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Author: RBSeekerScot One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75642  
Subject: Re: My Parents' retirement dreams Date: 11/6/2007 2:38 PM
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<<My mother was the same way. She sold her home and put the proceeds into CD's at her local bank, and happily rolled them over when they matured.>>

LOL -- At least CDs beat inflation! I understand my parents' aversion to risk, but I think they've gone too far. Doesn't make sense to me to have 75% of their portfolio locked down, and 25% exposed to loss due to a recession. Makes more sense to me to have 100% in inflation-beating T-bills, corp. bonds or CDs. But I do think they should have some skin in some solid stocks/mutual funds.

I understand your suggestion about moving all of their retirement investments into the vacation property, but we're forgetting about taxes... Any withdrawals are taxed as income, and their marginal rate (filing jointly) is 25%!! So taking out the whole hundred grand would yield them only $75,000, and leave no cash cushion for them. Even in good health and such, they should have something there.

So, let's say they allocate half their IRAs to a down payment, and pay the mortgage out of their pensions & S.S. -- leaving the other $50,000 as a nest egg/cash cushion. What is the best way to invest that 50 Gs with a very good chance to beat inflation each year?

If serious health issues arose which involved costs, or the loss of one partner's pension and S.S. due to death, I presume the vacation property would be sold (it would have less use at that point, of course). As of now, they're active and healthy.

So, primarily I'm looking for suggestions on the best way to allocate their investments: $100,000 at present. Possibly just $50,000 in the event they purchase the second home.
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