Ask Terry Questions 401K investments

401K investments

By Terry Savage on October 13, 2023 | Financial Planning / Retirement

Hi Terry, I love to listen to you on WGN with Lisa Dent!
I’m a 66 (67 in Nov.) year old divorced woman and have very little money left in my 401K (approx 35k). I’m not financially savvy, & had to withdraw quite a bit from my account over the years (raising a daughter w/out financial help from her father, home repairs, and basically, just to make ends meet). Also, still paying a mortgage, which is cheaper than rent in my area :-/
My question is this, what % of my 401K should be in bonds right now?!? From listening to you over the past couple years, I’m fairly sure the answer is “little to none”?!? I’m just not sure what I should switch to and when I do know, is it better to choose the new contributions for “future only” or “existing and future” . Forgive me for my lack of financial terminology, hope this makes some sense to you!
Also, I was just laid off from my 17 year job and currently searching for part-time work. Not sure when I will be able to resume my bi-weekly contributions, but hopefully very soon!

Terry Says

Oh, I’m so sorry to hear that you lost your job at this late stage of life. It sounds like you have been doing all the right things over the years. And I hope you can find a way to earn more income now.
I’m assuming that you already get Social Security and have Medicare at your age. If you hadn’t signed up for Medicare before this, you should do that immediately.
And, though I rarely recommend this, the least expensive form of Medicare for you will be a Medicare Advantage plan. But you must choose carefully, as some are very restrictive. Please write back if you want more information on this.

As for your 40l(k) this would be the perfect time to move almost all of it into the safest investment offered. If there is a money market fund inside your plan, I would put 80% of your money into that. If not there should be something called a “stable value” fund, or a very short-term government bond fund.
If none of those alternatives is offered, then this might be the time to do a “direct rollover” into an IRA. Read this column:
You do NOT need anyone to sell you anything or help you do this! And once inside an IRA at Fidelity or Vanguard, just tell them you want to put it ALL into a government securities money market fund.

Please feel free to write back to me if you get confused or need more instructions. And I’m hoping that your daughter will repay your generosity after all these years by helping you out.

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