AboutWarren Boroson Expertise Author of "Keys to Investing in Mutual Funds" (Barrons), "Ultimate Mutual Fund Guide" (Probus), "How to Pick Stocks Like Warren Buffett" (JKLasser), and "The Reverse Mortgage Advantage" (McGraw-Hill). Former financial columnist for Gannett News Service.
Experience Author of 20 books; winner of 1996 Personal Finance award from Investment Company Institute and Washington University. Formerly on staffs of Money and Sylvia Porter's Magazine. Had a radio program (on WEVD) about mutual funds and a newsletter, FundDigest.
Expert: Warren Boroson Date: 8/10/2006 Subject: Type of investment/annuity for a retired person
Question Hello,
An 80+ year old man will soon be selling his house and needs the proceeds to be put in some type of annuity that will pay him $1000 a month to show as income to qualify for a new seniors' apartment complex. He has an IRA (very small, paying him $230 twice a year). Should he put the money into a Roth IRA, his current IRA or something else that will send him a check each month? Are IRA's of any type allowable at his age? He also has three adult children and several adult grandchildren, how should any type of account be setup with them considered as heirs? Thanks for any advice.
Answer Dear Linda--
I'll ask a Certified Financial Planner to answer this question, but meanwhile:
The gentleman should consider a reverse mortgage -- if he wants to continue living in his house. As an option with the reverse mortgage, he can choose an annuity.
If he is determined to move to the apartment, he might consider an income or immediate annuity. NOT a deferred annuity. He can have it begin when he moves into the apartment, or just before. At his age, he should receive a large payout.
He would receive less if he chooses an income annuity that would continue to pay income after his death--say, for ten more years. (This is called a 10-years-certain policy.) This would help provide for his heirs.
He might buy enough of an income annuity to throw off $1,000 a month.
I'll check with a financial planner with regard to IRAs.
But I think that, in addition to an income annuity, he might also purchase an income mutual fund, one that invests in bonds and high-paying stocks. Fidelity Asset Manager Income might be one good choice.
