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Would really like ideas for income for an age bracket of an 85 year old and anyone of that age. no debt and no heirs.very low 6 figure assets regards oramac
I spent the last 5 years as a caregiver for my elderly parent. Things happen in steps as we age so prepare for these "steps" by trying to be one step ahead of the next "step". Most of these steps move in the opposite direction of what we are use to.
Income is a misnomer at this age (85 & older) because, as we age, less and less of our income is spent on maintaining a lifestyle and more is spent on maintaining a life.
A decision should be made on where this 85 year old will reside for their next 5-10-15 years. If the hope and desire is to stay at home (somewhat independently) realize that this can change instantly..a car crash, a fall, a major illness and this person will be unsafe living alone. Determine who (loved ones or community services or elderly care agencies) will dovetail with this independent living arrangement...often it is all three.
Outside of these personal resources (low six figure assets), what other resources will this 85 year old also have access to? This could be a VA Aid & Attendance benefit, community heating allowances, renters rebates, SS waivers (on premiums), subsidies for the costs of home care, family leave benefits for family members, Home modification loans or grants, and many many more that would be unique to where you live and how you qualify. Usually qualifying means being below an income and an asset threshold. Come up with a spend down plan for these assets to maximize the time that this elderly person can live independently.
Care changes as the elderly person's medical need increase. Spend down or transfer of assets need to occurred 5 years prior to medicaid becoming available for helping pay for LT care. I just completed this process with my elderly mom and it was an honor, a privileged and the hardest damn thing you'd ever want to do (mostly) alone.
Remember that care facility costs for LT care can be substantial...$4-7K / month is not uncommon.
My first thought when I read your question was a QLAC. This would have taken as much as $125K and bought a Qualified Longevity Annuity Contract the year prior to when the person turned 70.5.
I've never heard of QLAC within an IRA before. Seems like a sweet deal for many retirees seeking a guaranteed income stream for life and looking to lower RMD.
I see 2 huge problems though. 1) QLAC appears to benefit and fit-well for many senior individuals and 2) it was established under the Obama administration. Two glaring red flags that it could be repealed under the current administration.
To the original poster: steer clear of risk, I suppose, at age 85. No heirs? Will you tactically spend-down what you have? Or plan to give it to a charity or non-profit? The market is going through a major tantrum just now, but it could end anytime. Just steer clear. A conservative bond fund is the first thing to hit me, to offer an answer to your question. That means "core." Think DODIX and the like.But that fund pays quarterly, not monthly.
#1 Annuities are always a crap shoot, but can serve a valuable function in ensuring enough income to cover essential expenses. Just don't buy more than you need, since the value is in the guaranteed income stream. Unless one is sure that one's days are numbered, they're worth considering - again, so long as the income stream is needed.
#2 If someone has already purchased a QLAC, I have a hard time seeing how future changes could affect this. The rules on annuity taxation predate QLACs, and the Treasury Dept. pragmatically can't void the contract as violating future IRA rules created after the purchase.
Kitces writes that QLACs are not recommended if their purpose is to deal with RMDs, as opposed to meeting a real need for a guaranteed income stream.
Comments
Income is a misnomer at this age (85 & older) because, as we age, less and less of our income is spent on maintaining a lifestyle and more is spent on maintaining a life.
A decision should be made on where this 85 year old will reside for their next 5-10-15 years. If the hope and desire is to stay at home (somewhat independently) realize that this can change instantly..a car crash, a fall, a major illness and this person will be unsafe living alone. Determine who (loved ones or community services or elderly care agencies) will dovetail with this independent living arrangement...often it is all three.
Outside of these personal resources (low six figure assets), what other resources will this 85 year old also have access to? This could be a VA Aid & Attendance benefit, community heating allowances, renters rebates, SS waivers (on premiums), subsidies for the costs of home care, family leave benefits for family members, Home modification loans or grants, and many many more that would be unique to where you live and how you qualify. Usually qualifying means being below an income and an asset threshold. Come up with a spend down plan for these assets to maximize the time that this elderly person can live independently.
Care changes as the elderly person's medical need increase. Spend down or transfer of assets need to occurred 5 years prior to medicaid becoming available for helping pay for LT care. I just completed this process with my elderly mom and it was an honor, a privileged and the hardest damn thing you'd ever want to do (mostly) alone.
Remember that care facility costs for LT care can be substantial...$4-7K / month is not uncommon.
Here's an Article against QLACs:
https://kitces.com/blog/why-a-qlac-in-an-ira-is-a-terrible-way-to-defer-the-required-minimum-distribution-rmd-obligation/
Here's an Article for QLACs:
https://marketwatch.com/story/13-reasons-why-a-qlac-belongs-in-your-ira-2014-11-18
Regards,
Ted
I see 2 huge problems though. 1) QLAC appears to benefit and fit-well for many senior individuals and 2) it was established under the Obama administration. Two glaring red flags that it could be repealed under the current administration.
#2 If someone has already purchased a QLAC, I have a hard time seeing how future changes could affect this. The rules on annuity taxation predate QLACs, and the Treasury Dept. pragmatically can't void the contract as violating future IRA rules created after the purchase.
Kitces writes that QLACs are not recommended if their purpose is to deal with RMDs, as opposed to meeting a real need for a guaranteed income stream.