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.. Your input is appreciated. ..

First, unless they are impaired, your parents, not you, should be deciding what to do, it really isn't that difficult. If they are not that well educated or comfortable with money, that is all the more reason for them to learn more about what their choices are. I would image that if they were buying a car they would spend many hours researching their choices and shop carefully. Investing their retirement money is a much larger purchase, they need to commit spending the time to learn what they need to know about retirement. Part of the problem with leading them through the process is that there is not one "right" answer for everyone, since some of the decisions really depend on how comfortable you are with some of the options. In addition even a well selected course of action has risks(including the risk of being too conservative) and if things do not work out well just because of bad luck, then they need to have been the ones making the decisions.

.. I was thinking an index fund such as Vanguard 500 should be fairly safe, but is that a safe enough play for someone that has just retired?...

You are on the right track(to helping them). I would probably prefer a low cost Total Stock Market index fund to get some small and medium size company exposure in addition to the large companies that are in the S&P 500 Index. With just a few index funds, you can build a portfolio that will be better than the majority of other choices because of the low costs.

1) Total Market Index Fund
2) Total International Sock fund
3) Total Bond Fund
4) a money market fund.
5) (optional) A REIT Index fund.

How much to allocate to each fund is pretty much a topic of endless debate and it really depends on their personalities and their total financial picture. One thing to keep in mind is that with a couple near retirement age, there is a reasonable chance that at least one of them will live to be 95 or older. This means that some of their money will be invested for possibly 30 years or more. They will have to be careful to not get too conservative too early.

A good place to start helping them would be describe their background some more here, and ask for suggestions on what books they should read. Then a good retirement gift would be a couple of retirement investing books. You could buy and additional copy of these for yourself and read them at the same time your parents do to be able discuss them better with your parents.

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