$750k in checking accounts- 84yr old- help !

[Al18]

I suggest picking 1 local bank that pays 2% or greater on savings. Keep 100K in that bank and move the rest to Fidelity (assuming there’s a local office in your area). Accompany your aunt at Fidelity and with the help of a rep, open a 5 year CD ladder with different banks, staying below the 250K limit. Lastly move the growth fund to Fidelity.

FYI you can quickly check the savings rates in your area using the bank map feature at https://www.depositaccounts.com/banks/rates-map/

 

[ChrisC]

you folks seemed to have missed the last word in this sentence in the original post:

"$750,000 in checking accounts"

That's accountS - with an S...

Nope, you forgot to read the memo from the FDIC about aggregating all single ownership accounts that a depositor might have at one bank for purposes of calculating the insured limit of $250K. https://www.fdic.gov/resources/deposit-insurance/brochures/insured-deposits/

 

[ncbill]

There's an easy workaround for the $250k FDIC limit:

https://www.intrafinetworkdeposits.com/

 

[JohnRM]

Savings Interest

Have her open an Ally bank savings account and earn 3.3 % on $200K of the cash. Can do it all via the computer. Although you may need to do it for her.

Citizens is currently paying 3.75% - I only have about 40k in there, not sure if you have to put in a large sum.

 

[seattledan]

Not to be callous but statistically, there aren't a lot of years left. I'd keep a years worth in her checking account and put the rest in a CD ladder i.e. x amount that will mature in 2 years, 3 years, etc up til 10 years. DEFINITELY have her not keep all that money in her checking in case she gets scammed.

 

[zippy2020]

Someone in her family needs to step up to be the Healthcare PoA agent and financial PoA assignee. Do it NOW, when she is clearly compos mentis. Emphasize to her it is for both HER safety and the AGENT's safety that this is put into place before doing anything with her accounts.

Your state bar association might have (ours does) a record of estate attorneys who specialize in senior/elder care. Ours has a certification for seniorcare legal matters.

Getting her the extra income (minus any taxes) is a good idea, then sock it away for potential eldercare/home healthcare needs. A lot of people do NOT realize that home healthcare can actually be more expensive than facility care on a per-hourly basis!

Start investigating who the best homecare services agencies are. You want to know this stuff beforehand, not when you needed them last night.

She is hitting the age where two other considerations come into play: safety and socialization. Many family members under-estimate the importance of both. If she lives alone, getting her one of those safety monitoring devices would be a VERY good idea.

Don't overlook socialization. It isn't a matter of family coming to see her; it's that people crave commonality. Being with people of her own age and interests has been proven to be an important factor in longevity and happiness.

It's wonderful of you to be taking this on. Best wishes to you and all the family as you work together on this. You've gotten some great advice here, and we're all rooting for you.

 

[jazz4cash]

Reading this with interest. My 84 yr old cousin lives in a senior apartment complex with her Shih Tzu, a gift from a grandchild. It’s very true the social benefits of living with peers and her dog is great for her well being. Her savings are ~100k. She has military healthcare and her SS now covers her rent as of the latest increase. Her children don’t live in the area and seem to be somewhat disinterested. I’ve been pushing her to sign up for the 5% 15 mo CD at NFCU, but I am a bit concerned about being blamed for manipulating her finances. That said, I’ll probably get a look at her spend rate in the process of opening the CD. At that point I plan to nudge her into a 5yr CD ladder with 5%(?) distributions to a checking account. She has tiny life insurance policies with grandchildren as beneficiaries that I could not talk her out of.

 

[ivinsfan]

Reading this with interest. My 84 yr old cousin lives in a senior apartment complex with her Shih Tzu, a gift from a grandchild. It’s very true the social benefits of living with peers and her dog is great for her well being. Her savings are ~100k. She has military healthcare and her SS now covers her rent as of the latest increase. Her children don’t live in the area and seem to be somewhat disinterested. I’ve been pushing her to sign up for the 5% 15 mo CD at NFCU, but I am a bit concerned about being blamed for manipulating her finances. That said, I’ll probably get a look at her spend rate in the process of opening the CD. At that point I plan to nudge her into a 5yr CD ladder with 5%(?) distributions to a checking account. She has tiny life insurance policies with grandchildren as beneficiaries that I could not talk her out of.

Can I ask why you want to nudge? The risk/reward ratio doesn't seem to be in your favor. I'm not talking about you gaining anything financial. I'm talking about getting caught in the middle between family members. Cousin seems to be doing fine I'd leave it.

 

[jazz4cash]

Can I ask why you want to nudge? The risk/reward ratio doesn't seem to be in your favor. I'm not talking about you gaining anything financial. I'm talking about getting caught in the middle between family members. Cousin seems to be doing fine I'd leave it.

Sure. She needs the income. She thinks she's doing fine but I'm skeptical without knowing her burn rate. I've asked her many times to meet with a financial counselor at the credit union, but they just might try to sell her something she doesn't need.

 

[Time2]

Not sure what you goal is here. . . I don't think she is going to outlive her funds. Are you trying to grow money? Make it easy to pass on to heirs? Does she have an estate plan?

This reminds me of my 74 yr old sister in law. She ask me to remove funds from her previous employer (she had to). I looked at it and decided, the way I would invest it and the way she would invest it would be different and I didn't want to make a choice for her. I turned it over to her son, while we were discussing it, I ask him, "do you think she will ever spend any of it?' I knew the answer was, she would not. I then said to him, "so you are investing it for yourself" I'm pretty sure a year later, it is still in a bank account.

 

[imnontrad]

How risk adverse is she? With that amount of cash, and low expenses, a CD ladder may provide her with the security she needs and plenty of income to draw each month from the maturing CDs.
Right now at Vanguard, you can get a brokered bank CD at rates from 4.2% up past 4.7%

 

[mickeyd]

Take most of the cash in the checking act (leave 1or 2K in) and stuff it in VG CRFMMF which is yielding about 4.26%. She easily switch $ back and forth with her checking act. Since she is not afraid of stocks, take ALL of that stock MF and move the money to VG TSM.

Easy peesy lemon squeesy.

 

[Katoslake]

Update:

Aunt and family decided to use Merrill Lynch do to existing accounts with Bank of America.

She was able to move $480k into 1-3 yr CD’s paying 4.5-4.6%.

Question- would you consolidate all accounts at BofA and Merrill L, or
put remainder of portfolio ($500k) at Fidelity ?
Fidelity seems to have more fixed income options from what we can tell.

Thanks for previous comments and any thoughts going forward.

 

[Markola]

^^^^ The richest woman I ever knew gave me a very useful piece of advice: “Keep it simple.”

 

[FinBiz]

Morgan Stanley is currently MM - 4%. 3 and 6 months CD - 5%. Yes, during a phone conversation there was no difference in 3 and 6 months. You can choose.

 

[Koolau]

Update:

Aunt and family decided to use Merrill Lynch do to existing accounts with Bank of America.

She was able to move $480k into 1-3 yr CD’s paying 4.5-4.6%.

Question- would you consolidate all accounts at BofA and Merrill L, or
put remainder of portfolio ($500k) at Fidelity ?
Fidelity seems to have more fixed income options from what we can tell.

Thanks for previous comments and any thoughts going forward.

Thanks for the update. Sounds like you've leaped the main hurdle: Getting aunt to "do" something rather than ignore it. Good for you.

 

[Katoslake]

Medallion Signature Guarantee is the new thorn in side.

Low cost firms don’t seem to require it, but load funds with higher fees do.
Variable Annuity accounts are similar.

To those reading; clean up beneficiaries and co or secondary owners.
Tedious and so unnecessary

 

[dobig]

I'd keep it very simple or she likely won't want to do anything. I'd go with something along the lines of a Morgan Stanley preferred savings account paying 4% for the $750,000 and she can get a debit card and checks so it will be like her current account. Interest compunds daily and she'll make an extra $2,500/month in interest. FDIC insured for $500k per person/account.


Older people seem to just want things simple, safe and familiar so don't confuse them by introducing new investment products they won't understand.

 

[Bdarr]

My thoughts for the current situation…it is not hard to build a t-bill treasury ladder…buy 6 month treasuries bills for the time being. Advantages is as fed raises rates you will get a better rate…if you buy 3-6 month treasuries you will have access to cash if needed during this cycle…I am doing this for my 80 yr old father…with the gains I am buying SCHD dividend fund…when the fed cycle changes of course bonds are not the place to be in when they begin cutting rates. So now we just wait. Also I Bonds maybe a great option to do 10k a yr. Good luck

Advantages of T-bill over CD's…they trade if you want or need to sell…there is no penalty for early withdrawal other than you sell at market price. Almost all CD's and MM pay are based on short term treasuries but of course they take their cut. Currently 6 month t bill pays 4.82% and will likely be over 5% after the fed mtg 1 Feb. Nothing is guaranteed but a treasury is about as close to guaranteed as you can get.

 

[Katoslake]

Update-Aunt’s situation

Through family action she has the following:

$465,000 in 1-3 year CD’s paying 4.3-4.65%
$175,000 that will likely be split between MM-3.8% and another CD

Remainder of $750,000 not yet allocated. ($110,000)

Also, upon a file cabinet scavenger hunt, found the following accounts:

BlackRock variable annuity- $43,000
Allianz variable annuity- $70,000
ColumbiaThreadneedle large cap growth- $340,000
Lincoln financial annuity- $92,000

No one was aware of the mutual fund or annuities. Just confirmed they do exist.

Lucky to have looked through file folders.

 

[pb4uski]

Update-Aunt’s situation...

Also, upon a file cabinet scavenger hunt, found the following accounts:



BlackRock variable annuity- $43,000

Allianz variable annuity- $70,000

ColumbiaThreadneedle large cap growth- $340,000

Lincoln financial annuity- $92,000



No one was aware of the mutual fund or annuities. Just confirmed they do exist.



Lucky to have looked through file folders.

So, is the $340,000 of ColumbiaThreadneedle large cap growth above the same as the $334,000 in Columbia Large Cap Growth Fund- class A shares in the OP?

 

[Katoslake]

So, is the $340,000 of ColumbiaThreadneedle large cap growth above the same as the $334,000 in Columbia Large Cap Growth Fund- class A shares in the OP?

Yes, should have clarified. Some amounts in these accounts were older statements so don’t reflect true balances.

Also, she actually has $485,000 in CD’s currently not $465,000.

Hoping dust and balances will settle a little, but the scariest part of having all that money in non interest earning checking accounts is past.

 

[OldShooter]

... Hoping dust and balances will settle a little, but the scariest part of having all that money in non interest earning checking accounts is past.

Yes. You've done well for her. No rush now.

Jason Zweig is one of the few writers I find worth reading. I recently ordered a couple of his backlist books. One was "The Little Book of Safe Money." Here is a sentence that I flagged while reading last night: "In financial life, there are no prizes for making the fastest decision -- but there are many rewards for making the best decision."

 

[Katoslake]

Yes. You've done well for her. No rush now.

Jason Zweig is one of the few writers I find worth reading. I recently ordered a couple of his backlist books. One was "The Little Book of Safe Money." Here is a sentence that I flagged while reading last night: "In financial life, there are no prizes for making the fastest decision -- but there are many rewards for making the best decision."

This is good advice for those of us that tend to be impulsive !

Next goal for Auntie is to get necessary Medallion Signatures to move mutual funds and annuities into her Merrill Lynch account. Then look at tax implications of those holdings, which is way, way above my pay grade.

Thanks to all for the continued advice !