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Question: My wife (age 68) and I (age 69) have about $80,000 to invest. Our mortgage is paid off and we have no debts. Our current income (our Soc Sec, my pensions, and my wife’s part-time job) seems adequate. This will increase this year due to required distributions from various 401Ks. So even if my wife has to stop working, I think our income will be adequate. We have retiree health care, a $30,000 deferred annuity I bought last year, and $30,000 in 5 CDs that form an annual ladder. But we don’t have life insurance (no need now) nor long-term care insurance (about which I am very skeptical). So what should we do with our $80,000? Stephen, Columbia, MD
Answer: I could write a book answering this question. (Okay, I did write a book that offers up some thoughts, The New Frugality.) There are so many different directions and scenarios to think through that I can’t do them justice.
And I would need more information.
Instead, I have two suggestions. Hopefully, they’re helpful, My first thought is you’ll want to stick with conservative investments and a well diversified portfolio considering the volatility and risks in the market. You don’t want to end up 78 and 79 years old with your portfolio slashed in half thanks to another vicious bear market.
My other idea is to ask what would you like to do over the next several years? You’re finances are in good shape and your wife is still bringing in an income. Saving for the future is something we all have to do, whether we are 20 or 68. But it also matters where would you like to spend the money. Is it on travel? Giving it away over the years to charity? Moving to a different home, perhaps a continuous care community or remodeling your current home so you can age there more easily? Passing it on to your children or grandchildren, in which case you could take a lot more risk with the money since they have a much longer investment time horizon than you do? Bank it against future health care costs?
The answers will tell you what to do with the money. But while you’re thinking it over I would stick with low-yielding safe investments backed by the full faith and credit of the federal government, from insured savings accounts to Treasury bills.
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