# What should an older person do with a LOT of cash? **URL:** \ **Category:** Factual Questions\ **Created:** [June 6, 2009, 11:49am UTC](https://boards.straightdope.com/t/what-should-an-older-person-do-with-a-lot-of-cash/498918 "2009-06-06T11:49:00Z")\ **Posts on this page:** 16\ **Page:** 2
**Author:** ![China\_Guy](https://avatars.discourse-cdn.com/v4/letter/c/779978/32.png) [@China\_Guy](https://boards.straightdope.com/u/China_Guy)\ **Post date:** [June 7, 2009, 9:28am UTC](https://boards.straightdope.com/t/what-should-an-older-person-do-with-a-lot-of-cash/498918/21 "2009-06-07T09:28:45Z")
David Carradine went for the self service option in Thailand. If the gentleman in question wanted ‘the works’ in Thailand, $200k could last at least several years. 'Maybe Siam Sam could estimate for us how long $200k could last. 🙂 ---
**Author:** ![Siam\_Sam](https://avatars.discourse-cdn.com/v4/letter/s/d78d45/32.png) [@Siam\_Sam](https://boards.straightdope.com/u/Siam_Sam)\ **Post date:** [June 7, 2009, 5:23pm UTC](https://boards.straightdope.com/t/what-should-an-older-person-do-with-a-lot-of-cash/498918/22 "2009-06-07T17:23:13Z")
> [@China\_Guy](#): > > David Carradine went for the self service option in Thailand. If the gentleman in question wanted ‘the works’ in Thailand, $200k could last at least several years. 'Maybe Siam Sam could estimate for us how long $200k could last. 🙂 All I can tell you is I once made the acquaintance of a fellow American in his 30s who had managed to save up a bit of cash and figured he could live here 10 years, maybe up to twice that. He might have made it, too, but unfortunately he chose to settle down in Pattaya. He was broke in 2 years and was last heard from in Utah, where he was searching for further employment. But he left with no regrets and the biggest smile on his face I’ll bet anyone has ever seen. He auctioned off his possessions before he left, and someone made a bid for his libido. ---
**Author:** ![don\_t\_ask](https://avatars.discourse-cdn.com/v4/letter/d/e68b1a/32.png) [@don\_t\_ask](https://boards.straightdope.com/u/don_t_ask)\ **Post date:** [June 7, 2009, 5:43pm UTC](https://boards.straightdope.com/t/what-should-an-older-person-do-with-a-lot-of-cash/498918/23 "2009-06-07T17:43:34Z")
> [@Siam\_Sam](#): > > He auctioned off his possessions before he left, and someone made a bid for his libido. What, he was going once, going twice, going for the third and last time… ---
**Author:** ![Siam\_Sam](https://avatars.discourse-cdn.com/v4/letter/s/d78d45/32.png) [@Siam\_Sam](https://boards.straightdope.com/u/Siam_Sam)\ **Post date:** [June 7, 2009, 5:46pm UTC](https://boards.straightdope.com/t/what-should-an-older-person-do-with-a-lot-of-cash/498918/24 "2009-06-07T17:46:18Z")
> [@don\_t\_ask](#): > > What, he was going once, going twice, going for the third and last time… Penalty for early withdrawal. 😃 ---
**Author:** ![Mr.Slant](https://avatars.discourse-cdn.com/v4/letter/m/c57346/32.png) [@Mr.Slant](https://boards.straightdope.com/u/Mr.Slant)\ **Post date:** [June 7, 2009, 7:27pm UTC](https://boards.straightdope.com/t/what-should-an-older-person-do-with-a-lot-of-cash/498918/25 "2009-06-07T19:27:14Z")
> [@Doug\_Bowe](#): > > The Vanguard Prime Money Market Fund currently pays O.40% interest. That interest is not much, but better than bank MM funds. It is not protected by FDIC but is well managed by a very good company. > > Money markets are liquid. When you open an account you’ll get a checkbook to write checks on the account. Mind you, minimum check amount needs to be $250, so you won’t be writing checks for a Starbucks. > > I’m still a big fan of laddered CD’s, but what the heck? Suggesting ING Direct at this point. They’ve got a checking account that pays 1.65% on deposits that size. ---
**Author:** ![alterego](https://avatars.discourse-cdn.com/v4/letter/a/6bbea6/32.png) [@alterego](https://boards.straightdope.com/u/alterego)\ **Post date:** [June 7, 2009, 11:03pm UTC](https://boards.straightdope.com/t/what-should-an-older-person-do-with-a-lot-of-cash/498918/26 "2009-06-07T23:03:56Z")
First of all, he should go skydiving. Second, he should hire a nutritionist. Third, he should get himself checked out by a preventative medicine doctor. ---
**Author:** ![Soul](https://avatars.discourse-cdn.com/v4/letter/s/e9bcb4/32.png) [@Soul](https://boards.straightdope.com/u/Soul)\ **Post date:** [June 8, 2009, 9:14pm UTC](https://boards.straightdope.com/t/what-should-an-older-person-do-with-a-lot-of-cash/498918/27 "2009-06-08T21:14:32Z")
Single-premium immediate annuity for half of it, the other half in a single-premium life insurance policy. That’s what I’d do, anyway. ---
**Author:** ![Southern\_Yankee](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/southern_yankee/32/2800_2.png) [@Southern\_Yankee](https://boards.straightdope.com/u/Southern_Yankee)\ **Post date:** [June 8, 2009, 9:22pm UTC](https://boards.straightdope.com/t/what-should-an-older-person-do-with-a-lot-of-cash/498918/28 "2009-06-08T21:22:53Z")
> [@Soul](#): > > Single-premium immediate annuity for half of it, the other half in a single-premium life insurance policy. That’s what I’d do, anyway. Can you explain what those are to a financial simpleton? ---
**Author:** ![dracoi](https://avatars.discourse-cdn.com/v4/letter/d/90db22/32.png) [@dracoi](https://boards.straightdope.com/u/dracoi)\ **Post date:** [June 8, 2009, 9:41pm UTC](https://boards.straightdope.com/t/what-should-an-older-person-do-with-a-lot-of-cash/498918/29 "2009-06-08T21:41:34Z")
One thing that hasn’t been mentioned is that he should look at potential estate tax issues. When it’s said that he has enough in savings for emergencies, I’m not clear on how much we’re talking, but if there’s a chance his total estate could be worth more than $1 million, he should seriously look at giving the money away. The estate would include any real estate, investments (including annuities and residual partnership interests), retirement accounts, insurance proceeds, etc. The estate tax is brutal on assets over the exemption amount. The exemption amount is a moving target these days, but it’s set to revert to $1 million in 2011. The tax on the estate assets will be 45% on anything over the exemption. (And in 2011, a 55% rate comes back on amounts over $2 million). He can avoid any gift tax on amounts up to $12,000 per person. If the estate tax were going to affect me, I’d start giving that money to kids, grand kids, etc. Set up some college funds or something. (Note: these are all federal tax issues. There may be state issues to look at.) If he does want to keep and invest the money, I think the bond market is undervalued right now, and there are good 5%+ rates from solid companies on bonds. Even better are some of the municipal bonds that are tax free at the federal level. Bonds are even longer-term investments than CDs, but the bond market permits him to sell at the going rate without any penalty. ---
**Author:** ![Soul](https://avatars.discourse-cdn.com/v4/letter/s/e9bcb4/32.png) [@Soul](https://boards.straightdope.com/u/Soul)\ **Post date:** [June 8, 2009, 10:02pm UTC](https://boards.straightdope.com/t/what-should-an-older-person-do-with-a-lot-of-cash/498918/30 "2009-06-08T22:02:45Z")
> [@Southern\_Yankee](#): > > Can you explain what those are to a financial simpleton? I shall be lazy and post links: [http://www.immediateannuities.com/content\_pages/lesson.htm](http://www.immediateannuities.com/content_pages/lesson.htm) > **[A Look at Single-Premium Life Insurance](https://www.investopedia.com/articles/pf/05/singlepremlife.asp)** > > Want to provide for your dependents and finance your own long-term care with one policy? Consider single-premium life insurance. Basically, this solves the problem of long-term income, helps secure a solid return, and avoids a good deal of stress due to taxes. Many of the tax issues **dracoi** mentioned could be avoided by using a life insurance policy like the one I’m describing (assigning ownership to an irrevocable trust avoids estate taxation, and income tax doesn’t apply to death benefits). ---
**Author:** ![Southern\_Yankee](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/southern_yankee/32/2800_2.png) [@Southern\_Yankee](https://boards.straightdope.com/u/Southern_Yankee)\ **Post date:** [June 8, 2009, 10:36pm UTC](https://boards.straightdope.com/t/what-should-an-older-person-do-with-a-lot-of-cash/498918/31 "2009-06-08T22:36:04Z")
> [@Soul](#): > > I shall be lazy and post links: > > [Your Guide To Immediate Annuities—What You Need To Know — ImmediateAnnuities.com](http://www.immediateannuities.com/content_pages/lesson.htm) > > [A Look at Single-Premium Life Insurance](http://www.investopedia.com/articles/pf/05/SinglePremLife.asp) > > Basically, this solves the problem of long-term income, helps secure a solid return, and avoids a good deal of stress due to taxes. Many of the tax issues **dracoi** mentioned could be avoided by using a life insurance policy like the one I’m describing (assigning ownership to an irrevocable trust avoids estate taxation, and income tax doesn’t apply to death benefits). Thank you, I’ll read upon those. ---
**Author:** ![Southern\_Yankee](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/southern_yankee/32/2800_2.png) [@Southern\_Yankee](https://boards.straightdope.com/u/Southern_Yankee)\ **Post date:** [June 8, 2009, 10:40pm UTC](https://boards.straightdope.com/t/what-should-an-older-person-do-with-a-lot-of-cash/498918/32 "2009-06-08T22:40:47Z")
> [@dracoi](#): > > One thing that hasn’t been mentioned is that he should look at potential estate tax issues. When it’s said that he has enough in savings for emergencies, I’m not clear on how much we’re talking, but if there’s a chance his total estate could be worth more than $1 million, he should seriously look at giving the money away. The estate would include any real estate, investments (including annuities and residual partnership interests), retirement accounts, insurance proceeds, etc. > > The estate tax is brutal on assets over the exemption amount. The exemption amount is a moving target these days, but it’s set to revert to $1 million in 2011. The tax on the estate assets will be 45% on anything over the exemption. (And in 2011, a 55% rate comes back on amounts over $2 million). > > He can avoid any gift tax on amounts up to $12,000 per person. If the estate tax were going to affect me, I’d start giving that money to kids, grand kids, etc. Set up some college funds or something. > > (Note: these are all federal tax issues. There may be state issues to look at.) > > If he does want to keep and invest the money, I think the bond market is undervalued right now, and there are good 5%+ rates from solid companies on bonds. Even better are some of the municipal bonds that are tax free at the federal level. Bonds are even longer-term investments than CDs, but the bond market permits him to sell at the going rate without any penalty. He’ll be well under the exemption. When I say he’s comfortable, I mean he gets about $2500/month from pension and SS and his expenses total about $1100/month. He has a bit under $50k in savings and checkings, and another $20k in a CD. He’s certainly not rich, but lives a pretty simple life. ---
**Author:** ![Siam\_Sam](https://avatars.discourse-cdn.com/v4/letter/s/d78d45/32.png) [@Siam\_Sam](https://boards.straightdope.com/u/Siam_Sam)\ **Post date:** [June 14, 2009, 3:13am UTC](https://boards.straightdope.com/t/what-should-an-older-person-do-with-a-lot-of-cash/498918/33 "2009-06-14T03:13:30Z")
> [@Siam\_Sam](#): > > All I can tell you is I once made the acquaintance of a fellow American in his 30s who had managed to save up a bit of cash and figured he could live here 10 years, maybe up to twice that. He might have made it, too, but unfortunately he chose to settle down in Pattaya. He was broke in 2 years and was last heard from in Utah, where he was searching for further employment. But he left with no regrets and the biggest smile on his face I’ll bet anyone has ever seen. > > He auctioned off his possessions before he left, and someone made a bid for his libido. Popping back in to mention a British friend of mine. An ex-London banker. His job here in Bangkok as a project manager for an international translation company makes him a comfortable living. He owns a number of properties in and around London that he rents out – some company manages the places for him for 10% of the rent – and he just stashes all of that away for the future. Back when he was a banker, the bank he was with laid off a bunch of people, and he seems to have made out like a bandit in the settlement. So he and one of his banker friends who also got a large severance payment moved to Rio. They lived there for a year and did nothing but lay on the beach, drink and screw girls. For a whole year. My friend does not drink now, and I think that must date back to that time. So there’s another option. 😃 ---
**Author:** ![zamboniracer](https://avatars.discourse-cdn.com/v4/letter/z/e9a140/32.png) [@zamboniracer](https://boards.straightdope.com/u/zamboniracer)\ **Post date:** [June 14, 2009, 3:31am UTC](https://boards.straightdope.com/t/what-should-an-older-person-do-with-a-lot-of-cash/498918/34 "2009-06-14T03:31:08Z")
> [@Early\_Out](#): > > (Tangential advice - set up a revocable living trust, and transfer the man’s assets into it. This will let you avoid probate fees entirely, and will speed up the process of settling the man’s affairs when he eventually shuffles off this mortal coil. When my mother died, I had things completely taken care of within a month, instead of the many, many months that probate typically requires.) IMHO trusts are too expensive to set up and administer. Assets nowadays can usually be titled in payable on death - POD - format, which avoid trustee fees and set up costs all together. ---
**Author:** ![Early\_Out](https://avatars.discourse-cdn.com/v4/letter/e/6f9a4e/32.png) [@Early\_Out](https://boards.straightdope.com/u/Early_Out)\ **Post date:** [June 14, 2009, 2:31pm UTC](https://boards.straightdope.com/t/what-should-an-older-person-do-with-a-lot-of-cash/498918/35 "2009-06-14T14:31:30Z")
> [@zamboniracer](#): > > IMHO trusts are too expensive to set up and administer. You can do a simple revocable living trust yourself, with zero cost. Transferring things like brokerage and bank accounts into the trust takes no more than a letter, or a form that the brokerage or bank provides. Transferring real estate into the trust, on the other hand, requires a new deed - I did my own, but it’s not a simple thing, and it has to be done properly. (Cars should generally NOT be transferred into a trust, by the way - some insurance companies balk at insuring a vehicle that’s not titled to an individual.) There’s really no “admin” cost, since any income to the trust is imputed to the trustee. In other words, you don’t have to file a separate income tax for the trust. Interest earned on a bank account, for example, is shown as being paid to “The Early Out Revocable Living Trust, Early Out, Trustee,” and just gets reported on Early Out’s 1040, just as before. Having said all that, I wouldn’t advise the do-it-yourself route for anyone with any sort of complex assets. And a trust is best when the bequests are simple: one-third of everything to each of three people, for example. It doesn’t work well for things like, “one-third to X, but only if he divorces that harpy, Y,” or for setting up things like life estates. ---
**Author:** ![rocking\_chair](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/rocking_chair/32/2918_2.png) [@rocking\_chair](https://boards.straightdope.com/u/rocking_chair)\ **Post date:** [June 15, 2009, 10:04pm UTC](https://boards.straightdope.com/t/what-should-an-older-person-do-with-a-lot-of-cash/498918/36 "2009-06-15T22:04:18Z")
do not let him put it in a matress. you may find yourself in landfills looking for it after someone surprizes him with a new matress. [Previous page](https://boards.straightdope.com/t/what-should-an-older-person-do-with-a-lot-of-cash/498918.md?page=1)