Helping my mom (60yr) - looking for stability

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yourrealdad
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Helping my mom (60yr) - looking for stability

Post by yourrealdad » Fri Dec 07, 2018 10:12 am

Hello all,

Just a quick opinion would be very helpful here. My mother is in the early stages of retiring. She want to get all funds moved from her work investment program. We will work on the long term plan/goals, but for right now she is happy with the balance & just want to put it somewhere low risk. She has a rental unit and will be drawing on Social Security shortly, this should cover her main day-to-day expenses. Her balance now is around $180,000, so some of this she wants access to as needed, and then a chunk would be put away and ideally not drawn on for a good while, or maybe at all.

A fund with moderate growth would be great, but she doesn't want large exposure to the stock market - She is okay with not have her balance go up, or DOWN a large percentage. She has been meeting with a financial advisor and discussing a 3rd Generation Fixed Income Annuity...

Any favorite VG funds or otherwise for this purpose?

Thank you in advance!!

b42
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Re: Helping my mom (60yr) - looking for stability

Post by b42 » Fri Dec 07, 2018 10:52 am

Welcome to the forums!

If you can provide information on what your mother is currently invested in, it will serve as a good starting point for posters to chime in with advice.

Vanguard's target retirement funds may be a good idea (like the 2020), since the fund gets more conservative over time and it takes care of rebalancing:

https://investor.vanguard.com/mutual-fu ... irement/#/

I would be very, very cautious about getting into an annuity product. I'd want to know why out of all of them the advisor is selling a particular product, since they can be loaded with commissions and fees. That being said, if she's risk averse and would prefer stable monthly payments, a single premium immediate annuity (SPIA) may be a good option:

https://www.immediateannuities.com/in-t ... nuity.html

SuzBanyan
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Re: Helping my mom (60yr) - looking for stability

Post by SuzBanyan » Fri Dec 07, 2018 11:18 am

yourrealdad wrote:
Fri Dec 07, 2018 10:12 am
Hello all,

-snip - She has a rental unit and will be drawing on Social Security shortly, this should cover her main day-to-day expenses. -snip-

Thank you in advance!!
How is your Mom’s health and expected longevity? Can she expect any other social security benefits based on someone else’s record because she was married to them for 10 or more years? If so, how much might those benefits be? How accurate is her estimate of her living expenses and her ability to pay them only using her rental income and social security taken at 62?

It may be preferable for her to delay her own social security benefits to increase the amount she receives. When she is in her ‘90s, it will be easier to manage the social security check deposited in her account than it will be to manage a rental property.

yourrealdad
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Re: Helping my mom (60yr) - looking for stability

Post by yourrealdad » Fri Dec 07, 2018 11:29 am

Her health is good. She was married for 17 years and should be able to collect on my father's SS as well, which looks like it should be between $1000 - $1200/month if she starts soon. The rental should provide $800 - $1000/month. I manage that property for her, so nearly no work needed on her end right now. If she can make it work, she wants to delay her SS benefit.

Another part of the conversation is that when my wife & I have our child, we plan to count on her for part time childcare, and will pay a portion of she health insurance costs, so that plays into her expenses. Her house (including the rental unit) is paid off.

pkcrafter
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Re: Helping my mom (60yr) - looking for stability

Post by pkcrafter » Fri Dec 07, 2018 12:03 pm

yourrealdad wrote:
Fri Dec 07, 2018 10:12 am
Hello all,
Just a quick opinion would be very helpful here. My mother is in the early stages of retiring. She want to get all funds moved from her work investment program.
Is this a 401k type of tax-deferred account? What is the current asset allocation? What is mom's age?
We will work on the long term plan/goals, but for right now she is happy with the balance & just want to put it somewhere low risk. She has a rental unit and will be drawing on Social Security shortly, this should cover her main day-to-day expenses. Her balance now is around $180,000, so some of this she wants access to as needed, and then a chunk would be put away and ideally not drawn on for a good while, or maybe at all.
You will have to determine a suitable asset allocation. You will need some percentage in the market to keep up with inflation, so maybe ~40% in equity for that portion which she will not tap.
A fund with moderate growth would be great, but she doesn't want large exposure to the stock market - She is okay with not have her balance go up, or DOWN a large percentage. She has been meeting with a financial advisor and discussing a 3rd Generation Fixed Income Annuity...

Annuity is not a good idea.
Any favorite VG funds or otherwise for this purpose?
Vanguard's Life Strategy Conservative fund (40/60) would be a good choice because it's one fund, auto rebalancing, diversified, and tends to hide the volatility of the stock portion. If that's too much stock, then Target Retirement income (30/70) might also work.

https://investor.vanguard.com/mutual-fu ... view/vscgx

https://investor.vanguard.com/mutual-fu ... file/VTINX

Paul






When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

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mhadden1
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Re: Helping my mom (60yr) - looking for stability

Post by mhadden1 » Fri Dec 07, 2018 12:23 pm

With a monthly income of $1800 and a small nest egg, your mom's ability to take risk seems low. I would consider a CD ladder. I would not buy any complicated financial product from a salesperson.
Oh I can't, can I? That's what they said to Thomas Edison, mighty inventor, Thomas Lindberg, mighty flyer,and Thomas Shefsky, mighty like a rose.

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celia
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Re: Helping my mom (60yr) - looking for stability

Post by celia » Fri Dec 07, 2018 12:47 pm

yourrealdad wrote:
Fri Dec 07, 2018 10:12 am
She has been meeting with a financial advisor and discussing a 3rd Generation Fixed Income Annuity...
What is the difference between a 3rd generation (is that a brand name since you capitalized it?) fixed income annuity and a regular fixed annuity?

If her husband of 17 years has died, his SS benefit will no longer increase so she might as well take it when eligible and allow her own benefit to continue to grow. At 70, will her benefit be more than his?

guitarman555
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Re: Helping my mom (60yr) - looking for stability

Post by guitarman555 » Fri Dec 07, 2018 12:49 pm

What about VBTLX? Wondering about that myself. It would be “relatively” safe and still outperform CD’s right?

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dodecahedron
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Re: Helping my mom (60yr) - looking for stability

Post by dodecahedron » Fri Dec 07, 2018 12:57 pm

celia wrote:
Fri Dec 07, 2018 12:47 pm

If her husband of 17 years has died, his SS benefit will no longer increase so she might as well take it when eligible and allow her own benefit to continue to grow.
Not a foregone conclusion. Need to run the numbers to be sure. Her survivor benefit on late husbands account grows until HER Full Retirement Age. She might be better off collecting on her own record at 62 and then filing for maximized survivor benefit at FRA.

yourrealdad
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Re: Helping my mom (60yr) - looking for stability

Post by yourrealdad » Fri Dec 07, 2018 2:27 pm

celia wrote:
Fri Dec 07, 2018 12:47 pm
yourrealdad wrote:
Fri Dec 07, 2018 10:12 am
She has been meeting with a financial advisor and discussing a 3rd Generation Fixed Income Annuity...
What is the difference between a 3rd generation (is that a brand name since you capitalized it?) fixed income annuity and a regular fixed annuity?

If her husband of 17 years has died, his SS benefit will no longer increase so she might as well take it when eligible and allow her own benefit to continue to grow. At 70, will her benefit be more than his?
I am not certain about what 3rd generation means. The different products have different caps and fees.

Her benefit will definitely be more than his.

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Nestegg_User
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Re: Helping my mom (60yr) - looking for stability

Post by Nestegg_User » Fri Dec 07, 2018 9:13 pm

yourrealdad wrote:
Fri Dec 07, 2018 2:27 pm
celia wrote:
Fri Dec 07, 2018 12:47 pm
yourrealdad wrote:
Fri Dec 07, 2018 10:12 am
She has been meeting with a financial advisor and discussing a 3rd Generation Fixed Income Annuity...
What is the difference between a 3rd generation (is that a brand name since you capitalized it?) fixed income annuity and a regular fixed annuity?

If her husband of 17 years has died, his SS benefit will no longer increase so she might as well take it when eligible and allow her own benefit to continue to grow. At 70, will her benefit be more than his?
I am not certain about what 3rd generation means. The different products have different caps and fees.

Her benefit will definitely be more than his.

that speaks that she should file for a survivors benefit; then the “deemed filing” rule doesn’t apply

as for annuity.....only a SPIA, get rid of the salesman

is the “3rd Generation Annuity” that you mentioned a reverse annuity mortgage (i.e., a “reverse mortgage”) by “3rd Generation Mortgage” out of NJ? If so there’s pitfalls at that age: https://www.researchgate.net/publicatio ... e_Industry

averagedude
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Re: Helping my mom (60yr) - looking for stability

Post by averagedude » Fri Dec 07, 2018 9:26 pm

I would suggest you consider these two funds.
1. VSCGX- Vanguard life strategy conservative growth fund. Only consider this fund if you can handle a 20% loss.
2. VASIX- Vanguard life strategy income fund. Consider this fund if you can handle a 10% loss.


If you can't handle any loss, don't expect an investment product that is going to give you great returns.

Dottie57
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Re: Helping my mom (60yr) - looking for stability

Post by Dottie57 » Fri Dec 07, 2018 10:04 pm

No fixed annuity.

A Single Premium Immediate Annuity might work. I would hope she can wait until age 70. She will get more money for her money the older she is when purchased.

averagedude
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Re: Helping my mom (60yr) - looking for stability

Post by averagedude » Fri Dec 07, 2018 10:16 pm

Dottie57 wrote:
Fri Dec 07, 2018 10:04 pm
No fixed annuity.

A Single Premium Immediate Annuity might work. I would hope she can wait until age 70. She will get more money for her money the older she is when purchased.
If i was an annuity salesperson, this is the advice i would give. Waiting to 70 is an annuity that is hard to beat. Im sure if i was an annuity salesperson i would either get fired or starve to death.

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