401k
I’M 70 YEARS OLD AND HAVE $40,000.00 SITTING IN 401K FROM MY LAST EMPLOYER. wHAT AND[ HOW DO I go about it ] can I do to make this money grow for me?? Want to leave most of this to my son,
Thanks
Terry Says
This is not the time to start speculating with this money. You have no idea whether or not you will need to use it during your retirement! That’s why you saved it.
And since most 40l(k) plans only have growth funds, I’m wondering where exactly this money is “sitting.” Certainly not in a money market fund inside your 40l(k) — because those aren’t typically an option inside your 40l(k) plan.
I would suggest you call 1-800-VANGUARD and ask for the IRA Rollover department. They will help you move your money to an IRA — WITHOUT PAYING TAXES! Then you can put at least half in a money market fund, and maybe 25% in their Equity/Income fund. There will be a little risk with that, but at least you will have some growth to keep up if inflation returns.
Don’t worry about leaving money to your son. In two years, you’ll have to start taking Required Minimum Distributions (which Vanguard will calculate for you). They are designed to empty your Rollover IRA by the time you are scheduled to die (based on actuary tables). Those annual RMD payments will be taxed at ordinary income tax rates.
And you’ll need that money to pay for your Medicare supplement and Part D. So tell your son that you’re going to use up all your retirement savings and he better start saving for his own retirement!
