No. of Recommendations: 2
Hi mkulash,

This is a hard question to deal with. On the one hand it's a financial question, and the response would probably be at least 85% bonds and 15% stocks due to her age. On the other hand, there's the reality of the situation. This is the part that gets hard to discuss, whether it's among friends, or relatives, or strangers.

My mom has started down this path, so I have at least some understanding of your mom's plight. My mom is still keeping herself and her apartment clean and paying her bills, so we're essentially leaving things as they are for the present. However, her dementia has noticeably worsened in the past 6 months, so it's only a matter of a short time before some intervention is going to happen.

The real issue, IMO is your mom's health. At 85, is she truly healthy, other than the dementia? The reason I ask is because if she's not, then you probably don't need to worry about withdrawal rates. Instead, you can concentrate on making her final years better, rather than worrying whether the money is going to last forever.

As I see it, with a 10% withdrawal rate, the money will probably outlast her, even if you just put it all in a CD ladder. Your financial job, as I see it, is to preserve her capital as best you can, accepting that the principal is going to decline. So, risk should be kept small for the larger portion of her estate. The "rule" of having a percentage of bonds (CDs or whatever) equal to her age is probably a good one to follow in her case. Fifteen percent of her funds in some ETFs or index funds probably won't add much risk or benefit though, so I guess it's a wash.

Good luck to you in these trying times.

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