Ask Terry Questions Inherited Life Insurance windfall

Inherited Life Insurance windfall

By Terry Savage on February 12, 2020 | Financial Planning / Retirement


My best friend died and since he was a widower and estranged from his children he left me as the beneficiary of his life insurance through his job. I will received a little more than $50.000. Where do I go to invest it? I don’t want to go to a brokerage house with lots of fees. On top of that I am very late to investing moneyfor retirement–I am over 50.

Any advice you can offer me would be most helpful.

Thank you.

Terry Says

I suggest you treat this as a windfall and keep it safe. Right now, just put it in a money market account at your bank. It won’t earn much interest — less than 2% — but you won’t lose any!
Then, pay off all your debt — except your mortgage. No sense in paying higher interest on credit cards or auto loans.

If you are still working, you can open a non-deductible Roth IRA and put in up to $7,000 since you are over age 50 — assuming you earned at least $7,000. I would contact Fidekity ((800-FIDELITY) or Vanguard (800-VANGUARD) and open the IRA directly with them. They will guide4 you over the phone.
You’ll have to chose an investment for your IRA. I would suggest their Equity-Income3 fund — a petty conservative investment. Or, you can put that $7,000 in a money market mutual fund in the IRA — and ask them to move $500 per month into the equity/income fund. That will spread out the risk.

Keep the balance in your bank money market deposit account. It may come in handy! So don’t sp0end it!

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