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Handling Aging Aunt's Finances
16 replies
AUTHOR: Brian White on 10/26/2025
FIRST: DAN SMITH on 10/26 | RECENT: William Perry on 11/1
IT’S IMPORTANT TO BE familiar with what happens with Social Security benefits when someone dies. Otherwise, you may find yourself in a long, painstaking battle to get the payment to which your loved one was entitled. I found this out the hard way.
My father-in-law Bernard died in September 2015. My wife was his executor and the agent under his power of attorney (POA). But I’d earlier served as POA and executor for my mother,
I FOUND OUT A YEAR ago that my Aunt Ina Lou, then aged 95, had designated me as her agent in her financial and medical powers of attorney. She also named me as executor of her estate and the trustee for her trust.
She wasn’t well and needed more help than her thoughtful neighbors could provide. Within months, my brother, my wife and I had our aunt settled in an assisted living facility near her townhome in Burke,
THIS PAST SPRING, my brother Phil made the six-hour trip from our hometown in North Carolina to northern Virginia to visit our 95-year-old aunt, whom we know as Aunt Ina Lou. We hadn’t heard from her in a while, which was unusual.
Since we were children, she’d always sent us Christmas and birthday cards, and she’d missed some recently. Phil tried calling several times, but she hadn’t been answering her phone. This wasn’t particularly surprising since our aunt is almost deaf.
BUILDING A NEST EGG is relatively easy: Save as much as you can starting as early as you can. Invest in a diversified mix of low-cost mutual funds. Rebalance periodically. And tune out the noise.
By contrast, determining how much you can safely spend in retirement is far trickier. Consider three strategies.
First, there’s the much-discussed 4% withdrawal rate. In the first year of retirement, you spend 4% of your portfolio’s beginning-of-year value. In subsequent years,
MY FATHER-IN-LAW William retired from Duke University after teaching there for more than 30 years. He had a good pension, which—along with Social Security—covered all his expenses at the continuing care retirement community (CCRC) where he spent most of his retirement. Almost to the end, he was mentally sharp. I saw no need to inquire about his finances. I was mistaken.
In summer 2014, my wife noticed that William, then age 96, had left a large check for a matured life insurance policy on his desk for a couple of months.
AS MY WIFE AND I approached our June 2014 retirement, I set out to consolidate and simplify our investments.
The first account I dealt with was my 403(b). Fidelity Investments was handling the 403(b) plan for the University of North Carolina System, which is where I worked. But while Fidelity was the administrator, the plan included several Vanguard Group funds, to which I’d been contributing. This was where I had the majority of my retirement money.
IN SUMMER 2012, MY boss of 17 years announced he planned to retire the following year. I had enjoyed working for him and considered him both a mentor and a friend, and I had some trepidation about working for a new manager at this late stage in my career. While I enjoyed my job and was good at it, and I liked most of the people I worked with, it was a stressful, demanding position,
BY EARLY 2009, I HAD been investing for 22 years. My wife had invested for a bit longer, and our savings were starting to seem like a significant chunk of money. I was reasonably happy with our investments. Still, I knew that—for those 22 years—we had been paying too much in investment expenses, thanks to the high-fee funds in our employer-sponsored retirement accounts.
Another source of frustration was that our money was spread over seven financial accounts and 14 mutual funds.
WHEN I BEGAN investing in 1987 at age 33, I knew very little about the financial markets. As a new University of North Carolina employee, I just started having money taken from my paycheck each month and put in North Carolina’s 457 plan for state employees. A 457 plan is a deferred compensation plan, similar to a 401(k) plan, but the plans are offered by state and local governments, and they’re subject to somewhat different rules.
I LIKE TO THINK of myself today as a pretty savvy investor. But I wasn’t savvy when I started out. Despite attending business school and earning a master’s degree in computer science, I knew nothing about managing money or saving for retirement, so I initially made a number of blunders—but also one particularly lucky choice.
My first real job after college was in 1987, as a systems programmer for the University of North Carolina in Chapel Hill.
Comments
I always keep some cash stashed at home. Having lived through Hurricane Fran back in 1996, when power was out for a week, I put together an emergency stash containing 50 ones, 30 fives, 20 tens, and 5 twenties. I also keep some larger bills on hand for paying the few things that still call for cash, and I replenish this when it gets down to a few hundred. The smaller bills come in handy if your power is out for a week. It is good to have close t correct change if whoever is selling does not have change. It is also good to have at least 100 miles or so worth of gas in the car, because gas pumps don't work when the power is out.
Post: A Question of Cash.
Link to comment from November 3, 2025
David, you make a good point. It got me thinking about whether it still makes sense to do things the way I have been doing under current conditions. In 2010, as I was working to simplify my investments, I decided to keep my 457 account, rather than moving that into Vanguard, because it is not subject to North Carolina income tax. In addition, funds rolled over from an IRA to the 457 would also not be subject to NC income tax. Unfortunately, the 457 has a very limited set of investment options, and their bond options have not performed well. The only fund they have that has essentially the same holdings as any of my four preferred Vanguard funds is the NC international stock index, so that is where I put the money. To answer your question, the reason I did not have all the equities in a Roth is as follows: Between my retirement (at 60) and my wife starting to get Social Security seven years later, I did Roth conversions each year, getting us to the top of the 12% tax bracket each time. Our overall asset allocation is 40/60, and our Roths are 40% of the total investments. 14% of the total is in our taxable account, in the Total Stock fund. Another 13% of the total is in my 457. That leaves just 13% of the total to be invested in stocks, and since the Roths are 40% of the total, we must have some bonds there to reach our admittedly conservative overall allocation of 40/60. NC income taxes have dropped since 2010, when they were 7.75% for those with over $50,000 and an additional 2% above $100,000. NC income tax will be 3.99% in 2026. Also, I found out yesterday that since 2016, funds rolled over into the 457 are now subject to NC tax. I decided to run the numbers under the current conditions. I made a spreadsheet that computed the tax I will pay on the funds 457 funds if I leave them as they are, versus moving them to my IRA and shifting money into a Roth, keeping the asset allocation the same. As long as stocks beat short-term bonds by around 2% on average, it makes sense to have the stocks in a Roth and pay the NC tax on them. In addition, transferring the 457 funds to Vanguard simplifies my accounting, and that will get increasingly important as I age. I appreciate your question. You saved me some money down the road.
Post: How do Couples Rebalance with Multiple Accounts
Link to comment from November 2, 2025
My wife is not as interested in finance as I am, so I do all the asset allocation and rebalancing, but I show her my spreadsheets each quarter and she is happy with the arrangement. She has detailed instructions on how to handle things should I be incapacitated. We look at all the investments as “ours” as opposed to individually held. We have no children, and we are agreed on what happens to whatever is left after we both have died. In 2014, after we retired, I moved all of our investments into Vanguard, except for my 403b, which is through the state of North Carolina and (because of when I opened the account and a fortuitous legal ruling) is not subject to NC income tax; I would lose that tax advantage if I were to move that account to Vanguard. At Vanguard, we have a joint taxable account that just contains Vanguard Total Stock Fund. In addition, we each have an IRA and a Roth, and each of these contains a subset of four funds: Total Stock, Total International Stock, Short-Term Treasury Index, and Short-Term TIPS. We also have a joint Vanguard Cash Plus account, several jointly held T-bills at Treasury Direct, and credit union accounts we use for short-term expenses. I have a spreadsheet with the accounts and holdings on the left, types of holdings on the top, and totals for each class (e.g. total US stock) on the bottom, along with a line below the totals showing the percentages held in each class. I have a second spreadsheet with rows for each of the classes, the current percentage in that class, the desired percentage, and the dollar amount needed to adjust the class to the desired allocation. Most of the money is in IRAs or Roths, and I do all our rebalancing within these, since there are no tax consequences to making moves within these tax-advantaged accounts. For simplicity, and to get only Admiral shares (which have lower expenses) in each fund, we have a minimal number of funds in each account. The 403b just has an international index fund, and I generally just leave that alone. Our IRAs each have just Short-Term Treasuries and TIPS. My Roth has just Total Stock and Total International, and my wife’s Roth has both stock funds and the Short-Term Treasury Index. To shift funds from one class to another, I do the shift in an account, e.g., my Roth, that has funds in those two classes. I used to rebalance quarterly, even when we were not far off the desired allocation. Now I still update my spreadsheet (and an associated balance sheet) quarterly, but I only rebalance when we get too far off. If there is a sell-off exceeding 20% (as in the 2020 lockdown), I take Jonathan’s advice and rebalance early to get stocks at bargain prices.
Post: How do Couples Rebalance with Multiple Accounts
Link to comment from October 31, 2025
Thank you. I have saved that link for future reference, and I will certainly wait until she dies to apply.
Post: Handling Aging Aunt’s Finances
Link to comment from October 29, 2025
That is a very handy list. The original post was right about the time that I found out the my aunt had named me POA, executor, and trustee and that she was already incompetent to handle much of anything. I found myself taking all of those steps that applied to her. Now all her money is in T-bills and a bank account and there are just a few regular bills that get automatically paid. I just have to make sure there is money in the checking account to pay those bills. Her former employer (a Maryland county school system) provides a great Medicare supplement plan that pays for practically all of her medical expenses not covered by Medicare. About the only other thing I have to do is make dental appointments and see that she gets there. My brother and I also periodically make the 5-hour drive to northern Virginia to lay eyes on her and make sure she is being treated well.
Post: Handling Aging Aunt’s Finances
Link to comment from October 28, 2025
I have no children, and I the county I live in has the highest property taxes in the state (NC), with a good chunk going to our excellent public schools. I am perfectly happy with paying that money, though I would prefer to pay higher state taxes so the rest of the state could have better funded schools.
Post: There are two things humans (at least Americans) are not programmed to handle rationally – taxes and spending on health care.
Link to comment from October 27, 2025
Fortunately, Virginia, where my aunt lives, does not require this.
Post: Handling Aging Aunt’s Finances
Link to comment from October 27, 2025
Bill, Thank you very much for pointing that out! That is an excellent point and one I had not considered. From the Treasury Direct webpage, it appears to be quite difficult to get customer service any time, and it is likely even harder during the shutdown. At this point I think I will just cancel the reinvestments of her T-bills, which will automatically send the funds to my aunt's credit union account, which is in the trust. I'll probably just move most of the money into 3-month CDs at her credit union. Those are currently yielding 3.3%. Given her age (98.7) and general condition, I don't expect her to live much longer (thought I thought that three years ago). I'll still have to deal with assigning an EIN to the trust, but it will just be with the credit union. I already have a direct number for the person their who manages trust issues, and she is always very responsive ( and in any case I would have had to deal with the credit union account).
Post: Handling Aging Aunt’s Finances
Link to comment from October 27, 2025
I agree that it is wise to get on the CCRC list now. With lots of people reaching retirement age these days, the CCRC waiting lists will only get longer. We have been on four lists for ten years, but we really want to hold out for one in particular, and it will be at least another five years before we bubble up to the top of their list.
Post: Waiting Until We Turn 70
Link to comment from October 26, 2025
Thanks. That was my hope.
Post: Handling Aging Aunt’s Finances
Link to comment from October 26, 2025