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Asset Allocation for an 84 year old
Old 05-11-2008, 06:59 AM   #1
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Asset Allocation for an 84 year old

I read a recent thread "Asset Alloc. for a 24 year old", lets take a look from the other end of the telescope.

An 84 year old friend of mine is worried that she might outlive her money. She is in good health and lives in, and owns outright her own townhouse and drives her own car. Her husband set up all investments decades ago and died in 2001. Her account statements show no buy/sell activity.

Here are the investments and assets:

$8,650 Money market sweep acct. paying .32%
$3,900 Common stock (CHG)
$8,400 CEFs (MYN MFM)
$18,500 MFs (ETNYX PTIEX)
$7,200 Annuity (AIM/Cigna)

$200,000 Townhouse

She has been drawing $600 per month from the annuity for years and says that amount is more than enough to pay her expenses. I don't know how much Social Security she gets, and how much real estate taxes she pays nor if there was any life insurance.

Doing the simple math her $46,600 investments divided by $600 a month says shes got 6 years left. Might be enough. My feeling is that most of the money is at risk and in haphazard slices and dices. With recent market declines she was worried enough about it to ask my opinion.

What do you think?
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Old 05-11-2008, 07:38 AM   #2
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She can always get a reverse mortgage. The bigger worry at her age is if she needs assisted living or nursing home care.
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Old 05-11-2008, 08:20 AM   #3
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I may be wrong here but I read your post as the $600/mo ($7200/yr) comes from the annuity alone. The other $39,400 is extra income if needed. I would try and get her into a better MM account then sell anything that is exposed to equities and set up a 5 yr ladder of CD's.
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Old 05-11-2008, 04:14 PM   #4
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Quote:
Originally Posted by BUM View Post
I read a recent thread "Asset Alloc. for a 24 year old", lets take a look from the other end of the telescope.

An 84 year old friend of mine is worried that she might outlive her money. She is in good health and lives in, and owns outright her own townhouse and drives her own car. Her husband set up all investments decades ago and died in 2001. Her account statements show no buy/sell activity.

Here are the investments and assets:

$8,650 Money market sweep acct. paying .32%
$3,900 Common stock (CHG)
$8,400 CEFs (MYN MFM)
$18,500 MFs (ETNYX PTIEX)
$7,200 Annuity (AIM/Cigna)

$200,000 Townhouse

She has been drawing $600 per month from the annuity for years and says that amount is more than enough to pay her expenses. I don't know how much Social Security she gets, and how much real estate taxes she pays nor if there was any life insurance.

Doing the simple math her $46,600 investments divided by $600 a month says shes got 6 years left. Might be enough. My feeling is that most of the money is at risk and in haphazard slices and dices. With recent market declines she was worried enough about it to ask my opinion.

What do you think?
If she is getting $600 a month from that annuity she must have alot more than $7200 in it?
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Old 05-12-2008, 05:48 AM   #5
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While catastrophic care is always a concern, I'm not in a position to help with that. A CD ladder is a safer option. The $7200 annuity is not yielding $600/mo. That balance is being drawn down. Next year the annuity will be used up. So then what? To generate $600/mo. the broker sell off equities, perhaps with a monthly commission? Bad idea.
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Old 05-12-2008, 10:09 AM   #6
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IMO and, as already has been mentioned, she seems to be prime candidate for a reverse mortgage. Not sure what kind of a payout she could get but a trip to a reverse mortgage calculator, with the applicable numbers, should answer that one for her. IMO all of the other stuff should be consolidated to maybe one of the three new VANGUARD life income funds. That payout, SS benefits along with the reverse mortgage should set her up fine for even a long remaining life. Also are there any local social or public assistance programs she can qualify for to help her.
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Old 05-12-2008, 11:18 AM   #7
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Looks like she can get a SPIA that nets her $600/mo for $48,000.
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