there something I'm not thinking of?
2) Asset Allocation- I'm pretty well versed in asset allocation, however I felt it would be prudent to ask this on here because I feel that my need, willingness, and ability to take risk is on such a different planet than my parents. So, focusing on my parents, here are some important factors.
-Both parents are around 60 and in relatively ok health. Dad is a little overweight, some manageable diabetes, gets physical therapy for back problems but otherwise is more-or less OK for now. The reason I provide this information is that its worth considering that a day could come when working becomes difficult for him...hes not one of those 60 year olds who hikes in the mountains and runs every day. His health is OK, at best. He says he'll probably work for the rest of his life, jokingly...but in the back of my mind this is worth considering.
-Obviously, they're retirement savings are not immense. With about 150k, plus whatever they can put together in the remainder of my dads career. I think that this probably calls into question how much risk they should be taking.
-On the plus side, I am not worried about them "panic selling" during a downturn, unless I advised them to. They understand enough about investing that they're hope is not to touch this money until retirement, and hopefully let it grow for awhile.
Is 60/40 too risky for the couple described above? Should they be more like 50/50? Again, this isn't a a concern about their reaction to market ebbs and flows...but more so perhaps it is prudent to take into account their ability to take risk being 60, having low retirement savings (I guess need is high, ability is so-so)
I know this is a personal decision,however I do request specific recommendations on the above things. Thanks in advance for any helpful replies.