So, with trepidation inspired by the ongoing thread about scams, I was talking to my dad about an investment opportunity that his financial advisor has suggested. I believe this is an ACTUAL financial advisor working for a legitimate company, but I’m concerned there may be a misunderstanding of how this works, so am hoping someone has some info.
Here’s what my dad told me:
He puts in a lump sum of money ONCE - he cannot add more to it. For the sake of this discussion, let’s say that’s $50,000.
That money is NOT invested - he cannot LOSE the $50,000.
He can withdraw any or all of it at any point from the account - he can do it monthly, or just call and say, “I need $30,000” or whatever. There is a certain age at which he says he HAS to have withdrawn money, but even then, as long as he has withdrawn money before that age, he is not obligated to continue withdrawing money. He merely has to have made a withdrawal by that age.
When he dies, as long as there is any money remaining of the $50,000, his estate / heirs (namely, me!) get the full $50,000.
Again, this money is NOT invested, so the only way there wouldn’t be any money remaining is if my dad withdrew all $50,000.
This seems sketchy to me - why couldn’t my dad give them $50,000, immediately withdraw $49,999, and then when he dies, his heirs get $50,000?
I understand that the money isn’t growing, so depending on how long my dad lives, this may not be the best option, but it still seems strange.
Has anyone encountered anything like this? Are there any details I may be missing?