Ask Terry Questions Where to invest money from life insurance

Where to invest money from life insurance

By Terry Savage on August 24, 2017 | Financial Planning / Retirement

My father recently died and had a life insurance policy for my brothers and myself. We've received the checks from the insurance company and I don't really want to park it in my savings account. Is there any thing out there that I could put it in that I wouldn't take a tax hit, down the road. I'm 63 and probably would retire in three years. Thank you, Barb

Terry Says

If you're still working, you could now afford to put more into the company retirement plan (and maybe get a matching contribution), while deferring taxes on all the growth of assets in the plan.  You can keep the money in savings to make up for the lower paycheck you'll get from increasing your retirement plan contribution. Depending on your income level, you might be able to open a Roth IRA (it doesn't matter where the money comes from as long as you qualify with income) -- and the money can grow tax-free as long as you want. Or if you want tax deferral, you can surely open a non-deductible traditional IRA.  Go to Fidelity or Vanguard to find out about those options. Be sure to pay off any debts, because "safe" returns today are far lower than the interest you are paying on credit cards. Then decide how much is left after these strategies -- and how much of this bonanza you are willing to lose!  If your answer is NONE, then you need to leave the money parked safely in a money market deposit account at the bank.  You won't get rich -- but you won't get poor, either!

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