So my mother is a widow, my dad was great with investing in stock markets and funds, etc. She is not educated, and watched a lot of the news. The news, with how the market has been the past few weeks, keeps hinting to her that the financial Apocalypse is coming, and she needs to make drastic withdrawals from her retirement accounts.
Earlier this year, she had withdrawn 25% of a large investment ( > 100k, so she withdrew roughly 28k) - all because her Rate Of return was at -3% for the year ( most of which occurred during those few weeks the market took a crap.) although it’s her money, I wasn’t happy she did this, especially since she did so out of fear. She had no one tell her or advice her that this was a good move, she decided at that moment to make this move. That account used to get up to +10% every 4-5 months, and she’d withdraw from it for income. Now she won’t be able to enjoy as much of a luxury.
She has an inherited IRA, so she has Minimum Required Distributions every year. Normally - she would take about 100k pretax as her yearly income, spread in quarterly payments. Now- with the fear of the marker - she wants 100k pre tax in one lump sum in the beginning of the year!
She also makes $2500 per month in Social Security.
My mother has a checking account - her account currently is at 48k. She has no major expenses, she doesn’t travel, she has no plan for her money at all, yet she wants to add an additional 60k to her checking account out of fear of the market’s volatility.
I keep trying to convince her that this is a dumb dumb financial move to make. She does not need more money, she has no plans for it. She doesn’t seem to understand that taking money out in a down market is way worse than the risk of keeping money in the market that may or may not tank!
Does anyone have any advice on dealing with these market fears for elderly people. We get into such heated arguments on this subject. I know it’s her money, but I’m trying to prevent mistakes.
What came part of this problem - a year ago she used to have $1.09M, and now its 954k, and that’s after about 40k in withdrawals. She thinks she lost too much.
TL:DR - Mom thinks the market will bottom out and she will have no more money to live out her life. She wants to withdraw money and put it under a mattress essentially and hope for the best. Need advice on how to better convince her she shouldn’t withdraw so much more money than she needs.
She’s 71. She’s not educated, since she usually relied on my dad. Financial advisors can only say so much.
Submitted December 25, 2018 at 11:48PM by ScottPens http://bit.ly/2Ah5DCR
