Mom's money

[Beppington]

As I've said, this isn't survival money. She has other options. Maybe we won't do anything with this money but it never hurts to think about other options.

I agree & am just providing my opinion.

I just hope that she would take it well if you put in $45K & the Dow drops anything like it did from Oct. '07 (~14,000) to March '09 (~6,800), a drop of about 50%. Will she be perfectly happy with her $90K being worth $68K at then age 78? I would not be, but then we are all different.

[disneysteve]

I think we may be getting confused here. How much does she have in total investable assets? You said she has 90K in savings but also said she has "some cash and bonds that may be worth a couple hundred k more." Is that 90K plus a couple hundred K or a couple hundred K all together including the 90K?

Let's say she has a grand total of 200K in investable assets. What I'd look to do is something like 10% in growth, like the total stock market index I mentioned, 20% in cash as an EF and whatever fund (travel, gifts, home maintenance, etc.), and the remaining 70% in a mix of conservative investments of varying duration from short-term (1 year) to longer term. Right now, I'd probably favor shorter terms since interest rates have nowhere to go but up and it would be a lousy time to lock in money with a long term at an interest rate that won't look so attractive a couple of years from now.

[Beppington]

Right now, I'd probably favor shorter terms since interest rates have nowhere to go but up and it would be a lousy time to lock in money with a long term at an interest rate that won't look so attractive a couple of years from now.

Market timing

[GREENBACK]

She has about 200k total, more or less, I believe. I'm really just concerned with the 90k that's in cash. Just seems like it could be better utilized. As a very conservative person she may decide to leave it there and she would be fine if she did. I'd like to offer a few possible alternatives if I can.

[disneysteve]

She has about 200k total, more or less, I believe. I'm really just concerned with the 90k that's in cash. Just seems like it could be better utilized. As a very conservative person she may decide to leave it there and she would be fine if she did. I'd like to offer a few possible alternatives if I can.

How about building a 1-year CD ladder? Pull out whatever she needs totally liquid for emergencies - perhaps 10K. That leaves 80K. Put 20K each into a 3-month, 6-month, 9-month and 1-year CD. When each of the shorter ones matures, roll it into a new 1-year CD. In 1 year, that will leave her with four 1-year CDs with one maturing every 3 months. That will earn her more than a savings account and will allow her to take advantage of rising rates.

[GREENBACK]

That's an idea I'm considering. Thanks for the advice.

[KellyJef]

My dad had a military pension and a pension from civilian employment and none of it went to her.

Corporate pensions definitely do not automatically transfer to a surviving spouse unless the employee has chosen an option that gives the surviving spouse a "share". When I retired, I chose to accept a smaller pension because this option will give DH 2/3 of my pension if I die first.

[GREENBACK]

Corporate pensions definitely do not automatically transfer to a surviving spouse unless the employee has chosen an option that gives the surviving spouse a "share". When I retired, I chose to accept a smaller pension because this option will give DH 2/3 of my pension if I die first.

I now see your point exactly. My dad had a death benefit option that he chose not to accept. I can't imagine why. It's a relatively small amount that will greatly benefit the loved ones you leave behind. It's water under the bridge now but maybe someone reading this will look closer at the options you choose in things like this.

[disneysteve]

My dad had a death benefit option that he chose not to accept.

Many people opt out of the survivor benefit because it usually makes the payments lower while they are alive since the company knows payments will likely last for more years. By skipping the survivor benefit, the recipient gets a higher monthly income while alive. For some people, there really isn't a choice because the reduced amount may not be enough for them to live on.

[GREENBACK]

Many people opt out of the survivor benefit because it usually makes the payments lower while they are alive since the company knows payments will likely last for more years. By skipping the survivor benefit, the recipient gets a higher monthly income while alive. For some people, there really isn't a choice because the reduced amount may not be enough for them to live on.

DS
I understand your response but this didn't apply to my parents who lived comfortably on their retirement revenue. I wish I could have said something years ago to them but I simply thought this was taken care of.

[scfr]

I see nothing wrong with leaving the $90K in savings. You can help her by making sure she's earning a competitive rate of interest on it.

Bank Deals - Best Rates and Deals

I helped my grandparents with their finances towards the ends of their lives, and once they got in to their 80's their expenses increased quite a bit (assisted living center, medical, extra expenses related to aging). Your mom may some day in the not too distant future need those funds to help her meet her expenses, so I'd leave it liquid.

[GREENBACK]

I see nothing wrong with leaving the $90K in savings. You can help her by making sure she's earning a competitive rate of interest on it.

Bank Deals - Best Rates and Deals

I helped my grandparents with their finances towards the ends of their lives, and once they got in to their 80's their expenses increased quite a bit (assisted living center, medical, extra expenses related to aging). Your mom may some day in the not too distant future need those funds to help her meet her expenses, so I'd leave it liquid.

Yeah, I've talked to her and got a better idea of things. This may be the way to go afterall.