from https://www.marketwatch.com/story/im-an-unemployed-widow-but-i-saved-600000-what-should-i-do-with-it-2018-05-01?reflink=MW_GoogleNews&google_editors_picks=true

I’m an unemployed widow with $600,000 saved — how should I spend and
invest it?

Published: May 5, 2018 6:09 p.m. ET

This woman wonders whether she should move to a cheaper location

By QUENTIN FOTTRELL
PERSONAL FINANCE EDITOR

Dear Moneyist,

I am a widow who is 63 years old. I receive $2,115 per month in Social
Security and $533 per month for a pension. I have $600,000 saved. I have
not been able to find work in the past five years so I am looking at the
money I have as the best case scenario. I rent, but it is getting quite expensive.

Where I live it will cost $240,000 to get a modest town home. I am
thinking of buying the house in cash so I will only have property taxes
and homeowner association fees, and home insurance to pay monthly which
will be $1,150 less a month then what I pay now. I will have $320,000
left to invest.

What do you think would be the best course of action to invest the money
left over? I will need it to throw off $12,000 a year to supplement my
Social Security and pension and, if possible, grow the principle
investment. I am hoping to take the money in such a way as not to pay
much in taxes.

Dear Wondering,

First off, congratulations. Somehow, you managed to save a sizable nest
egg and, given that you are renting your home and have no job, you
likely made many small sacrifices along the way. You’re in pretty good
shape compared to many Americans and you have the luxury of many options.

Only about half of baby boomers are on track to meet their most basic retirement expenses. You appear to be among them, assuming you play your
cards right. Take heart in that. Don’t make any big decisions without consulting an adviser. Nor should you stick with the first adviser you meet.

He or she may have more insight into your situation regarding investing
versus home ownership, but it’s your money and you should never forget
that. Trust your gut. So much will depend on your appetite for risk at
the age of 63 (or any age, for that matter).

Think carefully before locking up so much of your savings in a home.
Neil Krishnaswamy, a certified financial planner in the Frisco, Texas
office of Exencial Wealth Advisors, says $12,000 a year to supplement
your Social Security would leave you with a 3.8% portfolio withdrawal
rate on $320,000.

“You won’t be left with much flexibility for larger, more variable expenses,” he says. “These can include large home repairs, cars, travel
or any out-of- pocket health or long-term care costs.” He has a
suggestion: A reverse mortgage, which is available to people 62 and over.

You may only have to pay for 50% upfront. “This would allow you to
retain around $440,000 to invest. This drops your portfolio withdrawal
rate to around 2.7%,” he says. HUD oversees this program, which has been abused in the past by predatory lenders and advisers.

Tread very carefully with reverse mortgages. My preference: Move to a less-expensive area and live well for a lot less, and remain debt-free
and without the fees and interest rate associated with a reverse
mortgage. That’s in ideal world, and you’re pretty close to living there.

Home prices have been on a tear these last 10 years, however. The median
price of a home in Detroit is $147,957, $126,566 in Oklahoma City and
it’s $212,017 in St. Paul, Minn. Home prices accelerated again in March, surprising many analysts. They shot up 7% in March on the year.

The Moneyist Facebook Group has plenty of suggestions on starting life
anew. They’ve mentioned everywhere from Chattanooga, Tenn. to Florida
and Texas. MarketWatch has also a series, “Retire here, not there.” No
one has all the answers. But it will help you with ideas.

Don’t miss: I built a nest egg of $1 million and I’m only 46 — how do make sure my kids benefit?

As for your investments, the Facebook Group suggest everything from a high-yield corporate fund or lower risk bonds or a low-cost index fund
(50% stocks, 35% bonds and 15% money markets). Be prepared for a market downturn. At 63, you’d have less time to recover your losses than most.

The Dow Jones Industrial Average took six years to recover after the
Great Recession, but it took longer after previous recessions. The AARP
has advice on taking charge of your money in your 60s. By your 60s,
Fidelity recommends that you have saved six times your annual income.

Ultimately, this process should make you feel empowered rather than
fearful. You’ve done well to get this far with what you have, and some prudent and well-thought out decisions with the help of an adviser and
friends should ensure a comfortable retirement where you also have peace
of mind.

That, after all, is something we all aspire to.

Do you have questions about inheritance, tipping, weddings, family
feuds, friends or any tricky issues relating to manners and money? Send
them to MarketWatch’s Moneyist and please include the state where you
live (no full names will be used).

Would you like to sign up to an email alert when a new Moneyist column
has been published? If so, click on this link.

Hello there, MarketWatchers. Check out the Moneyist private Facebook
group, where we look for answers to life’s thorniest money issues.
Readers write in to me with all sorts of dilemmas: inheritance, wills,
divorce, tipping, gifting. I often talk to lawyers, accountants,
financial advisers and other experts, in addition to offering my own
thoughts. I receive more letters than I could ever answer, so I’ll be bringing all of that guidance — including some you might not see in
these columns — to this group. Post your questions, tell me what you
want to know more about, or weigh in on the latest Moneyist columns.

--- SoupGate-Win32 v1.05
* Origin: fsxNet Usenet Gateway (21:1/5)