Case Scenario:
You have been asked by an elderly relative to take over the management of her finances. She is in reasonably good health, and currently lives in a "life-care" facility that offers a wide range of living arrangements, from independent, assisted living and custodial care. She has total funds of $1.1 million that provide the primary source of her income, about $50,000 yearly. Social Security income is about $10,000 a year. She has invested her funds in the past in money-market funds and / or CDs (certificates of deposit) because she's wary of stocks. However, her recent concern is that the money earned from her funds and Social Security won't be sufficient to meet the rising cost of her living arrangements, now about $30,000 yearly but increasing about 10% yearly. She has asked you to use your best judgment to develop a viable strategy that could reasonably sustain her current living situation for the next ten or more years. Provide her with a viable strategy (identify major asset types only); include your best assessment of estimated rates of return, annual income generated and possible risks.