• =?UTF-8?Q?Fottrell_-_widow_with_$600=2c000_saved_=e2=80=94_how_shou?= =

    From a425couple@21:1/5 to All on Sun May 6 16:45:43 2018
    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


    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).

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    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.

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