Budget form for retiree

[harley]

I'm looking for a decent but not too detailed budget form for my Mom to fill out. She's recently widowed. Due to really bad planning on their part (assuming she would die first), she's gone from a shared $95K/yr retirement income (pension + 2 SS checks) to one $15.5K/yr SS check. They have been living that way for the past 30 years - very early retirees. She's got some savings, and I'm trying to help her invest it to produce income while making sure she won't run out of money. She keeps saying she doesn't have long, and I'm trying to get her to see the cost of another bad assumption.

She's actually a decent saver. She's saved nearly $250K over those 30 years, which she has had sitting in various savings accounts. She knows absolutely nothing about investing (obviously). She had once invested $13K in a mutual fund, but she pulled it out a few years ago when it dropped down to $12K. After questioning her a little it turned out she had over the years withdrawn $80K from the fund, but she only saw a loss when it went below it's original amount.

Anyway, I'm thinking pssst - Wellesley for a chunk of the money, with some in CDs for emergency. I'm also considering annuities (she's 72, and not in the best of health). But I don't like the fees and loss of control they require.

My biggest problem is figuring out how much cash flow she'll need. I keep talking to her about a budget, and she keeps shoving notebooks at me saying she has a great budget, since she's recorded every expenditure since the beginning of time. I tell her that those are registers, not a budget. Past, not future. She just doesn't get it. And I can't translate her reports, since I don't understand what a lot of the expenditures are for.

She loves organizing and bookkeeping, so I thought if I could print out a budget form that she could fill out with monthly, yearly, and occasional expenses, we could maybe come up with a cash flow requirement. That would give us a starting point for deciding investments going forward. I've looked at some, but most are fairly complex, with a lot of line items she doesn't need. I thought y'all might have some good suggestions. Any help would be appreciated.

Harley

[ats5g]

Check out Nathan Gutman's RetPlan.zip, which includes a budget worksheet.

[TN_INVEST]

Study her past expenses...that'll give you a good idea of her 'budget' In fact, the future budgets are practically worthless. If you want a real budget, look into the past at their real expenses.

Some expenses come around once a year and some come 2 a week. Because we all have irregular expenses, it's better to take a look at how she spent her money and take the excess at put it in a savings account to cover the irregular expenses (sorta like a personal escrow account).

If she's in poor health, some annuity companies will actually do health underwriting and provide more income.

Annuities are OK, but they're not perfect (what is?). They are a way to manage a risk. Sorta like a personal pension plan. I know there are immediate income annuities and deferred annuities with systematic withdrawals. Neither is perfect and both have pros-and-cons. Perhaps a diversified strategy is in order (little bit of several things).

[Moemg]

Have her keep a monthly tab on all her expenses or ask her to give you all her monthly bills after she pays them . Then add on the yearly items (taxes ,insurance ) and you are good to go . Being newly widowed she is probably incapable of doing a complicated or even simple budget at this time as she is still in shock from her recent loss.

[FinanceDude]

Quote:

Originally Posted by harley I'm looking for a decent but not too detailed budget form for my Mom to fill out. She's recently widowed. Due to really bad planning on their part (assuming she would die first), she's gone from a shared $95K/yr retirement income (pension + 2 SS checks) to one $15.5K/yr SS check. They have been living that way for the past 30 years - very early retirees. She's got some savings, and I'm trying to help her invest it to produce income while making sure she won't run out of money. She keeps saying she doesn't have long, and I'm trying to get her to see the cost of another bad assumption. She's actually a decent saver. She's saved nearly $250K over those 30 years, which she has had sitting in various savings accounts. She knows absolutely nothing about investing (obviously). She had once invested $13K in a mutual fund, but she pulled it out a few years ago when it dropped down to $12K. After questioning her a little it turned out she had over the years withdrawn $80K from the fund, but she only saw a loss when it went below it's original amount. Anyway, I'm thinking pssst - Wellesley for a chunk of the money, with some in CDs for emergency. I'm also considering annuities (she's 72, and not in the best of health). But I don't like the fees and loss of control they require. My biggest problem is figuring out how much cash flow she'll need. I keep talking to her about a budget, and she keeps shoving notebooks at me saying she has a great budget, since she's recorded every expenditure since the beginning of time. I tell her that those are registers, not a budget. Past, not future. She just doesn't get it. And I can't translate her reports, since I don't understand what a lot of the expenditures are for. She loves organizing and bookkeeping, so I thought if I could print out a budget form that she could fill out with monthly, yearly, and occasional expenses, we could maybe come up with a cash flow requirement. That would give us a starting point for deciding investments going forward. I've looked at some, but most are fairly complex, with a lot of line items she doesn't need. I thought y'all might have some good suggestions. Any help would be appreciated. Harley

I don't know if I would put her in mutual funds. If she gets a statement that is less than her cost basis, she'll freak out. In her case, a SPIA might be a good route for half the money, and keep some liquid, and the rest in Treasuries and or short-term CD ladders.

It will take a year of tracking expenses to see how she will adjust to a LOT less income. Apparently your dad took the highest payout option (lifetime only), so when he died she lost her SS and the pension........

[Independent]

I'd make another attempt to convert her registers into something. She must be putting some information with each expenditure. Even if it's just the name of the store, you can accumulate using her categories. I'm guessing that you'll find some basics (utilities) pretty directly. Some of the hard-to-identify might be smaller or clearly discretionary. You will at least identify the big periodic expenses.