Lump Sum investment for 85 yr old (~ $250k home equity) (funds, paying, rate)

[StealthRabbit]

I recently helped an older couple sell their rural home as they really need to get to town and into a lessor intensive home. (pretty serious health issues, frequently passing out, not too good for driving 40 miles of curvy canyon to town)

They elected to sign onto an independent living center. It is a non-profit, but still $2800/ month

Situation: Home was only asset (~ $250k)
needs: ~ $3500/ month Longevity ???? who knows ??

How should they be investing this?
I'm sure there are plenty of annuity salesmen salivating over their cash.

I am real concerned because they are really 'shark-bait'. (I.e. they're paying several hundred $ / month in life insurance, that has a very LOW cash value)

I am willing to give them a decent return (~6%), and I can stick it into some of my income real estate that is paid off and secure them with a deed, but don't want to get into a big hassle.

Just hate to see them ripped.

[mathjak107]

its not about what to do with the money..its about what do they need from the money?

if they barely need any income from it stick it in a cd and call it a day...if you already won the game you dont keep playing.

its all about what they need to withdraw and their tolerance for risk ,loss and aggrevation.

its also about what they plan to leave heirs or spend.

[MadManofBethesda]

Originally Posted by mathjak107

its not about what to do with the money..its about what do they need from the money?

if they barely need any income from it stick it in a cd and call it a day...if you already won the game you dont keep playing.

If I read the OP correctly, they need $42k/year and their only asset is the $250k. I don't think a CD is going to cut it.

[StealthRabbit]

Originally Posted by MadManofBethesda

If I read the OP correctly, they need $42k/year and their only asset is the $250k. I don't think a CD is going to cut it.

Correct, this advice request is for investing while 'shoestring' living.

I don't have control over the previous 80 yrs before I met these folks, I just do free 'gratis' help to seniors transitioning levels of care. This happens all the time from my limited experience.

Trying to get them the best quality of life from their home-brewed lemonade.

(which I advised an $800/month apartment and 'meals-on-wheels', but that didn't wash for them)

Looks like they need the best returns, while still eroding capital, and eventually running out of funds or dying. (Both likely).

One caveat is that husband will qualify for VA aid if their assets are not liquid, but I really hate to advise them to dump into an annuity. (tho that may be best choice for majority of it)

Life will not stop when they spend it down, but the fewer yrs on state aid the better IMHO.

There is a high likelihood of the husband (VA eligible) needing higher level of care, so spending could be grossly accelerated, UNLESS funds are not liquid, and VA would assist.

[flyonpa]

I would think that they would have Soc Sec coming into also that would reduce the amount of money they need to draw down. But 250K at best right now will spin off 10K a year. The money need to be Kept Safe, I check my company's Annuity numbers ( I DON'T sell them) for 250K for a 85yo in Washington State, will spin off about 32K a year (For life) 12.9% Rate.
Question is Will they out live there 250K if they start drawing it down? or Give it (all or some) to a annuity and they can live forever, getting checks. I would not get them into Real Estate, When Factor in that someone else need to manage the property, the Return on R/E goes down fast.

[StealthRabbit]

Thx,
SS = $800 / mo (self employed low earner / lifelong 'shoestringer')

They have a USA relief agency that they worked for overseas, I will check their gift rates.

32k/yr would just about make it, but I assume your quoted rate was for single life. Also... they will be OR residents (LOW tax thresh-hold, hopefully we can keep them out of range)

[flyonpa]

OR would be same amount, Its for single male 85, Dual life would be less, Does 2nd person need 100% of the income stream? For life, or some lenght of time? Do they want to 'leave' income for some lenght of time after they are both gone to someone else? Those effect the monthy amount. Dual 85 life/0 after drop the annual number to bout 28K

[StealthRabbit]

The charitable gift annuity is only 6.8%,

Where can I look to find 10% + ?

I assume both spouses would need full payout through life. No desire to leave a remainder. (unless as a gift to charity)

[flyonpa]

The Charitable gifts are Joint Annuities with a guaranteed amount going to them. (and you get a Tax deduction when you start it) Not that I think your friends need it. that why the rate is lower,

[sonarrat]

Multi-family real estate is the only thing I can think of that could cut it, dependably.