The Ultimate Guide to Financially Supporting Aging Parents Without Going Broke

Retirement doesn’t have to be complex or costly. When my Dad retired in 2002, he trusted a financial advisor who claimed to specialize in retired teachers to manage his 403(b) and IRA. However, after two decades, it was evident that the advisor’s approach with fees and investments wasn’t delivering desired results. This led us to rethink and take control of managing my parent’s wealth for a more fruitful retirement journey.

1. Simplify and Lower Costs
   • We transitioned their IRAs to a Schwab account, known for its reliability.
   • Our focus was to streamline the portfolio, reduce costs, and align investments with their age and objectives.
2. The 130 Rule of Thumb (Stock/Bond Allocation)
   • Following the 130 Rule of Thumb, we aimed for a target portfolio allocation of 50% stocks, 50% bonds/cash.
   • This target distribution helps balance growth and stability, considering their age and risk tolerance.
3. Holdings
   • We consolidated the IRAs to include diversified index funds like VTI and VXUS for stocks, and BND for bonds.
   • A shift towards more fixed-income funds like SGVO and BIL complemented their cash holdings for a steady income stream.
4. The Mindset Shift
   • Switching from trying to beat the market to preserving wealth was crucial for my Dad’s retirement strategy.
   • With a broader perspective, including pension income, taxable account, and cash savings, we could afford to be more aggressive with their investments.

In conclusion, taking charge of managing my parents’ retirement funds was a decision driven by a desire for more control and transparency. Transitioning towards a simpler, cost-effective, and age-appropriate portfolio has set the stage for a more secure and prosperous retirement journey ahead. It’s never too late to reevaluate and make the necessary shifts to ensure a comfortable and fulfilling retirement.