Skip to Main Content

Dave Says: Helping Take Care of Mom

AUGUST 21, 2023

Dear Dave,
My mother-in-law is 85, and she’s had some health setbacks recently. The family got together with her, and as a group, we decided it was time to sell her property and move her into an apartment at a nice senior living facility. She should see a little over $300,000 from the sale of her house. Aside from that, she has about $10,000 in a savings account. The problem is, she’ll only receive $2,100 a month in Social Security, and rent at the facility is $2,600 per month. Plus she loves making donations to charities. With interest rates where they are, is a CD ladder a good place to put the money to help her cash flow expenses in the future?
— Ed

Dear Ed,
If this were my mother-in-law, I’d want her to do better than a CD (certificate of deposit) ladder. Even with the deficit between her Social Security income and the cost of rent, she’ll only need to see $6,000 a year from the investment to make up the difference. And plus, she’s 85. Even if she got nothing in terms of interest, the chances of her burning all the way through her nest egg before she dies are almost zero. I know the thought of her passing away isn’t pleasant, but it’s something you have to take into consideration.

As far as the charities go? Right now, she’s the charity. Maybe not in the traditional sense of the word, but it’s time for mom to come first. Only the strong can help the weak. I didn’t let my toddlers carry our newborn. And when it comes to money, you’ve got to have the financial strength—the free and clear assets—to carry others. Take care of your own household first. That’s her responsibility at this point.

Ed, you’re not going to mess this up unless you put the money in crypto, or something stupid like that. If you want to do some high-yield savings as a part of it, that’s fine. If it were me, I’d probably end up investing some of it too. Here’s the thing: Overall, if you could make 8% on it, that’s $2,000 a month, and it lasts indefinitely. That’s not even touching the principal. But like I said before, even if you make nothing on it, just divide $6,000 into $300,000. See what I mean? It’s probably going to last as long as she does.

Of course, there may be some other medical bills, and you’d probably want her to have a life other than just paying bills. That’s why I’d like to see that extra $2,000 a month happening. It would provide a little cushion. And there may be a few other little things from time to time the family would have to pick up, but that’s not unusual in a situation like this.

You all can make this work for her. Just don’t be super aggressive, but don’t be super conservative either.
— Dave

*Dave Ramsey is an eight-time national bestselling author, personal finance expert and host of “The Ramsey Show.” He has appeared on “Good Morning America,” “CBS This Morning,” “Today,” Fox News, CNN, Fox Business and many more. Since 1992, Dave has helped people take control of their money, build wealth and enhance their lives. He also serves as CEO for the company Ramsey Solutions.