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Senior citizen wants to keep nest egg safe, income low

Updated: May 3, 2013 12:15PM



Q. I am a widowed senior wanting to sell my home & move into a senior apartment where I will be more comfortable.
The maximum income to qualify for the apartments is $32,000 per year. But assets are not considered. At the present time my approximate yearly income (Social Security, pension, etc.) is $30,000, so I qualify. But if I sell my home, worth about $170,000, I may have too much income to qualify. Where should I invest this money, safely, so that it will not generate an excess income to disqualify my application?

A. Well, that’s an interesting issue. And you’re not alone. Many people who find themselves in a similar situation are disabled children and adults who want to keep income low to qualify for federal benefits or programs. Presumably the senior citizens residence you’re considering is a federally designated HUD “low income” facility. Very-low-income senior citizens must have an income of 50 percent or less of the area’s median income. This limit varies depending on the state, county or metropolitan area.

Under current interest rates, you don’t have much to worry about. Rates on CDs are so low that even if you earned a rate of 1 percent on the sales price, you would still be just below the cut-off level, adding less than $2,000 interest to your income.

You didn’t give me much other information, so I don’t know if you have heirs to whom you will leave any remaining money after your death. But if this money is to be given to them, you could purchase a tax-deferred, fixed-rate annuity and no income would be reported, because inside an annuity your interest is tax-deferred. Most annuity products allow a 10 percent withdrawal of principal every year so you would have access to some of the cash in case of need.

I surely don’t want to recommend cash. That’s a sure loser to inflation over the years — and a personal danger, as well. You could also purchase gold coins and leave them in a safe deposit box. They won’t add to your income, but they should keep up with inflation. There’s some risk as the price of gold fluctuates, and if you are in a senior living situation you may not have easy access to that safe deposit box in case of need.

If this is a HUD senior housing program, you will be required to verify your income every year. If rates rise, you might then switch some of your savings to one of these choices, or spend some of the principal. But since the Fed has just pledged to keep rates low, I think you’re safe for another year or two.

And, though you didn’t ask, this is a good time to make sure your will and living will and health-care power of attorney are up to date. The lawyer who helps you handle the sale of your house may be able to work on this project — or recommend a qualified estate planning attorney.

As part of that process, you’ll need to designate someone you trust completely with these powers to help you manage your affairs if the time comes when you are unable to do so. It’s good to plan while you can.



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