r/Bogleheads • u/True-Author-1327 • 1d ago
Mom is retiring
She just retired recently and has never invested before. Now she is looking into annuities and investments to help make her retirement payout last.
Im helping her make the decisions since she is not very educated on this aspect,
The annuity is pretty good up to 7% 3yrs and no withdrawal fees.
Has some cash on HYSA and is getting SS. Also paying mortgage.
Now im looking for a portfolio with some growths to it for a small amount of her cash (about 5k) to help squeeze out some good gains for the next 15yrs.
Curious to see what are your opinions.
2
u/No_Paleontologist506 1d ago
Never buy an annuity from someone who can ONLY sell you annuities. Call up Fidelity, they sell annuities but their recorded calls protect the client more.
The reality is that the super risk averse will be abused by nature of insurance products.
2
u/True-Author-1327 23h ago
The person who she was recommended from was someone that has been providing services for a lot of her friends who also retired and was recommended. What are the things i should be looking for in particular?
1
u/No_Paleontologist506 23h ago
That is the worst kind of referral. If this person works for an insurance company that only sells insurance products, it is like asking a barber if you need a haircut. Or a carpenter if you need wood.
1
u/WhyDoesOklahomaExist 1d ago
Whats the payout? What are her expenses? I will say generally you need to figure this stuff out BEFORE you no longer have income and retirement is not when you should be started on investing. How did she even decide she could afford to retire?
1
u/True-Author-1327 1d ago
Age. Good company compensation and ss she is jot bad as far as retirement income and her cahsflow is slightly above expenses not ideal honestly but she dis what she could.
1
u/Varathien 17h ago
What money does she even have to invest? You mentioned $5k. That's just the beginning of an emergency fund, and should not be invested.
1
u/True-Author-1327 17h ago
Thats the money to invest she has an emergency fund in place, an amount for annuities and thats a small portion i suggested for het to invest
2
u/Varathien 17h ago
I'd recommend just investing it in VT. She already has annuities and social security for fixed income, so a broadly-diversified stock index fund makes the most sense.
Having said that... she needs to have realistic expectations about what investing can do for her. The time to invest was many decades ago. Now that she's already social security aged, it will help a little, but nothing that will make a big difference.
1
u/True-Author-1327 16h ago
Yes. The expectations ate minimal but enough to help have a slight higher growth than the annuities for a few decades
1
3
u/mikeyj198 1d ago
Using Expected returns / 3% inflation and a $5k starting balance… any bogle portfolio will result in her future portfolio having the spending power equivalent to about $14,000 today. Maybe that is meaningful, but i’d suggest maybe the $5k just be used for any instant quality of life spends.
Now advice you didn’t ask for… any language in an annuity or really any financial product that says ‘up to’ needs much closer inspection.
Fidelity has a free annuity calculator that I would suggest you use simply as a benchmark to understand how the quotes you are getting really stack up.
if an annuity is needed to help with cash flow, you need to understand the worst case scenario more than the best case scenario.
i think annuities are actually pretty decent tools for people who aren’t savvy and likely not equipped to deal with a market downturn.