My grandparents, aged 82 and 87, recently sold an investment property and now have a decent amount of cash. They've reached out to me for some help in how best to manage the cash, and I am hoping to get some opinions from you all on:
- Is it a mistake to just park everything in a high yield savings account?
- I feel they can afford to spend a bit more than they are currently, but I'm not sure how to think about that for retirees in their 80s.
- Knowing they're getting older, are there any expenses to consider that would require us to plan more conservatively?
Net worth
- ~$500,000 equity a paid-off, new build home
- ~$400,000 in high-yield savings earning ~3.5% (after cap gains)
Expenses
- Very low; about $20,000 a year after they spend their social security. Their rental income was covering this before.
Other considerations
- Both are currently in good health, living alone without assistance.
- Both have siblings who lived well into their 90s.
- They are on medicare advantage and do not have long term care insurance.
- They do not want to have to rely on family financially.
Help managing a windfall for grandparents in their 80s
byu/mcfc_as inpersonalfinance
Posted by mcfc_as
6 Comments
$20k is a borderline safe annual withdrawal rate. I’d keep it in HYSA so that the funds are available for long term care needs.
Nothing wrong with hysa at 80. Maybe a handful of stocks and some bonds or bond ladder.
Healthcare worker here. I’d really recommend they consider traditional Medicare before they have a health problem that would be pre-existing for a Medigap plan and may not be covered.
At their age keeping most of it in a HYSA isnt a bad move at all. The goal isnt growth anymore, its stability and easy access. They’ve already done the hard part by building a solid safety net. Maybe set aside a small portion for short-term CDs or a conservative bond fund, but I wouldn’t take on much risk at 82 and 87.
At that age, NO RISK like they would have in stocks. All in HYSA.
Three things
1. It’s so refreshing to read that you are posting because they asked.
2. Have you asked what their goal is? They’ve asked for help managing it, but I don’t see that they’ve told you what they want the dollars to DO.
3. Please talk to them about doing regular Medicare with a supplement rather than an Advantage plan. The “advantage” is that the plan takes ALL the Medicare entitlement and profits what is left over. Whole lot more denials.