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1. She is 67
2. She is currently still working at a beauty salon making about $500 per week.
3. She has 80,000 in an interest bearing savings account (making probably around 3%).
4. She has 40,000 in an E-trade account (currently not invested in anything...just sitting there as cash)
5. She has 32,000 in an IRA account
6. She is getting about $875 per month from Social Security.
7. Her current rent is about 1,000 per month.


She has $152,000 in liquid assets.

She gets $10,500/year in SS (and I assume she's also on Medicare).

She's also making roughly $26,000/year from her job. This gives her a gross income of $36,500/year give or take. As long as she can keep that job, she probably doesn't need to dip into savings with the caveat below.

In 3 years, she's going to have to start withdrawing from the IRA. The first year's minimum required distribution works out to 3.65% of IRA assets ( $1168 for the first year) and goes up from there.

I ran the $120K (money outside the IRA) through Berkshire-Hathaway's SPIA (Single Premium Immediate Annuity ) calculator ( ). It's enough to provide her with $709/month gross for the rest of her life (I assumed California residency without more info)if she bought now. Berkshire is currently paying 3.9% (down from about 5.25% a couple of years ago).

Without a job (and ignoring the $32K in the IRA), she would be grossing
$1584/month before provision for income taxes or a bit more than 1/2 her current income. 'Course, the SS will increase with COLA, but the SPIA won't AFAIK. Then there's the fact that most of it would be eaten up by the $1,000/month rent.

How would she chip in with your sister to buy a house with mother-in-law's quarters? Would she supply the down payment and let your sister make the mortgage payments? Where's your sister located and could your mother maintain her job if she moved in with your sister? What are real estate prices like where your sister lives?

There are a lot of questions that need answering before any decisions are made. HOWEVER, one thing that needs to be made clear to your mom is that she needs to hold onto her savings as long as possible to preserve her capital so that she does have something left that could provide her some income.

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