The wife is insistant that she wants zero risk of loss of principal. She wouldn't listen to T-bill funds.

It is hopeless. Even if you keep the money as dollar bills in a safe deposit box, a sufficiently organized bunch of criminals could get it out. Perhaps a tornado could. Or nuclear attack. I suppose, however, that is the nearest thing to zero risk of loss of principal, though.

But, unless she thinks inflation is at an end (along with Roger Bootle, author of The Death of Inflation, there is the risk of loss of purchasing power even though the dollar amount does not go down. With a 3% inflation rate, the purchasing power of that money is cut in half every 24 years. That is a risk, too. At least with treasury bonds (e.g., long bonds), you roughly keep up with inflation. Even that has an opportunity cost.

While I would not presume to change her mind, you might. Have her read The Motley Fool Investment Guide and some of the essays on the main Motley Fool website and Fool's School. Education is the answer.