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Multigenerational Finance Advice Needed
Looking for some advice around multigenerational financial planning—specifically, how my mom can make better use of her savings now with the long-term goal of leaving me something that will help fund my retirement.

She’s in a strong financial position and wants her money to do something rather than just sit. And her stated goal is to leave me as much as possible.

Note, this is NOT my stated goal. I’d like her to enjoy her money now, but she claims she is content and happy so here we are. Ideally, with a wise investment strategy, she can do BOTH.

My mom’s current situation, at age 70:
$900K in cash savings
$700K in one account
$200K in another

Paid-off home worth ~$350K (I’m on the deed via a lady bird trust)

Enough income from Social Security and VA benefits to cover her needs comfortably

She recently spoke to a financial advisor who suggested:
Putting the $700K into an account with a guaranteed 5% return, which would grow to around $900K in five years.

I am not clear on the account type, as this was all learned via a phone conversation with mom, who lives a thousand miles away from me.

Taking the $200K and putting it into a CD ladder to earn a bit more interest without taking on risk

We both like that this plan is low risk and better than the nothing she’s earning now—but we’re wondering if there are smarter or more flexible ways to accomplish the same goals.

WHAT WE’RE HOPING TO FIGURE OUT:
Is the 5% guaranteed return option something common or recommended? What kind of account might that actually be?

Are there other low-risk strategies that would still help her money grow, without locking it up too tightly?

Is a CD ladder the best option for the $200K, or are there other alternatives that still protect principal?

If she wanted to help me* start saving now—especially for retirement—are there safe, tax-friendly ways she could do that without compromising her own future?

Lastly, what kind of financial advisor should we be working with to get a second opinion on all of this? (Preferably someone fee-only, not selling products.)

We’re not looking for risky or aggressive strategies—just smart, safe ways to stop her money from sitting idle while still planning for the future.

Thanks in advance for any guidance or insight!

I have very little savings of my own, but I am employed, debt-free and have a paid-off house in a HCOL area. I plan to move to a much more LCOL area as soon as I’m able.

I assure you, I’m working on saving as well and am making good choices, it’s just an uphill climb.

[Carrie]

My guess is she was talking to an annuity salesman. It’s not a bad strategy necessarily.

My dad has one like that as it has built in LTC insurance.

It made sense for him for part of his overall strategy.

[Frank]

Well now, those are crappy recommendations for the stated purpose. How much is she paying the milkshake drinkers?

If she is never going to use the money and wants it to grow the most over a long time, it should be in 100% equities in index funds that are NOT income focused.

She should also be transferring some of it to you now so that you can max out all available retirement accounts in your name and that of your spouse and any children.

If you really want to put it into low-risk instruments, WHICH IS NOT SMART IN ANY MEANING OF THAT WORD AND MAKES NO SENSE WHATSOEVER GIVEN THE STATED GOALS, it should be invested in low tax investments like municipal bonds, preferred shares funds and ETFs like BOXX.

The MYGAs and CD ladders suggested by the salesperson are really one of the dumbest ideas on the board. But that’s how the financial services industry rolls.

Lazy, greedy and stupid.

[Kristin]

That financial advisor is a salesperson. Don’t do that annuity….
Is any of the $900k in a 401k or
traditional IRA?

If so, you’ll be taxed on that money when you withdraw it after she passes away.

One way she could help to save you money in the future is by converting portions of that money from 401k or traditional IRA to Roth, paying the taxes for you.

Then it will grow tax free for the rest of her life and even your life once you inherit it.

I wouldn’t do all of it at once because of the amount, but parts of it can be done each year up to her existing tax bracket.

And I agree with others that she can start gifting you money now so you can max out your own 401k and/or Roth IRA.

you may want to read some books like Simple Path to Wealth and FIRE for Dummies so you can start getting more knowledgeable too.

[Hilary]

Yes, like others said talk to advisor or maybe even a cpa – to consider tax consequences of different moves and options of investing some of it …

My dad got hit last couple years with bigger taxes because a good sum of cash from a house sale went into high yield savings which generated a lot of interest that added onto his social security and RMD income (he was widowed in 2018) ….

Also something to consider (especially if you live nearby and can’t be caregiver later) …, if she does eventually need to move to independent/assisted living or hire extra help – costs can go up quickly – home health private pay runs $40+/hour and assisted living can run you at low end 5k/month but probably more like 8-10k depending on where she is …

my dad seemed fine with no major health issues at 70 , at 84 he’s in a VERY different boat with parkinsons/mobility issues and dementia, and had head trauma from falls (though otherwise physically healthy) he moved to independent living 3 years ago because he was living alone and not able to really take care of prepping food, cleaning, had to stop driving etc (costs in his pkace have gone up 33%) and while still there, he needs extra daily caregiver support and help getting to drs appointments (I live 8 hours away)

[Angelika]

If I were you, I would educate myself about investing so you could give her better advice.

It’s also helpful for your own understanding what is a good advice and what isn’t.

Maybe start with Simple Path to Wealth. Apparently, it just got updated.

[Jill]

A quick Google search says your mom, at age 70, has a 60-70% chance of needing LTC at some point. And that % increases with age.

There are some types of insurance policies that also serve as LTC insurance…not sure of the details, but that may be worth looking into as it could serve both purposes — LTC coverage for her, life insurance for you if she doesn’t use the LTC benefit.

[Tristan]

A “guarantee” is probably not in an account but rather an annuity, I’d ask for more info there. A fee only advisor wouldn’t be able to sell her one, even if in her best interest (not saying it is or isn’t).

There’s nothing wrong with a CD ladder, but if the goal is to leave this to you down the road, and you won’t need it until further down the road, not sure it needs to be that conservative.

There are plenty of “low risk” investments that allow for liquidity, but the time horizon is still important here.

What is her future you mention in question 4? Tax efficiency is important for her, but if you are beneficiary on the account there’s a step up in basis when she passes, so it won’t create a tax issue when left to you (unless she has estate tax issues, it seems unlikely, but not enough info here to say).

[Cecile]

To answer this question – Is the 5% guaranteed return option something common or recommended? What kind of account might that actually be? The financial adviser is probably recommending an annuity.

You should probably check out the fee-only advisors from nectarine.

Some of the questions I will have for them include: how to handle the possible expenses of long-term care if she doesn’t already have insurance.

For yourself – the good news is that you’re employed and debt free. Your mom can probably gift you $19K this year that you can invest in an IRA or brokerage account.

I don’t know how old you are, but keep your retirement horizon into consideration when investing the money.

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