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Managing Income and Investments

Stay ahead of changing finances.

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If your parents have IRAs or other retirement accounts, they will most likely have to take Required Minimum Distributions beginning at age 72 (70½ if you turned 70½ prior to 2020). All RMDs are suspended for 2020 under the CARES Act. They should talk to their tax advisor about the simplest way to comply with IRS rules. If they don't take the correct distribution, they could be subject to a 50 percent tax penalty. For more information go to

As people get older, it's generally recommended that they invest more conservatively. That's because they need to use their investments to, in effect, write their own paycheck. To help your parents try to maintain a reliable source of income, talk to them about their investments and encourage them to consult with a financial advisor.

Here are some basic ideas to help them—and you—feel more secure about their financial future.

Simplify—There's no need to manage multiple accounts in multiple financial institutions. Consolidating accounts at a single bank or brokerage firm can make it easier to stay on top of investments, earnings and withdrawals.

Keep enough cash and cash investments on hand—Ideally, your parents should have one year's expenses in a relatively safe and accessible account, such as a checking or savings account, a money market fund or an extremely liquid cash investment. It can also be a good idea to have enough to pay for two to four years of expenses saved in a high-quality, short-term ladder consisting primarily of CDs, Treasuries or the highest-rated municipal bonds with staggered maturities of one to four years.

Review investments—Generally speaking, the older people are, the more conservative their asset allocation should be. That means investing less money in stocks and more in income-producing investments.

Strategic asset allocation models
  • Age 60–69 / Moderate

    • 35% Large-Cap Equity
    • 10% Small-Cap Equity
    • 15% International Equity
    • 35% Fixed Income
    • 5% Cash Investments
  • Age 70–79 / Moderately Conservative

    • 25% Large-Cap Equity
    • 5% Small-Cap Equity
    • 10% International Equity
    • 50% Fixed Income
    • 10% Cash Investments
  • Age 80+ / Conservative

    • 15% Large-Cap Equity
    • 0% Small-Cap Equity
    • 5% International Equity
    • 50% Fixed Income
    • 30% Cash Investments

Focus on income—To provide a steady income stream, the investment focus should be primarily on bonds and cash investments.

Ways to do this could include any of the following:

  • Income funds. Invest in mutual funds specifically designed to provide income while preserving growth.
  • Laddering. Create a ladder of high-quality bonds, bond funds or CDs with maturities of one to seven years to generate income at regular intervals.
  • Annuities. Outside of a pension plan, an annuity is the only product that can guarantee income for life.1
1. The guarantee depends on the claims paying ability and financial strength of the issuing insurance companies.


The information on this website is for educational purposes only. It is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, consult with a qualified tax advisor, CPA, financial planner, or investment manager.

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