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My mother will be retiring soon. She has small invests, small pension, and will be receiving Social Security. I can't seem to find information about which things she should tap into first and the tax liability that goes with it. Her bank says she needs to have a financial counselor. But the people I've contacted charge enormous fees or want her to move her accounts to their company. Where can I access this information that explains these investments in simple English?
Thank you.

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Igloo...thanks again for your thorough input. Your knowledge of these things is so expansive! I'm sure others appreciate the info. as well. Have a wonderful day!!
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Annuities, which is an insurance product on sold on commission, based on posts on this site are a huge issue for those who find their elder needs to apply for Medicaid. Often the maturation for the annuity is in their late 90's. There is someone on this site, whose mom's is over age 100!! Most annuities cannot be made Medicaid compliant. Therefore they need to cancel it to be able to be approved on Medicaid & after they do a spend-down of the annuity funds.

An immediate annuity can be “Medicaid compliant” if it is actuarially sound, irrevocable, non-assignable, has equal payments, and names the state Medicaid program as the primary or contingent beneficiary to the extent of Medicaid benefits provided to the institutionalized individual. The problem for most insurance companies is that they cannot offer an immediate contract that is irrevocable as to the parties and also is non-assignable and subject to state requirement for commission & fees.

If you withdraw early you can lose 10% plus fees on the invested principal. Also they have sales commissions that are higher than other investments. Remember it's an insurance product sold on commission.
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I think one needs to be VERY careful with RM. RM is debt that HAS TO BE REPAID. If homeowners, their kids or heirs want the house (or worst case scenario - have been unpaid caregivers for parents and have no other home), then the RM, it’s fees, interest and other expenses within the RM has to be repaid once the homeowner dies OR does something to cause RM come due. Under fed rules, lenders allow heirs up to 30 days to let them know what they plan to do and up to 6 mo to arrange financing for 95% of FMV of RM’d house. If not, property can be foreclosed on &/or sold on the open market. There is no gray area, the RM has to be repaid. If it’s an FHA/HUD backed RM & house sells for less than owed, feds pay the difference to the mortgage holder. Family doesn’t have to make up the difference. But if you want to keep the house, you have to pay the RM.

RM’s can work for some….like a healthy couple 63 & 65 which own 300K appraised home outright & plan 10 - 20 years there; home in an area of increasing value; & have guaranteed income to pay taxes, insurance, maintenance for 10 - 20 years; & they do line of credit RM. So when they move, home is now 500K which repays RM & leaves $$ for downsized home or CCRC buy-in. But if that’s you, really you don’t need an RM as you can get HELOC or personal loan. Too often, RM is done by those in financial or health crisis who don’t understand what an RM involves. If RM’d home is lower value, the $ received (may be less than 50% of value) is just a band-aid on a bigger $$ problem. They can’t pay for what is required for the RM; or they are ill & end up moving to a NH. Either way RM default & foreclosure.

As of 2013 significant changes happened to FHA backed RM. Now you have to show ability to pay the “required” on the house, like insurance, taxes, etc for years. If not, then have an escrow-like account to cover these costs. If you are low income and struggling, you just can’t do this. No federally backed RM for you. Also now value & condition on house has to be verifiable.

If you live with elder who gets the RM, you have no protection in all this. Only the spouse who was over 62 at the time of the RM is. Most excellent article in New York Times, October 14, 2012 by Jessica Silver Greenberg: “Reverse Mortgages Costing American Their Homes”nytimes/.../reverse-mortgages-costing-some-seniors-their-h...
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Wow, Igloo, this is amazing...want to be our financial advisor? :)

Mom will retire at 66 sometime this year. She owns her home and plans to stay there. In addition to SS she has a savings acct., IRAs (both trad. and Roth), and a small pension. I know of the minimum dates to start taking payments on all the investments, but what I can't help her with is which to take first and which to delay. For example, I understand that delaying SS until 70 is better. She can do that, but then which other investments should be tapped first? This is the information I can't seem to find. btw, we've done all the other planning.

Also, why do you not like annuities and reverse mortgages?
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I think your making this more complex that need be. I'd suggest approaching this from the probable end point. What age is she likely to die - think back to her family...when did they die & why. Really genetics is a factor you can't overlook. Then what is her health like? If she already has morbidity issues, factor that in. So between the two, you have an idea of the need to plan for 89 or 99. And in all this you do this for your own planning as well.

For SS, go to SSA site, its pretty good for info. She has to take SS by 70. You can figure out what the payout difference is for each year. If the amount is with very little difference at 67 vs 69 and they live to 95, take it earlier. The one rule with SS is that the best is to always wait till 66 to start.

Small invests, what do you mean? Cd 's? IRA? Stocks? Royalties? you need to understand what each is, what it does over time and tax issues. This you do for each one. Really do your research to understand so you all don't get taken advantage in or stuck with something that is costly to liquidate. None of this is hard & you need to understand what each is & does. You've already started doing this, right? Just continue doing this. Yiu may find that not doing anything is the action to take.

Then do a reality check on what it costs mom annually to live - right now is a great time as she got all her tax stuff in the mail. Get all her bills & receipts from last year to really really have hard data as to what it costs to run Mom, Inc.

what is moms housing situation? Could she live there another 10, 20 years safely? Or is it just too much house right now? What type of social creature is she - like is she the type to need community projects to do or prefers living alone. Would she be better selling the house and using the $ and perhaps $ from IRA to do a buy in at a CCRC? All the advisors in the world can't tell you what's best unless you do the background on as to what works for mom.

Personally I hate annuities & reverse mortgages - I'd leave the free chicken dinner or seminar if those were bring touted.

Mom needs to have a will, DPOAs done by elder lawyer. If she doesn't have a prepaid funeral & burial done, get that done. If its the situation, that it's just you & mom for the future, get all these done for the both of you & let mom pay. Good luck in all this, you can do it!
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Thanks, guys. I have done a lot of online searching and started with napfa. I contacted some of the planners...they mostly just wanted to attract new clients. All her investments are modest, so we really don't need an attorney. I think where I need the most help is in deciding which account to tap into first. (ie: 401K, IRAs, pensions?) Also, if she has enough to live on, should she delay taking SS? I did contact her bank, they said, legally, they could not advise her on which to access first (puzzling!!). I don't want to move her accounts, so most advisors were not interested in talking to us...and her assets are not enormous...they only want larger accounts. We really just need to know which accounts to access first. Anyway, I thought, like anything else, I'll just have to figure it out.
If anyone has gone through this lately, I would certainly appreciate specific websites or trusted advisors who would be willing to work with us long distance if necessary. Thanks again!
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A fee based financial planner may be able to offer help. Their national organization has lists napfa . org Understand there are 'rules of thumb' but no one can guide your Mom without complete information on EVERYTHING. Budgets, debt, spending plans, every asset, every liability, every insurance policy, plans on where/how she wants to live, ETC. Will her social security and pension be sufficient to pay her monthly expenses? Does she have IRAs or 401ks to draw on? Are taxes really an issue for her, if so she may benefit from tax planning. How old is she? How long does she want to plan for (is there longevity in her family and health status?) There is a lot of information online as well, just make sure it comes from a reliable source.
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If she has the investments with a stockbroker, ask him. Most of these places have retirement seminars periodically. Most unions offer seminars to union members. Even your local senior center may offer them. Even the bank should have a Trust Department you can talk to.
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