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If I went this route, I wouldn't move the home drive carte blanche, but I'd have an SSD location for saving photos, docs, etc. Aliases on the desktop and train them to cmd-drag to those folders.
 
If your parents are over 70, keep it simple.
As someone older, I'll even recommend that one keeps tech simple for their older self as well. In my younger years, it was easier [edit: less stress inducing] for me to resolve an issue that resulted from my tendency to tinker with things and make them more complicated than necessary-- because I enjoyed the process.

In an effort to avoid the panic of not remembering how I set up something that has gone awry after years of running smoothly (which happened a couple times during COVID when I was working from home and my network setup was more complicated than I'd remembered), I've been gradually using hardware and software more "out of the box" these days, with the exception of smart lighting which I enjoy too much to ever give up. If paramedics ever need to show up in the middle of night, nobody will know how to turn on any lights, but they carry flashlights anyhow, LOL.
 
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If I went this route, I wouldn't move the home drive carte blanche, but I'd have an SSD location for saving photos, docs, etc. Aliases on the desktop and train them to cmd-drag to those folders.
I have a 512 GB SSD (currently 290 GB free) in my M4 Mac mini, but I attached a USB 4 SSD for my Photos Library, which is pushing near 700 GB. It's fast.

BTW, a little bit to my surprise, my USB 4 NVMe drive is more responsive than my USB 3 SSD even just in Photos. I didn't think it would make much difference, but it is noticeable. The main difference is after a sleep or reboot when first launching Photos with the Library on the USB 3 SSD, there'd often be a few second delay before it finishing launching with the photos fully loaded. I'm thinking maybe that USB 3 SSD sleeps deeper and takes a moment to wake up. That might be related to the specific USB 3 drive I have though (Samsung T7 Shield).

More important though is that a few times a month I'd get an error upon wake from sleep saying the drive was not appropriately disconnected. It'd reconnect automatically but very occasionally it would cause Photos to stop syncing with iCloud. To get syncing to restart, I'd have to reboot. Not sure why that happens, but it does. So far with my USB 4 SSD I've had zero disconnects at sleep though.
 
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A lot of people here concerned about the longer-term support issues. Family IT. If that is a problem for you, consider:

Disclaimer: not affiliated but I know the CEO.
 
If your parents are over 70, keep it simple. …

If they’re over 80, it could get even worse. Hopefully, for you, it won’t.

Worse, Go Go Quincy extends it down to those age 55 or over. Sheesh!

Let's avoid stereotyping the “elderly”. Their skills vary greatly. I know people over 70 who are astrophysicists, computer scientists, data analysts, engineers, professors, authors, etc. They are incredibly technically proficient.

I also know other people over 70 who aren't in science or tech-related fields, yet who are are quite competent with technology and computers — after all, many people aged 70+ today, have been using Macs for 40 years! Starting in their 30s or 40s, they've been through a sea change of devices, peripherals, OSs, accessories, hard drive types and connections, etc. and handled them with aplomb.

I also know several “youngsters” in their 20s and 30s who are so used to their self contained iPhones or iPads who could no more handle what the OP is proposing than work a digital camera or a VCR. If anything, many of those aged 70-90+ are far more capable of handling different set ups!

Age is not the differentiator, even if we know some older people to whom the difficulties apply.

I particularly cringe when people use “grandmothers” as the archetype of the tech-challenged. For one thing, many grandmothers are well under 70 and, for another, many, no matter their age, are technically talented professionals and skilled computer users.

It'd be far more accurate for us to refer to the people we have in mind as the “less technically savvy” or those “don't have the patience for puttering with their tech gear” or who “want an easy-to-use tool not a tech project!”! 😁

I've known people of a range of ages who fall into each of those categories.

In any case, the OP needs to take the advice here to heart and see whether it applies to their parents in particular. That is, judge their parents' skill level by what they've seen and experienced of their abilities, not assume something about them based on their age!
 
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