80 yo Single Male with $1.25MM in CD's (Course of Action/Inaction)

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OAG
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80 yo Single Male with $1.25MM in CD's (Course of Action/Inaction)

Post by OAG »

I will not say this is for a friend because it isn't. I have $600K in CD's maturing in next 8 months or so then the remainder maturing over the next 5 years (remainder is currently earning 3.5% APY). The maturing $600K, if placed into or rolled over to CD's would be at about 1% (assuming interest rates continue to decline).

Do not need the money to live on. Annual expenses are $30K to $60K depending on extent of gifts (bare minimum is $30K). Medical care, beyond medicare, is former employer paid for life. Pension, SS, and IRA provides over $70K of annual income.

Want to leave at least current savings balance ($1.25MM) for survivore, more wouild be nice but not necessary.

Do not anticipate needing nursing home care.

Suggestions would be appreciated along the line of where to put the short term and eventually longer term maturing money in the stock market or just forget the stock market - I have been very risk adverse in the past.
OAG=Old Army Guy. Retired CW4 USA (US Army) in 1979 21 years of service @ 38.
7eight9
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Re: 80 yo Single Male with $1.25MM in CD's (Course of Action/Inaction)

Post by 7eight9 »

You might want to consider multi-year guaranteed annuities (MYGAs).

Example --- Fixed Annuity Rates for August 2020 ---https://www.blueprintincome.com/fixed-annuities

Five year rates as high as 3.45% per above link.
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Lee_WSP
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Re: 80 yo Single Male with $1.25MM in CD's (Course of Action/Inaction)

Post by Lee_WSP »

How old would survivor be?
Last edited by Lee_WSP on Sun Aug 09, 2020 10:13 am, edited 2 times in total.
bluebolt
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Re: 80 yo Single Male with $1.25MM in CD's (Course of Action/Inaction)

Post by bluebolt »

It depends how risk averse you are.
You could put it into CDs at 1%. You could put it into a 3 year deferred fixed annuity/multi-year guaranteed annuity between 1.5-3%.

If you are willing to take more risk, there are additional options. Are you open to risking principal?
EnjoyIt
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Re: 80 yo Single Male with $1.25MM in CD's (Course of Action/Inaction)

Post by EnjoyIt »

How about a 40/60 life strategy fund. This way you have some cash in equites for possible growth.

Another option is to stick with CDs since it sounds like you are comfortable with that and buy US equites like VTSAX (vanguard total stock market index fund) for the rest. Maybe something in the order of $800k in CDs and the rest in VTSAX or equivalent.

Lastly rollover the $600k in CDs as planned and put the rest into a life strategy 80/20 fund. This will effectively give you about 40% in equites similar to my first option above.

Long story short, I think you should have some equities for growth and inflation protection. 20% at a minimum.
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Re: 80 yo Single Male with $1.25MM in CD's (Course of Action/Inaction)

Post by geerhardusvos »

OAG wrote: Sun Aug 09, 2020 9:53 am I will not say this is for a friend because it isn't. I have $600K in CD's maturing in next 8 months or so then the remainder maturing over the next 5 years (remainder is currently earning 3.5% APY). The maturing $600K, if placed into or rolled over to CD's would be at about 1% (assuming interest rates continue to decline).

Do not need the money to live on. Annual expenses are $30K to $60K depending on extent of gifts (bare minimum is $30K). Medical care, beyond medicare, is former employer paid for life. Pension, SS, and IRA provides over $70K of annual income.

Want to leave at least current savings balance ($1.25MM) for survivore, more wouild be nice but not necessary.

Do not anticipate needing nursing home care.

Suggestions would be appreciated along the line of where to put the short term and eventually longer term maturing money in the stock market or just forget the stock market - I have been very risk adverse in the past.
Do not put this into an annuity like another commentor said.

I would recommend putting the 1.2M in a 50/50 or 60/40 (VTSAX/CD). Meaning just take about 600,000 and put into VTSAX. Then continue the CD ladder on the rest of the money. If the CD ladder is too much work, do a low cost intermediate treasury bond fund or similar.

It’s that simple! This will give you some growth to keep up with inflation and maybe grow your nest egg slightly depending in how much you spend. Bests wishes!
VTSAX and chill
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Stinky
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Re: 80 yo Single Male with $1.25MM in CD's (Course of Action/Inaction)

Post by Stinky »

7eight9 wrote: Sun Aug 09, 2020 9:56 am You might want to consider multi-year guaranteed annuities (MYGAs).

Example --- Fixed Annuity Rates for August 2020 ---https://www.blueprintincome.com/fixed-annuities

Five year rates as high as 3.45% per above link.
If you don't want to take stock market risk, I agree that MYGAs offer guaranteed interest rates well-higher than CDs.

Two caveats -
---- MYGAs are not FDIC insured; rather, a default by the insurance company would be covered by your state life and health insurance guaranty fund. Therefore, keep the amount invested with any one company below the threshold for your state.

---- Almost all MYGAs have punishingly high surrender charges for withdrawals prior to the end of the guarantee period. Some products waive any surrender charges at death, but some do not, so check this out carefully.

I agree that Blueprint Income is a great place to shop for MYGAs. They have a wide selection of companies and guarantee periods. And they're easy to do business with.
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delamer
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Re: 80 yo Single Male with $1.25MM in CD's (Course of Action/Inaction)

Post by delamer »

If you want to increase your nest egg for your heirs’ benefit, then stocks are the way to go.

But they are a long-term investment, so only increase your stock allocation if you are willing/able to hold onto them through the inevitable market downturns. If your past behavior has been to sell stocks when the market goes down, then you are better off not investing in them.

I’m not suggesting putting everything in stocks, but a 30% allocation to stocks with the rest in CDs/Treasuries would greatly increase your overall return. You might find this chart interesting. It shows the tradeoff between return and volatility: https://personal.vanguard.com/us/insigh ... llocations

Also consider gifting some money to your heirs (whether they be family, friends, charities) now, rather then deferring your generosity until you’re dead. You can give $15,000/year to any person without having to report it on your taxes, and there are no tax consequences for the person you give the money to.
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OAG
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Re: 80 yo Single Male with $1.25MM in CD's (Course of Action/Inaction)

Post by OAG »

Lee_WSP wrote: Sun Aug 09, 2020 9:57 am How old would survivor be?
Not material as survivor(s) are adults not in need of support or income.
OAG=Old Army Guy. Retired CW4 USA (US Army) in 1979 21 years of service @ 38.
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mickeyd
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Re: 80 yo Single Male with $1.25MM in CD's (Course of Action/Inaction)

Post by mickeyd »

Want to leave at least current savings balance ($1.25MM) for survivore, more wouild be nice but not necessary.
Why complicate your life? What you are doing today is working well. Jack Bogle has indicated that simplicity is a wonderful condition (or was it Taylor Laramore?). At age 80, and single, simplicity rules!
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Lee_WSP
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Re: 80 yo Single Male with $1.25MM in CD's (Course of Action/Inaction)

Post by Lee_WSP »

OAG wrote: Sun Aug 09, 2020 11:02 am
Lee_WSP wrote: Sun Aug 09, 2020 9:57 am How old would survivor be?
Not material as survivor(s) are adults not in need of support or income.
I think it is since as you've stated in the OP, you're pretty much investing this money to be passed on to them since you in all likelihood will not need it. *I reread the OP a little more thoroughly to see if you stated your investing goals, which you somewhat did*

Although you did say that you want to leave *at least* that amount. Which is enough to say that you then shouldn't put any money in risky assets. I missed that.

Stick to CD's or direct treasury purchases. I'm unsure about treasuries, but CDs can transfer on death.
Last edited by Lee_WSP on Sun Aug 09, 2020 12:17 pm, edited 1 time in total.
retiredjg
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Re: 80 yo Single Male with $1.25MM in CD's (Course of Action/Inaction)

Post by retiredjg »

You are considering moving away from CDs because interest rates are so low right not. You state you are risk averse.

What do you think about using half CDs and half in an all in one fund at 20% stocks? An example would be Vanguard's LifeStrategy Income fund. This would give your portfolio a 10% stock allocation which is lower than usually suggested, but might suit your temperament.

You would probably leave more to heirs if you invest more aggressively, but then your own hard earned money would be making your life uneasy to miserable....what's the point in that?
Monsterflockster
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Re: 80 yo Single Male with $1.25MM in CD's (Course of Action/Inaction)

Post by Monsterflockster »

OAG wrote: Sun Aug 09, 2020 11:02 am
Lee_WSP wrote: Sun Aug 09, 2020 9:57 am How old would survivor be?
Not material as survivor(s) are adults not in need of support or income.
Well if it is a grandchild or a wife who is a few years younger it kinda does influence the investment time no? Aren’t long term investment generally considered less risk? (Though nobody knows nothin). If everyone is good... why you asking here on a forum?

Me... if I was risk adverse and didn’t need the money, I’d put 1 million in a CD & put 200k in VTI and not think about it.
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Re: 80 yo Single Male with $1.25MM in CD's (Course of Action/Inaction)

Post by Katietsu »

Monsterflockster wrote: Sun Aug 09, 2020 11:50 am
Me... if I was risk adverse and didn’t need the money, I’d put 1 million in a CD & put 200k in VTI and not think about it.
This sounds like a great plan.
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