Grant and Sylvia, aged 82 and 79 respectively, find they can no longer travel and are unable to keep up their home. They own a three-bedroom home in the suburbs of Trenton, New Jersey. It has no mortgage, and they feel they could get $600,000 for it.
They have a comfortable nest egg of approximately one million dollars, invested mostly in a few blue chip stocks and two mutual funds, and both receive Social Security. They are considering entering a retirement facility.
Challenge:
- Can Grant and Sylvia afford to live in the senior community they’ve chosen?
- Will their money last?
- Where will income come from each year?
Financial Issues:
- Should Grant and Sylvia sell their home or rent it out, then leave it to their children?
- Can they afford to stay in their home and get live-in help?
- How much money can they safely withdraw from their investments?
- What form will these withdrawals take? Interest and dividends? Selling mutual fund shares?
- Should they be taking more than the required minimum distribution from their retirement accounts?
- Should they go into a facility that requires them to buy in, or one that lets them rent an apartment?
Lifestyle Issues:
- Grant had a minor stroke last year and is not as mobile as he once was. He can no longer drive and has trouble climbing steps.
- Both Grant and Sylvia are very social and make friends easily, but will miss their neighbors if they move.
- Sylvia has a history of Alzheimer’s disease in the family; her father and older sister developed the disease in their 80s. Although Sylvia has no symptoms, she is concerned.
WrapManager is available to assist in discussing options and helping to build a portfolio based on the individual needs of the client. We can work with them to create an Envision plan and evaluate their cash flow needs against their available assets under both the preferred and acceptable scenarios. We can then run a projection of the probability that their money will reach their goals under each scenario to help them better understand their situation and options.
This case study represents hypothetical situations as examples only. Accordingly, no client or prospective client should assume that solutions presented (or any component thereof) serve as the receipt of, or a substitute for, personalized advice from WrapManager, or any other investment professional. Not every client of WrapManager chooses to participate in all of the steps available and each individual client situation is different.