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Best Course Of Action?

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Best Course Of Action?  Reply with quote  

My grandmother currently has $80,000 saved in the bank for retirement. She has $930 per month as social security, which is the only other source of income. Her current monthly expenses are $4,000, including $2,500 rent at a retirement facility. What would be the best course of action in order that financial stability can be sustained for 20 or so years?

Clearly, the $80,000 will not last into the future, so it's going to be in her best interest to act within the next few months in order to change the situation. What would you recommend in order to sustain financial stability? Here are some of the options which we've been considering.

If she were to buy a house outright with the remaining money (which would be difficult in today's market), she would be able to eliminate the $2,500 in rent, and would then be able to potentially live on the social security if she reduced her unneeded spending habits.

If she were to buy a mobile home, she would pay around $30,000 and have a space rent of around $600, leaving the rest of the money in the bank.

If she were to invest in cryptocurrency, she could see a high enough return to remain in the retirement facility, which would be preferable.

Which of these options do you think would be best? Do you have any other suggestions or questions? We live in the southern Oregon area, near Medford, so that's the real estate market we're looking at. Here is an approximate budget:

rent 2500
car insurance 180
storage 200 (eliminated if we get a house)
food 300 (380 - 80 food stamp card)
entertainment, utility, other, misc ~700-1000

Any help would be appreciated, thanks In advance.
Post Thu Jun 01, 2017 6:03 am
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Why is she in a retirement facility - assisted living needs, etc? (Altho if she is considering a house or a trailer she must be able to live independently?)

Medford has a pretty good supply of one-bedroom apts in the $750/m to $1000/m range. And then downsize so that the $200/m storage is not needed. That cuts about $2000/m out of the budget.
It's not a big deal - but why is her car insurance $2160/yr, that's about twice what I pay.

cryptocurrency, she could see a high enough return to remain in the retirement facility

Risk and return are directly proportional. Ie, if you want a 'good' return you need to take risk - and that risk means that the value of your investment will fluctuate, you cannot use high-risk vehicles to service a periodic expense (such as rent).

Savings accounts are designed for safe storage of cash, ie no return (it approximately offsets inflation). And you pay a price for that safe storage, ie your money cannot grow and you cannot build wealth. Conversely, high risk vehicles - crypto, penny stocks, puts, calls, metals, corn futures, individual companies - cannot be used for longterm growth, only as trades. That leaves moderate risk - somewhere around 10%/yr. Rule of 72, that doubles about every 7 years. So $160,000 in 7 years, $320,000 in 14 years, $640,000 in 21 years. Of course no one knows if she has that many years.[/b]
Post Thu Jun 01, 2017 5:06 pm
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Risk and return are directly proportional. Why is her car insurance $2160/year?
Post Fri Nov 10, 2017 2:18 am
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I'm late to this, but the bottom line here is your grandmother is living WAYYYYYYYYY beyond her means, and by the time I post this she is likely already BROKE.

If you spend more than you make, you're gonna be broke.

She makes $930 a month. That's her budget. She can't afford to spend $4K a month.
Post Sat Dec 16, 2017 6:20 am
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