How to invest $1M cash for a 90-year old.

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Submitted by sdduuuude on April 27, 2021 - 2:58pm

So, Mom is 92 and living in a very expensive assisted living facility but has income from social security, a family business and long-term care insurance that almost covers those expenses. Maybe her net outflow is 20 to 50K a year now but If she got in trouble we could lower those expenses to make it so her income matches her outflow.

Or, we could boost her income with the right invenstment strategy. Or both.

We sold her house last year and she has over $1M cash in the bank, completely uninvested, and I'm just not sure what to do with it. Piggs to the rescue ...

Submitted by gzz on April 27, 2021 - 3:32pm.

GBAB, a taxable muni fund. It will pay about 60k before taxes.

BBN is similar but I like it a tiny bit less.

Submitted by sdrealtor on April 27, 2021 - 6:07pm.

This was almost exactly the situation my mom was in at age 77 albeit more money but no family business. The LTC insurance benefits for five years were a game changer. That $1m could easily turn into closer to $1.5 left alone with reinvestment in five years

Here's how I/we looked at it. She's not gonna run out of money if she lives to be 130. The investment approach was income was hers and assets were for heirs. Some munis, some income funds and a large amount of blue chip dividend stocks with goal of 3-4% income on those stocks. You should be able to generate close to 40k income which you reinvest while ltc insurance pays the bills. If that runs out you can take dividends as income.

Honestly 20-50k is a lot on top of SS and ltc insurance and will go down as she is less able or willing to do things. The big expense will come toward the end if she goes slowly like mine. Couldn't do assisted living and needed more care/attention. Spent 18 months in a private long term care room which was more than 2x what assisted was. I airways said if she saw the checks I wrote each month she would check out on the spot. But it was her money and she could both afford and deserved the best. None of us needed her money but once she was gone it did make a big difference to my sister's retirement. With that said nearly two years later not a penny has been spent by any of her four children

Submitted by Myriad on April 27, 2021 - 6:13pm.

So probably at least enough cash/cash equivalent to cover 2 years of increased LT care like the previous poster said.
The rest invested in diversified bonds, REITs, and equities. But definitely diversify internationally too as the US markets have increased much more than overseas.
Maybe 40% bonds, 20% REITs, 40% equities.

Submitted by sdduuuude on April 28, 2021 - 12:31pm.

Thanks piggs.

I have been paying little attention to the markets for the last several years due to a little house-building project. I feel rusty in the investing department. This need to get my Mom's money invested has kind of kicked me in that direction so hoping to start paying better attention to my own retirement funds as well.

I'll start researching these answers and see what I come up with. Would appreciate any thoughts on what not to do as well. I'll definitely avoid high growth stuff for Mom.

Last time Mom sold a house - in Tucson at the top of the market in 2005, some WaMu financial adviser sold them some bonds that crashed pretty hard. Muni bonds would have been better for them.

Also glad to see that the "fox news vs trump haters" insanity has left Piggington.

Submitted by sdrealtor on April 28, 2021 - 2:38pm.

I'll PM you. I've got a life experience PhD in this

Submitted by scaredyclassic on April 28, 2021 - 3:10pm.

it is kind of awful to allocate large sums of money all at once. Much nicer to do a bit at a time. maybe it's an argument for ditching one's house early in retirement and investing the money witha longer time frame for self and heirs.

Submitted by sdduuuude on April 28, 2021 - 4:59pm.

scaredyclassic wrote:
it is kind of awful to allocate large sums of money all at once.

Yes, I agree. I don't plan on moving it all at once. Thinking maybe over the next 12 months. But I would like a plan, at least.

Submitted by scaredyclassic on April 29, 2021 - 8:23am.

I recommend some type of auto debit plan to move the $, over whatever time frame, so that you don't have think about each buy.

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