Q: A few years ago, we had to move my dad to a memory-care facility. He had some investments, and, due to the cost of memory care, he is just about out of money … Recently I picked up a bartending/serving job so I can start saving some extra cash for him. With this extra cash, I would like to invest it instead of sitting in a savings account but also need to be able to withdraw from it in 2020 when my dad's investment money will be gone. Can you please give me some ideas?
A: There are no easy answers to your question. Each option involves difficult trade-offs. I reached out to three veteran financial planners for their feedback.
I like the initial reaction of Pat Zumbusch, founder and chief executive at Wellspring Financial Partners in Tucson, Ariz. "First of all, take care of herself. If the extra job drags her down, it's bad for her career," he said. Second, when it comes to the money, keep it in your name, which "will allow her funds to grow and be discretionary for Dad."
Mark Fischer, a certified financial planner and author of the new book "Serious About Retiring," argued for keeping the money from your second job in a safe place where it will hold its value. I know you would like to do better than the minimal return on a savings account. But the financial risk isn't worth it with such a short time frame, he argues.
"The most stable solution is an FDIC guaranteed account. Internet savings and money market accounts and credit union accounts will generally have a higher return than a retail bank account, perhaps as much as an extra 1%," said Fischer.
Stock and bond investments are typically too volatile for your time frame. The risk of a major decline at an inopportune moment during the next few years is too great. For now, you want to know that the money will be there when your Dad needs it. Later on, once you have a better grasp of your father's financial needs, you can always start putting some savings into a low-fee broad-based equity index fund.
Last, another certified financial planner I reached out to strongly suggested meeting with an elder-care attorney. If there isn't much left when it comes to your father's assets, and he has exhausted nearly all of his money, he may be eligible for government aid.
You will want to become familiar with Minnesota's Medicaid rules as well as understanding the contract at the memory-care facility. This may be the most important investment you can make for your father. It's well worth getting professional insight and advice.
Chris Farrell is senior economics contributor for "Marketplace" and a commentator for Minnesota Public Radio.