Financial plan review for a widowed mother

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
jaj2276
Posts: 343
Joined: Sat Apr 16, 2011 5:13 pm

Financial plan review for a widowed mother

Post by jaj2276 » Fri May 25, 2018 4:24 pm

I wanted to get the board's thoughts on financial advice/thoughts I gave to my mom (importantly AFTER she asked).

My mother turns 67 this year. Recently widowed and is currently drawing widow's benefits from SSA. I am not entirely clear if her benefit will be higher than her window's benefits at 70. Assume she'll continue drawing widow's benefits.

She's currently working and would like to retire at 69 or 70. She received word recently that my stepfather will have an insurance claim that will likely get paid out in the next 1-2 years (asbestosis claims, been going on for years). She came and asked me for advice on what to do with any insurance settlement money. We then discussed an overall financial plan.

Pertinent Info:
- She currently works and makes about $25k/year. Plans on working for another 2-3 years (she works for a CPA who also is the same age and also has retirement plans around the same time).
- Monthly expenses are currently $2200/month. SS benefits are $1550 leaving a $700/month shortfall (when she stops working). I haven't yet (nor have I been asked) to go over her expenses to see if there's room for improvement on this.
- Settlement offer is either 20-year annuity of $18k -OR- lump sum payment of $250k.
- No other retirement funds of significance to speak of (there might be a few IRA accounts but they don't have much money in them).
- Her father died at 55 of cancer but her mother just passed away at 92 (and her brothers and sisters all lived to 80s/90s so there is longevity in the family).

1) If I'm simply trying to compare the insurance company's lump sum offer vs. their 20-yr annuity offer, it seems like a discount rate of 4.25% will make them equal. I know interest rates are rising but it doesn't seem like I can get a 20-yr guaranteed return that high so I would need to put the lump sum at risk to achieve equality between the two offers. Am I thinking about this discount rate correctly?

2) I went to immediateannuities.com and got a quote for a $250k SPIA of $17.1k/yr. Basically for $900/yr ($18k vs $17.1k) she'll be able to extend the annuity to her lifetime in case she lives past 89. Doesn't seem like an awful trade-off.

3) If she plans for the lump sum to last 25 years, what kind of starting % withdraw would be recommended. I believe 4% is a common starting % for a 30 year time frame but not sure how different it is for 25 years.

4) If she took $75k of that $250k and put it in a deferred annuity starting at 85 and lasting for remaining lifetime, at 85 she would get $2k/month. Then she could take the $175k to bridge the gap between retirement and the deferred annuity. What's a starting withdraw % for a 15-year timeframe?

5) If I were to use VPW on a 60/40 portfolio, a 15-year timeframe starts at 8.6% and a 25-year timeframe starts at 6.1%. I understand the nuances of VPW and it's how I would go but it could be the constant withdraw % might be easier for her. Not sure there's a question/point other than to throw out whether there are better withdraw methods.

6) Another thing I thought was to take the $175k and buy a house. She would then do a reverse mortgage on the house. That would free up about $700/monthly cash flow (no rent) and then give her an additional amount of money (either lump sum to then annuitize or allow the bank to give her a monthly stipend). I'm the least knowledgeable about reverse mortgages but I know they exist as a tool.

7) She stated the thing she's most concerned about is having a reliable car. Seems bizarre since she only drives about 4k miles a year but whatever, it's her concern. Do low-mileage leases exist that give price breaks? I'd like to get her on a schedule of getting a new car every 2-3 years but I don't want her to have to buy and sell a car every 2-3 years. However I also don't want her to pay for a normal lease that gives her 12k miles/yr and only uses 33% of the mileage allowance. Seems like the dealership would get the benefit.

Wow, sorry for this being much longer than I had anticipated. Any comments welcomed and appreciated.

student
Posts: 2061
Joined: Fri Apr 03, 2015 6:58 am

Re: Financial plan review for a widowed mother

Post by student » Fri May 25, 2018 5:01 pm

This is my analysis.

1) The SS benefits are inflation adjusted. So she needs to come up wit $700 a month, which I will round to $10,000 a year.

2) Buying a SPIA gives $17,100 a year, which I will round to $17,000. So at the beginning there will be a surplus but the payout will not be inflation adjusted, there will be a deficit in later years.

3) Assume the inflation rate is 5% a year (which I hope is generous). After 11 years, $17,000 will have the about the buying power of $10,000.

4) During the first 11 years, she could save $7,000 a year and invest it. She could use it to supplement her income in later years.

5) I think there is a good chance that this is doable depending on inflation rate and investment return. You should play with various assumptions.

jaj2276
Posts: 343
Joined: Sat Apr 16, 2011 5:13 pm

Re: Financial plan review for a widowed mother

Post by jaj2276 » Sun May 27, 2018 12:14 pm

Thanks, appreciate the look. I hadn't thought of using either the 20-yr annuity or the lifetime annuity as making up for the shortfall of monthly expenses and saving for when the monthly expenses increase (which in your scenario was 11 years out).

User avatar
FiveK
Posts: 4837
Joined: Sun Mar 16, 2014 2:43 pm

Re: Financial plan review for a widowed mother

Post by FiveK » Sun May 27, 2018 8:02 pm

Using the numbers in the OP:

1) Yes, ~4.25% is correct. If you are worried about the market, the annuity may be attractive. If you are worried about inflation, the lump sum may be attractive. See What is the average S&P 500 return over 20 years? - Quora for some discussion.

2) Agreed.

3) 3.36%, the number one gets from $700 * 12 / $250K. In other words, withdraw what she needs for living expenses. Maybe more, depending on the amount of large but not annual expenses she might have.

4) Don't know, but >4%.

5) Withdraw at least what you need and at most what you want, recognizing that need and want may be subjective.

6) No experience with reverse mortgages.

7) With that annual mileage, regular preventive maintenance should keep it reliable for many, many years.

Good luck!

User avatar
Watty
Posts: 13439
Joined: Wed Oct 10, 2007 3:55 pm

Re: Financial plan review for a widowed mother

Post by Watty » Sun May 27, 2018 10:23 pm

jaj2276 wrote:
Fri May 25, 2018 4:24 pm
My mother turns 67 this year. Recently widowed and is currently drawing widow's benefits from SSA. I am not entirely clear if her benefit will be higher than her window's benefits at 70. Assume she'll continue drawing widow's benefits.
One of the first things to do would be to get all the details on her Social Security options well defined since that could greatly impact the rest of the plans.
jaj2276 wrote:
Fri May 25, 2018 4:24 pm
- Monthly expenses are currently $2200/month. SS benefits are $1550 leaving a $700/month shortfall (when she stops working). I haven't yet (nor have I been asked) to go over her expenses to see if there's room for improvement on this.

One option I did not see mentioned would be to take the lump sum and buy an annuity when she retires that pays $700 a month. It looks like that might cost about $120K.

An annuity is basically an insurance product so getting more than you need is not necessary and it sounds like she only will need $700 a month.

The other $130K could be left invested and then used to buy additional annuities when she is 75, 80, 85, etc to make up for the purchasing power that would be lost to inflation.

The $250k lump sum could also be left invested for two or three years an hopefully grow, some until she retires and needs to start the annuity.

jaj2276 wrote:
Fri May 25, 2018 4:24 pm
6) Another thing I thought was to take the $175k and buy a house. She would then do a reverse mortgage on the house. That would free up about $700/monthly cash flow (no rent) and then give her an additional amount of money (either lump sum to then annuitize or allow the bank to give her a monthly stipend). I'm the least knowledgeable about reverse mortgages but I know they exist as a tool.
She would also have the maintenance costs of owning a home and even if she can afford it that could be challenging when she is older.

Another consideration is that the typical single family stand alone home can be very isolating for an older person especially when they need to give up driving. My mom outlived my dad and she insisted on staying in the large family home that she had been in for decades. Many of her friends were about her age and she either outlived them or they became less mobile too and could visit less so there often times when the only person she could see for a while was a housekeeper that would come in most days. I can understand her wanting to do that but there would have been a lot of advantages if she would have moved into some sort of senior community where she would have had a lot more social contact.

A condo in some sort of over 55 community might be a better choice than a single family home especially if it costs less. There would be condo fees but with owning a single family house there would be ongoing maintenance costs.

Here is a "rent vs buy" calculator that might be helpful in deciding if one choice is more favorable in your area.

https://www.nytimes.com/interactive/201 ... lator.html

If she someday needs to move into assisted living or a nursing home the condo or house could be sold to help with those costs.

One potential problem with a reverse mortgage is that people may tend to deplete their resources earlier and not have a lot left if there situation changes and they need to leave the house. A reverse mortgage can have a useful roll but it might be better to wait until she is in her 80's for that.

averagedude
Posts: 23
Joined: Sun May 13, 2018 3:41 pm

Re: Financial plan review for a widowed mother

Post by averagedude » Sun May 27, 2018 11:12 pm

One option you can do is invest in a life strategy fund. Vanguard's income fund (VASIX) is a one fund solution that invests 20 percent in stocks and 80 percent in bonds.This fund is well diversified and is great for older people, especially if they are losing cognitive function. If this fund seems to conservative, Vanguard has a life strategy fund that invests in 40 percent of stocks (VSCGX).

User avatar
Watty
Posts: 13439
Joined: Wed Oct 10, 2007 3:55 pm

Re: Financial plan review for a widowed mother

Post by Watty » Sun May 27, 2018 11:13 pm

jaj2276 wrote:
Fri May 25, 2018 4:24 pm
2) I went to immediateannuities.com and got a quote for a $250k SPIA of $17.1k/yr. Basically for $900/yr ($18k vs $17.1k) she'll be able to extend the annuity to her lifetime in case she lives past 89. Doesn't seem like an awful trade-off.
That could be tricky to compare because;
1) She would not buy one until she stops working 2 or 3 years from now. See what the quote is for a 70 year old instead of a 67 year old.

2) If the $250k is invested for 2 or 3 years then it should grow so you would have more to buy an annuity with.

3) In 2-3 years interest rates could be different so the annuity payment amount could be different. My crystal ball is broken so I can't predict the future but if I had to bet I would suspect that interest rates will be higher a couple of years from now which should mean a higher annuity payment.

User avatar
Watty
Posts: 13439
Joined: Wed Oct 10, 2007 3:55 pm

Re: Financial plan review for a widowed mother

Post by Watty » Sun May 27, 2018 11:32 pm

jaj2276 wrote:
Fri May 25, 2018 4:24 pm
7) She stated the thing she's most concerned about is having a reliable car. Seems bizarre since she only drives about 4k miles a year but whatever, it's her concern. Do low-mileage leases exist that give price breaks? I'd like to get her on a schedule of getting a new car every 2-3 years but I don't want her to have to buy and sell a car every 2-3 years. However I also don't want her to pay for a normal lease that gives her 12k miles/yr and only uses 33% of the mileage allowance. Seems like the dealership would get the benefit.
That is way too complex.

I once had to buy a car in a hurry and I ended up buying a used Hertz rental car and it worked out well for me. There have been threads about buying rental cars that you can look up. There is not a consensus but lots of posters have had good experiences with buying used rental cars but some people are concerned that they will have been abused. The one near me frequently will usually a late model Toyota Yaris for less than $10,000.

Most cars come with a five year or 60,000 mile powertrain warranty and that might work to her advantage since she could buy a used rental car with maybe 40,000 miles and get it at a lower price because of the higher than normal mileage. The powertrain warranty would likely still last the full five years since she drives so few miles.

jaj2276
Posts: 343
Joined: Sat Apr 16, 2011 5:13 pm

Re: Financial plan review for a widowed mother

Post by jaj2276 » Mon May 28, 2018 8:44 am

FiveK wrote:
Sun May 27, 2018 8:02 pm
Using the numbers in the OP:

...

3) 3.36%, the number one gets from $700 * 12 / $250K. In other words, withdraw what she needs for living expenses. Maybe more, depending on the amount of large but not annual expenses she might have.

...

5) Withdraw at least what you need and at most what you want, recognizing that need and want may be subjective.

...

7) With that annual mileage, regular preventive maintenance should keep it reliable for many, many years.

Good luck!
Thanks. I came at this from the angle of trying to maximize total dollars received but hadn't thought of simply trying to guarantee she met her expenses for the longest amount of time (which *IS* my goal as I don't want/need/expect any inheritance).

Again, I can't say my mom's car concern is rational but I imagine she doesn't want to have to deal with taking it in to a shop, planning for large-ish unplanned repairs, etc., especially as she gets older. I understand that continually leasing a car and/or buying/selling a new car every 3 years is not the smartest move financially but I'm trying to see how much it costs to buy her that peace of mind.

jaj2276
Posts: 343
Joined: Sat Apr 16, 2011 5:13 pm

Re: Financial plan review for a widowed mother

Post by jaj2276 » Mon May 28, 2018 9:07 am

Watty wrote:
Sun May 27, 2018 10:23 pm
jaj2276 wrote:
Fri May 25, 2018 4:24 pm
My mother turns 67 this year. Recently widowed and is currently drawing widow's benefits from SSA. I am not entirely clear if her benefit will be higher than her window's benefits at 70. Assume she'll continue drawing widow's benefits.
One of the first things to do would be to get all the details on her Social Security options well defined since that could greatly impact the rest of the plans.
She claims that now that she's on his benefits she can't see what hers would be when looking online. I do know that before she even got widow's benefits it was going to be close on whether she would earn enough credits to overtake his (my mom started work late in life). I appreciate however that even a $100 uptick in social security benefits would see a decrease of ~15% in her budget shortfall. Agreed that before making any decisions we'll need to get this number locked in.
Watty wrote:
Sun May 27, 2018 10:23 pm
jaj2276 wrote:
Fri May 25, 2018 4:24 pm
- Monthly expenses are currently $2200/month. SS benefits are $1550 leaving a $700/month shortfall (when she stops working). I haven't yet (nor have I been asked) to go over her expenses to see if there's room for improvement on this.

One option I did not see mentioned would be to take the lump sum and buy an annuity when she retires that pays $700 a month. It looks like that might cost about $120K.

An annuity is basically an insurance product so getting more than you need is not necessary and it sounds like she only will need $700 a month.

The other $130K could be left invested and then used to buy additional annuities when she is 75, 80, 85, etc to make up for the purchasing power that would be lost to inflation.

The $250k lump sum could also be left invested for two or three years an hopefully grow, some until she retires and needs to start the annuity.
Brilliant! As I mentioned in an earlier reply, I do need to look at this from the angle of making sure she meets her needs for the longest period of time instead of trying to maximize total dollars received. An annuity to cover her shortfall would definitely meet that goal and then the rest could be invested to cover inflation increases (as well as occasional one-off expenses).
Watty wrote:
Sun May 27, 2018 10:23 pm
jaj2276 wrote:
Fri May 25, 2018 4:24 pm
6) Another thing I thought was to take the $175k and buy a house. She would then do a reverse mortgage on the house. That would free up about $700/monthly cash flow (no rent) and then give her an additional amount of money (either lump sum to then annuitize or allow the bank to give her a monthly stipend). I'm the least knowledgeable about reverse mortgages but I know they exist as a tool.
She would also have the maintenance costs of owning a home and even if she can afford it that could be challenging when she is older.

Another consideration is that the typical single family stand alone home can be very isolating for an older person especially when they need to give up driving. My mom outlived my dad and she insisted on staying in the large family home that she had been in for decades. Many of her friends were about her age and she either outlived them or they became less mobile too and could visit less so there often times when the only person she could see for a while was a housekeeper that would come in most days. I can understand her wanting to do that but there would have been a lot of advantages if she would have moved into some sort of senior community where she would have had a lot more social contact.

A condo in some sort of over 55 community might be a better choice than a single family home especially if it costs less. There would be condo fees but with owning a single family house there would be ongoing maintenance costs.

Here is a "rent vs buy" calculator that might be helpful in deciding if one choice is more favorable in your area.

https://www.nytimes.com/interactive/201 ... lator.html

If she someday needs to move into assisted living or a nursing home the condo or house could be sold to help with those costs.

One potential problem with a reverse mortgage is that people may tend to deplete their resources earlier and not have a lot left if there situation changes and they need to leave the house. A reverse mortgage can have a useful roll but it might be better to wait until she is in her 80's for that.
She currently lives in senior housing. The all-in costs there are $900 (incl utilities). It's a good deal but rent increases are to be expected. I own a home and it's awful (only slightly kidding) so I'm hesitant to go that route. I just wanted to see if anyone had any good experiences with reverse mortgages. I haven't heard anyone chime in so I imagine this won't be something we'll look in to.

jaj2276
Posts: 343
Joined: Sat Apr 16, 2011 5:13 pm

Re: Financial plan review for a widowed mother

Post by jaj2276 » Mon May 28, 2018 9:13 am

averagedude wrote:
Sun May 27, 2018 11:12 pm
One option you can do is invest in a life strategy fund. Vanguard's income fund (VASIX) is a one fund solution that invests 20 percent in stocks and 80 percent in bonds.This fund is well diversified and is great for older people, especially if they are losing cognitive function. If this fund seems to conservative, Vanguard has a life strategy fund that invests in 40 percent of stocks (VSCGX).
Great suggestions. I was thinking 60/40, 40/60, or 20/80 but didn't know the funds offered beyond the 60/40 Balanced Index fund. I'll sit down with her and try to gauge her risk tolerance. I personally would want 60/40 to keep pace with inflation but I imagine my risk tolerance (and capacity to bear it) is different than hers.

jaj2276
Posts: 343
Joined: Sat Apr 16, 2011 5:13 pm

Re: Financial plan review for a widowed mother

Post by jaj2276 » Mon May 28, 2018 9:20 am

Watty wrote:
Sun May 27, 2018 11:13 pm
jaj2276 wrote:
Fri May 25, 2018 4:24 pm
2) I went to immediateannuities.com and got a quote for a $250k SPIA of $17.1k/yr. Basically for $900/yr ($18k vs $17.1k) she'll be able to extend the annuity to her lifetime in case she lives past 89. Doesn't seem like an awful trade-off.
That could be tricky to compare because;
1) She would not buy one until she stops working 2 or 3 years from now. See what the quote is for a 70 year old instead of a 67 year old.

2) If the $250k is invested for 2 or 3 years then it should grow so you would have more to buy an annuity with.

3) In 2-3 years interest rates could be different so the annuity payment amount could be different. My crystal ball is broken so I can't predict the future but if I had to bet I would suspect that interest rates will be higher a couple of years from now which should mean a higher annuity payment.
The quote is/was for a 70-yr old (even though she is 67 now). All the numbers I've provided was as if my mother had aged another 2 years and received the lump sum settlement at the time (or started receiving the annuity at that time).

And the primary reason why I did it that way was because the $250k isn't expected until another 2 years (having something to do with the way the claims eventually get recorded/settled/paid out). Obviously there's a non-zero chance that she doesn't get ANY of this settlement and then of course we're dealing with an entirely different issue.

I, like you, can't predict where interest rates are going but I hope they continue going up (until they have negative consequences elsewhere and then I hope they'll go down). But at the time of the annuity I hope they're at their peak and the annuity can be maximized.

jaj2276
Posts: 343
Joined: Sat Apr 16, 2011 5:13 pm

Re: Financial plan review for a widowed mother

Post by jaj2276 » Mon May 28, 2018 9:25 am

Watty wrote:
Sun May 27, 2018 11:32 pm
jaj2276 wrote:
Fri May 25, 2018 4:24 pm
7) She stated the thing she's most concerned about is having a reliable car. Seems bizarre since she only drives about 4k miles a year but whatever, it's her concern. Do low-mileage leases exist that give price breaks? I'd like to get her on a schedule of getting a new car every 2-3 years but I don't want her to have to buy and sell a car every 2-3 years. However I also don't want her to pay for a normal lease that gives her 12k miles/yr and only uses 33% of the mileage allowance. Seems like the dealership would get the benefit.
That is way too complex.

I once had to buy a car in a hurry and I ended up buying a used Hertz rental car and it worked out well for me. There have been threads about buying rental cars that you can look up. There is not a consensus but lots of posters have had good experiences with buying used rental cars but some people are concerned that they will have been abused. The one near me frequently will usually a late model Toyota Yaris for less than $10,000.

Most cars come with a five year or 60,000 mile powertrain warranty and that might work to her advantage since she could buy a used rental car with maybe 40,000 miles and get it at a lower price because of the higher than normal mileage. The powertrain warranty would likely still last the full five years since she drives so few miles.
I understand it's complex but that doesn't mean that it's not the right thing to do for my mother. I'm glad your rental car purchases have worked out but I would never buy one (I know how I use rental cars) and I definitely wouldn't buy one for my mother at her age.

I'm not trying to maximize the financial deal I'm getting on a car, I'm trying to minimize the cost of giving my mother the peace of mind of not having to deal with the normal age/mileage related tasks of owning/operating a car (i.e., new brakes, new tires, etc.). This is her desire, not mine.

magazinewriter
Posts: 291
Joined: Mon Apr 19, 2010 11:39 am

Re: Financial plan review for a widowed mother

Post by magazinewriter » Mon May 28, 2018 7:51 pm

I don’t think you need to plan for a new or leased car every 2-3 years. I’d say more like every 6-7 years since she drives so little. Maybe when she gets the settlement money buy a new Honda Accord Toyota Camry or something similar. What kind of car does she drive now?

I’m 63 and have similar driving habits as your mom, about 4K a year. I have a 2012 Honda Accord bought new and I’ve only had to do standard, routine maintenance. (I’m planning to get four new tires later this year, however.) I feel completely comfortable and safe with my 6-year-old car. My previous car was a Camry also bought new that I drove for 10 years while still working so a lot more miles.

sbaywriter
Posts: 67
Joined: Wed Mar 30, 2016 10:00 pm

Re: Financial plan review for a widowed mother

Post by sbaywriter » Mon May 28, 2018 10:12 pm

She claims that now that she's on his benefits she can't see what hers would be when looking online.
This is true, had the same situation - it will no longer show hers. She can call Social Security office and ask them for that info.

student
Posts: 2061
Joined: Fri Apr 03, 2015 6:58 am

Re: Financial plan review for a widowed mother

Post by student » Tue May 29, 2018 5:38 am

jaj2276 wrote:
Mon May 28, 2018 9:07 am
She claims that now that she's on his benefits she can't see what hers would be when looking online. I do know that before she even got widow's benefits it was going to be close on whether she would earn enough credits to overtake his (my mom started work late in life). I appreciate however that even a $100 uptick in social security benefits would see a decrease of ~15% in her budget shortfall. Agreed that before making any decisions we'll need to get this number locked in.
Does her social security security statement still show the earning history? If so, you can enter them https://www.ssa.gov/planners/retire/AnypiaApplet.html to get the projected benefits.

MJS
Posts: 82
Joined: Sat Aug 05, 2017 10:55 pm

Re: Financial plan review for a widowed mother

Post by MJS » Tue May 29, 2018 10:26 am

Most, but unfortunately not all, asbestosis settlements are tax free. If this is one of the rare cases where tax is due... It's worth checking now rather than later. Also, purchased annuities are taxed as ordinary income, while the settlement annuity (probably) won't be.

For the total cost of a cheap car every two years, your mom could have 3-4 uber rides/day. If not now, perhaps before the 2nd or 3rd car? Or as an alternative to night & bad weather driving?

Sandi_k
Posts: 693
Joined: Sat May 16, 2015 11:55 am
Location: SF Bay Area

Re: Financial plan review for a widowed mother

Post by Sandi_k » Tue May 29, 2018 12:32 pm

My mom is 81, and with limited assets. Some steps we've taken:

- Made sure that her SS benefits are maximized.

- Moved from having her taxes done (and paid for) by someone else

- Worked to maintain her home - less big "gotchas" with maintenance

- Bought her a home warranty for her appliances - paid off big this year, when her furnace died. $700 vs. $7000 out of pocket!

- Bought her a solid small car - Mazda CX-5 - that's easy for her to get in and out of, loads o' airbags, and has blind spot monitoring.

- Updated her will do include some $$ she loaned my sister.

- Took on the "personal effects" listing for the will that she's been promising the attorney to draft for 17 years. :eyeroll

- Met with the attorney, and updated medical POA, financial POA, and reviewed agency on her bank accounts - one has been missed, need to fix that

- Got copies of her will & trust, including updates on the trust established with her now-deceased husband (and what is owed to the kids when my mom passes).

All of this has given her great peace of mind. So keep in mind it's not just planning for a windfall in a couple of years - there are other things you can undertake to strategize.

jaj2276
Posts: 343
Joined: Sat Apr 16, 2011 5:13 pm

Re: Financial plan review for a widowed mother

Post by jaj2276 » Tue May 29, 2018 2:08 pm

MJS wrote:
Tue May 29, 2018 10:26 am
Most, but unfortunately not all, asbestosis settlements are tax free. If this is one of the rare cases where tax is due... It's worth checking now rather than later. Also, purchased annuities are taxed as ordinary income, while the settlement annuity (probably) won't be.

For the total cost of a cheap car every two years, your mom could have 3-4 uber rides/day. If not now, perhaps before the 2nd or 3rd car? Or as an alternative to night & bad weather driving?
I hadn't thought about the tax treatment of either the settlement (lump sum or annuity) or the SPIA. It makes a close decision that much closer.

Post Reply