elderly MIL's assets

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albireo13
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elderly MIL's assets

Post by albireo13 »

My Mother in Law is 94yo but, her assets are dwindling. She has ~$250K left and is concerned about running out of money.
She is in a CCRC right now. I am trying to get details on her investments and cash flow.
She has roughly half in Schwab in Morningstar multi asset Income fund (iYLD).
The other half I don't know yet.

She is thinking of moving to Fidelity and is looking for some guidance. I am thinking some low expense Bond heavy fund(s).
Any good ideas or suggestions?
I am not an investment guru myself so, am reluctant to recommend any funds in particular at this time.

Thx
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arcticpineapplecorp.
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Re: elderly MIL's assets

Post by arcticpineapplecorp. »

will she be subsidized by the ccrc when she runs out of funds or not?

if she will be allowed to continue to live at the ccrc without sufficient funds (only paying income to the facility), there's no issue. She bought in presumably to get the insurance of depleting funds due to longevity.

if she will need to leave the ccrc, there could be a problem, but bonds won't necessarily solve that problem because the issue is how much she is spending per month relative to her total resources.

can you give some more info so we can see what the trajectory looks like and what possible tradeoffs might be suggested:

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Silk McCue
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Re: elderly MIL's assets

Post by Silk McCue »

What sources of guaranteed income does she have (Social Security, Pension …) and what are her expenses. Just need to get a sense of what the burn rate on the 250k is.

She doesn’t need to move her money anywhere to get advice. No need to move until that is deemed necessary to meet her needs.

Cheers
HomeStretch
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Re: elderly MIL's assets

Post by HomeStretch »

+1 to providing more information in the “Asking Portfolio Questions” format linked above for best feedback. In addition to providing portfolio information, include your MIL’s retirement income (SS, pension, annuity) and total annual expenses.

As part of the information gathering, obtain and review a copy of the CCRC agreement and the current fee schedule in effect. It should specify, among other things, what happens if someone can no longer private pay the CCRC costs. I don’t know much about them, but it’s possible the CCRC may accept Medicaid in such situations. Your MIL would need to apply and be approved for Medicaid (which varies by state) and spend down her countable assets to a low four-figure amount before Medicaid would pay long-term care costs, if any.

Schwab and Fidelity both offer, among other things, low ER fund choices so likely there’s no need to transfer MIL’s Schwab account(s) to Fidelity in order to self-manage (if not already) or change holdings. Depending on the type of account, there may be tax consequences to making changes to investment holdings.

Does MIL have a durable power of attorney naming a person/successor(s)?
Topic Author
albireo13
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Re: elderly MIL's assets

Post by albireo13 »

Thanks.
I have a call with her soon and hope to get more info on cash flow, etc.
Yes, I believe the CCRC has a trust to cover situations where residents run out of money. I will confirm.
ChrisC
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Re: elderly MIL's assets

Post by ChrisC »

HomeStretch wrote: Mon Sep 20, 2021 7:18 am +1 to providing more information in the “Asking Portfolio Questions” format linked above for best feedback. In addition to providing portfolio information, include your MIL’s retirement income (SS, pension, annuity) and total annual expenses.

As part of the information gathering, obtain and review a copy of the CCRC agreement and the current fee schedule in effect. It should specify, among other things, what happens if someone can no longer private pay the CCRC costs. I don’t know much about them, but it’s possible the CCRC may accept Medicaid in such situations. Your MIL would need to apply and be approved for Medicaid (which varies by state) and spend down her countable assets to a low four-figure amount before Medicaid would pay long-term care costs, if any.

Schwab and Fidelity both offer, among other things, low ER fund choices so likely there’s no need to transfer MIL’s Schwab account(s) to Fidelity in order to self-manage (if not already) or change holdings. Depending on the type of account, there may be tax consequences to making changes to investment holdings.

Does MIL have a durable power of attorney naming a person/successor(s)?
It's highly unlikely for most high-end CCRCs to accept Medicaid (or even be approved as a Medicare facility for insurance purposes for rehabilitative services) for residents in the skilled nursing wing of the CCRC. Moreover, Medicaid wouldn't pay for a residential services in the independent wing of the CCRC and it's unlikely it would pay for home care or assisted living expenses incurred by the resident.

If you find a CCRC that accepts Medicaid residents after the resident has privately paid for everything and is now destitute, I'd be curious to see if that CCRC has turned to Medicaid as a last resort to financial solvency. Sounds like that would be counter-intuitive to a CCRC's attractiveness to in-coming residents.

Most of the CCRCs I've seen have a separate trust or fund to take care of residents, in the unlikely event they run out of money or resources to pay monthly CCRC fees -- the whole idea of the CCRC making sure in-coming residents have enough resources to private pay for services, though out their lifetime at a CCRC, is to avoid these situations, but they can happen. I believe some CCRC might even place restrictions on a resident's ability to gift money away to lessen the predicament of destitution.

Thus, far, we don't know from the OP: (1) MIL's stream of guaranteed income, pensions and social security that would pay for monthly fees, and (2) whether she now is in the nursing care wing of the CCRC and has incurred additional medical expenses not covered by insurance.
dbr
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Re: elderly MIL's assets

Post by dbr »

As a generalization you can't invest your way out of not having enough money at this point. Changing brokers and selecting funds is not going to have much effect. Also as a generalization, but not advice, a person at this point could probably just as well save all the money in CDs and savings accounts. But one needs to know how fast the money is being spent.

I think other posters are considering some of the options.
Lumpr
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Re: elderly MIL's assets

Post by Lumpr »

albireo13 wrote: Mon Sep 20, 2021 6:53 am My Mother in Law is 94yo but, . . . She has ~$250K left and is concerned about running out of money.
. . .

The first thing I'd do is start pricing annuities (SPIA).

When you need to drive a screw, don't look for a hammer.
delamer
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Re: elderly MIL's assets

Post by delamer »

As others have said, more details are needed. Understanding all her income sources is important — Social Security, pensions, annuities, savings/checking. And all her expenses — Medicare & supplements, cop-pays for prescriptions, etc.

Is she using an advisor at Schwab? Moving to a different brokerage likely isn’t the answer.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
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Stinky
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Re: elderly MIL's assets

Post by Stinky »

Lumpr wrote: Tue Sep 21, 2021 9:50 am
albireo13 wrote: Mon Sep 20, 2021 6:53 am My Mother in Law is 94yo but, . . . She has ~$250K left and is concerned about running out of money.
. . .

The first thing I'd do is start pricing annuities (SPIA).

When you need to drive a screw, don't look for a hammer.
I'm not sure that a 94 year old can buy a single premium immediate annuity (SPIA). The maximum issue age for many companies is 90.
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
Topic Author
albireo13
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Re: elderly MIL's assets

Post by albireo13 »

She is looking to move into Fidelity Morningstar Multi Asset Income ETF.
It seems to be a roughly 60/40 AA and expense ratio of 0.6%. Not necessarily bad choice but,
maybe a 50/50 fund with low ER might be better. Thoughts on other good options at Fidelity?

Unfortunately, I have no visibility into accounts or cash flow so ...
HomeStretch
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Re: elderly MIL's assets

Post by HomeStretch »

For someone worried about running out of money, investing in a fund with a 0.6% ER seems counter-intuitive.

I understand you are trying to help MIL. It’s not uncommon in my family experience to have an elderly relative who is worried about money yet is vague on necessary details. It’s not clear whether she has a cash flow issue, what the CCRC trust will do to help her if she runs out of money, and how best to invest whatever assets she has. But without any visibility into her accounts or cash flow, consider telling MIL you are unable to give advice as you may do more harm than good. If she really wants your/her children’s help, she will provide the information needed.
Last edited by HomeStretch on Wed Sep 22, 2021 6:25 pm, edited 1 time in total.
Silk McCue
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Re: elderly MIL's assets

Post by Silk McCue »

albireo13 wrote: Mon Sep 20, 2021 8:12 am Thanks.
I have a call with her soon and hope to get more info on cash flow, etc.
Yes, I believe the CCRC has a trust to cover situations where residents run out of money. I will confirm.
These are crucial data points necessary to provide any meaningful advice on investments. I thought she was looking for some help. Is she unwilling to share these details with you?

Cheers
Topic Author
albireo13
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Re: elderly MIL's assets

Post by albireo13 »

Thanks.
Cash flow is what it is. She is pretty frugal, just trying best to stretch what she has.
delamer
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Re: elderly MIL's assets

Post by delamer »

albireo13 wrote: Wed Sep 22, 2021 6:14 pm She is looking to move into Fidelity Morningstar Multi Asset Income ETF.
It seems to be a roughly 60/40 AA and expense ratio of 0.6%. Not necessarily bad choice but,
maybe a 50/50 fund with low ER might be better. Thoughts on other good options at Fidelity?

Unfortunately, I have no visibility into accounts or cash flow so ...
Vanguard Balanced Fund has a 0.07% ER. Apparently $75 to buy at Fidelity.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
bradinsky
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Re: elderly MIL's assets

Post by bradinsky »

delamer wrote: Wed Sep 22, 2021 6:46 pm
albireo13 wrote: Wed Sep 22, 2021 6:14 pm She is looking to move into Fidelity Morningstar Multi Asset Income ETF.
It seems to be a roughly 60/40 AA and expense ratio of 0.6%. Not necessarily bad choice but,
maybe a 50/50 fund with low ER might be better. Thoughts on other good options at Fidelity?

Unfortunately, I have no visibility into accounts or cash flow so ...
Vanguard Balanced Fund has a 0.07% ER. Apparently $75 to buy at Fidelity.
+1 And $75 fee to purchase is minimal if the purchase is $250K
Silk McCue
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Re: elderly MIL's assets

Post by Silk McCue »

albireo13 wrote: Wed Sep 22, 2021 6:38 pm Thanks.
Cash flow is what it is. She is pretty frugal, just trying best to stretch what she has.
If the $250k were held in cash how long would it last based on her frugal spend rate?

Cheers
Topic Author
albireo13
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Re: elderly MIL's assets

Post by albireo13 »

I believe burn rate is around $5K/month now. That's $60K/yr. Not counting inflation and rising CCRC costs, we are looking at 4yrs. She is very concerned about rising CCRC costs and would like some growth.

Does Fidelity offer something like low ER balanced funds?
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