Investing in the later stages of retirement

[tb001]

As I’m looking at poa and taking over finances for my aging parents, I’m realizing I don’t really have a great feel for the best investment strategies when you’re on the other end of the glide path.

DF is in his 90s and has done a great job managing their funds. Realistically, he probably won’t have a lot more years left, so he’s in good shape. But my mom is 12 years younger and in great shape. Her mother needed several years of memory care, which I think is probably on the horizon for my mother as well.

We got all of their financial institutions figured out yesterday and I realized the majority of their investment accounts are at Edward Jones. I haven’t gone through and looked at how much they’re paying their advisor, or what type of funds they’re holding yet, but if the fees are close to the typical 1% and they’re heavy in bonds, as I might expect, that’s a huge drag for them.

Any suggestions for trusted resources/recommendations for ‘later stage’ portfolio allocations would be helpful. We are set it and forget it vanguard low fee investors, but I know our current allocations aren’t appropriate for them.

 

[38Chevy454]

My recommendation:
1. Get out of EJ, switch over to Vanguard where you are already familiar with.
2. Nothing wrong with low fee index funds, just adjust the AA to be conservative like 40/60 or 30/70 for your parents.
3. You can do the managing of the account. Just keep in mind that your are into capital preservation more than capital appreciation.


I am not in later stages. I am in early stages of my retirement. Just my thoughts above and some of the same theory I used with my parent's accounts when I was POA on their accounts. Then I became executor for the estate. Their trust made it easy, I assume your parents have some trust or similar documents set up since you have the POA.

 

[OldShooter]

I would suggest that you talk to an attorney, CPA, or both, about estate planning and tax strategies. There is opportunity and quicksand out there. You also need health care powers, living wills, and durable powers of attorneys. And get the beneficiary designations on the accounts the way they should be.

It's really sad the number of vulnerable people that EJ successfully fleeces. Beware EJ investments that cannot be transferred, often annuities. A sharp attorney might be able to help, but EJ has vast experience responding to complaints.

AA depends a lot on the purpose and amount of the assets. In our case most of our assets will end up in our estate and in trusts, so are 100% in equities. Your needs will probably be different.

 

[SecondCor521]

I agree with the previous replies.

I would add the following points:

1. Locate. People at that stage usually have a variety of accounts, and it's good just to have a survey of where all the accounts are. Much easier to figure this out while they are still alive and have mental acuity.

2. Prioritize. Beneficiaries and PODs are good planning tools. But focus on the big accounts - like a traditional IRA - before small accounts - like a local checking account.

3. Get their point of view. My Dad is 85, and I have POA. So I can do just about anything with his finances if needed, but since he still has pretty decent mental acuity, I haven't and wouldn't do anything without his OK. But as things come up and he may slip a little mentally, I want to know how he would want things done so I can take care of things for him in the way he preferred.

4. Keep up to date. My Mom was really good about this. Before she passed away, she trained my Dad to put everything remotely financial into "the green basket" (which was just a banker box lid or something like that). She then trained me to go through the green basket every time I visited. I already had a pretty good idea of my parent's finances, but after doing this for a while I knew a lot more. We still do the green basket five years later, although it's probably overflowing due to covid (I haven't been in my Dad's place since March or so.)

 

[kevink]

Went through this with my own mother-in-law and agree with all of the posts above. Extricate them from the clutches of Edward Jones and seriously consider (taking into account the capital gains/tax consequences of any selling that needs to happen) rolling everything into Vanguard LifeStrategy Income Fund:

https://investor.vanguard.com/mutual-funds/profile/portfolio/vasix

That way no more decisions need to be made. If that fund is too conservative consider VTINX which bumps up the equities to 30%. These all-in-one funds are a great way to hedge against cognitive decline as well as any temptation to make bad decisions during market panics. We'll probably transition into them ourselves if we're lucky enough to have anything like your parent's longevity.

Good luck with everything (oh - and expect some unpleasantness from the Edward Jones rep but stand firm).

 

[JustCurious]

You did not say whether your father asked for your advice, or whether he is of sound mind, or whether he gave you power of attorney.

 

[OldShooter]

... 1. Locate. People at that stage usually have a variety of accounts, and it's good just to have a survey of where all the accounts are. Much easier to figure this out while they are still alive and have mental acuity. ...

Funny story: My dear Uncle Pat was an S&L rate chaser, this in the pre-internet days. His executor literally had to contact every single bank and S&L in a town of 70,000 people, asking if they had any of Pat's money.

 

[Ronstar]

I can't offer any advice, but I'm looking for similar advice. 91 MIL has Edward Jones, and we have met with her FA, and I'm not sure I agree with his investment strategy for a 91 yo.

 

[OldShooter]

I can't offer any advice, but I'm looking for similar advice. 91 MIL has Edward Jones, and we have met with her FA, and I'm not sure I agree with his investment strategy for a 91 yo.

Thing one is to get her out of Fast Eddy's clutches. Consider VG's low-cost management option or a robo.

Advice depends highly on how much money she has vs her expenses and what the purpose is for any excess money. If I make it that far, all but a few percent of our AA will be in stocks, as the stocks will comprise our estate and flow into three trusts. Very long term money.

 

[Montecfo]

My thoughts are get to a discount broker. I would probably look at Vanguard Wellington or Wellesley than augment with a bond fund such as Dodge & Cox Income or a Vanguard equivalent to give you some rebalance money and a stable source of drawdown funds. You can you the bond fund to dial in the overall AA.

 

[tb001]

Thank you all so much! I really appreciate all of the advice. Luckily they are very consolidated, so there’s not nearly as much to sort through. I have login info for everything at this point, so have a decent handle on what’s there at least.

I’m finding lots of old relationship based things where prices seem excessively high, so there will definitely be some room for cutting expenses when necessary. $1k for tax filing and their accountant isn’t even doing the basics he could be to cut their tax burden! It’s a super simple filing.

Glad to hear your feedback on EJ. I need to confirm the fees, but I’m definitely concerned they’re excessive.

 

[mountainsoft]

Have you calculated what advantage you would gain by switching things around? It might not be worth the trouble.

My mom is 74 and the only money she has left is from the sale of her home (about 160K), plus the money she receives from social security. Early on she was really nervous about putting her money in any kind of investment, so I just put it in a high interest savings account (2% at the time, now down to .5%).

She lives in assisted living and blows through more than 4K per month. I've estimated her money will only last about another 4 years. Naturally, I would like to get a better return than the paltry .5% she's getting in savings, but even with a 7-8% return from investments, it would only gain her 2-4 months or so before she would run out of money. Not to mention investments can lose money, which could mean she would run out sooner.

As much as the low return pains me, there's no real point in switching from what she has.

Of course, I would do whatever you can to cut costs. If that means switching your dad's investments to another firm to get lower fees, do it. If you look around there are probably other areas you can reduce expenses too.