Personal Investments • Overwhelmed with decisions after major life events.

New member here, although I've been lurking for a while before joining. I can be a very verbose person so feel free to skip the prologue… I put all the hopefully properly formatted financial details below the line.

First off, I am very very new to all of this and at this point I’m primarily focused on helping my mom figure out her finances. It’s been a particularly rough couple of years with the two of us taking care of my very ill dad at home, my mom retiring, my brother getting divorced and moving in with us, grandma (mom’s mom) declining and passing away in July, and then my dad passing away at the end of August.

For the past couple of months we’ve been dealing with all that comes with settling the estates of two people, and trying to catch up on all the other things we weren’t getting done while caring for my dad. No one was really managing my parents’ nest egg for a long time, and a lot of it is not even invested. We knew there was “enough” money and we had too many other things to worry about.

My dad used to manage their investments, but his lifelong disorganization and hoarding has made trying to figure things out challenging to say the least. But, we are finally at the point now where I believe we’ve identified all the many accounts that were scattered all over, gotten all but one account transferred to my mom’s name, and updated the beneficiaries. Mom also inherited some accounts and money from my grandma.

I’ve been trying to rapidly educate myself on all things investing and retirement, and really like the Boglehead approach of keeping investments passive, simple, and low fee. My mom is burned out and asked me to just give her the CliffsNotes version. We realized early on that at this stage of her life some professional help was warranted, and mom found a local CFP on letsmakeaplan.org that we consulted with back in September. I wasn’t too far into my financial education process at that point and only later realized the CFP although nice enough was commission-based, also an insurance agent, and not the way we should be going. Mom now has yet another account with a relatively small money market fund (American Funds) through the CFP which was supposed to be a ”baby step” to investing the rest of it. We’ve tapped the brakes on that plan and told the CFP that we weren’t ready to do anything else yet.

Now we are back to looking for a CFP that is actually un-biased, “advice-only”, “fee-only”, hourly person to help us come up with an actual plan for investing, withdrawals, conversions, taxes, etc. I’m sure we will also need help from a CPA or EA for the tax situation for at least a year or two… my folks have always done their own taxes in the past so we don’t already have a person for that either.

I figure advice from a forum of strangers would also be pretty un-biased, may provide a different perspective, and make me better prepared for meeting with a CFP and CPA. I have some ideas on what to do, but I’m so new that I “don’t know what I don’t know.”

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Mom’s Retirement Assets

Emergency funds: There’s actually a lot of cash uninvested at the moment. I’ve seen differing opinions on how much an emergency fund or liquid cash there should be. We still have to go over the expected income and expenses in more detail. It’s not so easy with so many changes the last couple of years to figure out what the “new normal” will be.

Debt: no debt, house paid off

Tax Filing Status: married filing jointly for 2024, recently widowed and will be filing single in the future

Tax Rate: 12% Federal, 4.95% State

State of Residence: IL

Age: 70 retired

Desired Asset allocation: not sure
Desired International allocation: not sure

Currently just under $2,000,000 total in all accounts below and a home worth ~$350,000

Current retirement assets

Taxable Brokerage - Edward Jones 21.3% of Total
*inherited from her mother, a confusing mix, the last four lines are “Unit Trusts” with First Trust Portfolios totaling almost $100k… and I had to do a lot of Googling to figure out what they heck they were! This account shows no AUM fee.
.55% Cash
1.08% INVESCO COMSTOCK A (ACSTX) (.81% ER)
.80% INVESCO CORE PLUS BOND A (ACPSX) (.75% ER)
.68% INVESCO CORPORATE BOND A (ACCBX) (.75% ER)
.83% INVESCO DIVERSIFIED DIVIDEND A (LCEAX) (.82% ER)
.16% INVESCO ENERGY A (IENAX) (1.27% ER)
2.18% INVESCO EQUITY AND INCOME A (ACEIX) (.78% ER)
1.06% INVESCO HIGH YIELD A (AMHYX) (1.05% ER)
1.49% INVESCO MAIN STREET A (MSIGX) (.80% ER)
.29% INVESCO SHORT TERM BOND A (STBAX) (.65% ER)
.91% PGIM CORE BOND A (TPCAX) (.65% ER)
.73% PGIM GLOBAL TOTAL RETURN A (GTRAX) (.89% ER)
2.48% PGIM SHORT DUR MULTI-STR BD A (SDMAX) (.66% ER)
2.47% PGIM SHORT TERM CORP BOND A (PBSMX) (.71% ER)
.77% PGIM TOTAL RETURN BOND A (PDBAX) (.76% ER)
1.45% FT INVT GRADE MULTI ASSET #35 (IGMA35)
.92% FT INVT GRADE MULTI ASSET #36 (IGMA36)
.81% FT INVT GRD MULT ASSET INCM 28 (MALT28)
1.63% FT TAX EXEMPT MUN INC TR #312 (FT312)

Taxable Brokerage – UBS .43% of Total
*inheriting from husband but don’t have access yet, was an ESPP that tanked
.30% cash
.13% six stocks not worth time to list!

Taxable Brokerage – Capital Group 3.54% of Total
*newly opened by CFP, this was to be designated “Emergency Fund”
3.54% American Funds U.S. Government MMFund Class A | Fund 59 (AFAXX) (.53% ER)

TCA Account – BNYMellon 28.57% of Total
*husband life insurance “total control account” with option to get a CD with more interest
28.57% cash 2.25% Interest

Life Insurance Payment Account – FB 1.39% of Total
*mother’s life insurance payment
1.39% cash .75% Interest

Checking/Savings – Chase 4.25% of Total
4.25% cash .01% Interest

Roth IRA - Schwab .19% of Total
*inherited from husband, he opened ‘03, never invested it, forgotten about
.19% cash 0.20% Interest

401k Nokia 3.43% of Total
*inherited from husband, retirement account that tanked
3.43% Mixed-Asset Target 2015 Fund (?) (.28% ER)

IRA - Fidelity 17.12% of Total
*inherited from husband, was lump sum pension rolled into IRA and parked
17.12% cash Deposit Sweep 2.44% Interest

403B – Franklin Templeton 1.45% of Total
1.45% Templeton Growth Fund Class A (TEPLX) (1.04% ER) ($30 annual fee)

403B - Fidelity 1.52% of Total
1.52% FID ASSET MGR 50% (FASMX) (.57% ER) ($24 annual fee)

IRA - Schwab .73% of Total
.73% cash Deposit Sweep .20% Interest

IRA -Morgan Stanley E-trade 15.52% of Total
*Activision stock bought by Microsoft, not reinvested yet
15.52% cash Deposit Sweep .01% Interest

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Questions:

1. We would like to simplify and combine like accounts as much as possible. Is it smart though to have some accounts at two brokerages to take advantage of products and services at both, and in case of a hack or outage? We were thinking of just going with Fidelity and Schwab because they seemed to have good customer service when we dealt with them? I think all the old qualified accounts can be rolled into just one or two IRAs. The qualified accounts that were inherited were all to a spouse and so not the “inherited IRAs” where they have to be emptied in 10 years. We will be taking the RMDs for my dad for this year, and then I believe won’t have to take more until mom is 73.

2. As I understand it we should make sure the cost basis for holdings in any taxable accounts is set to the date of death of the original owners before selling anything. I downloaded a holdings spreadsheet for the Edward Jones taxable account mom inherited and some things show a cost basis, but other things don’t and there are no dates. That account has a lot of stuff in it and seems overly complex. The inherited UBS taxable account has almost nothing left in it so I’m not as worried about that being correct. The Nokia 401k I think might have a mix of pre and post tax if I understand the website, but I think cost basis shouldn’t matter in a qualified account?

3. There’s currently ~700k in qualified accounts and most of it isn’t even invested or growing now. Mom will have to start taking RMDs at 73, and they will start at over $30,000. I think her non-investment income from SS, pension, and land rental will be at least $45-50k a year. She’ll likely have other income too once things are invested better, but she’ll be filing single then, so I’m concerned about that “widow’s penalty.” I think some Roth conversions before then would be smart especially this year since she will still be filing as married and all deductions and caps will be higher. I’ve read about “filling the tax bracket” while staying under set caps for IRMAA and SS tax. Mom’s also talked about possibly moving to Minnesota in the next few years where more retirement income is taxed than here in Illinois. In Illinois withdrawals/conversions from IRAs are not taxed I believe.

4. I’m wondering if we should temporarily put the uninvested money that’s in the qualified accounts and Roth into a money market fund just so that it’s doing something while we look for a CFP and come up with a long term plan? Also, maybe open an online HYSA to use instead of the savings account at Chase getting .01%. It’s hard to know how much to keep fairly liquid at the moment. Mom lives beneath her means, but also has a backlog of home repairs coming up. If she does large Roth conversions, she’ll need cash to pay the taxes on them. When she does move, she would like more land and to either build new or renovate to have a fully wheelchair accessible home so she can age in place. That’ll likely be more expensive than the value of her current home.

-Sorry that was so long if anyone made it to the end! Any suggestions would be appreciated.

Statistics: Posted by chassis — Thu Nov 14, 2024 6:14 am — Replies 12 — Views 2624