Ask Terry Questions What to do with my lump sum settlement?

What to do with my lump sum settlement?

By Terry Savage on October 13, 2019 |

where should i invest my after tax, $250,000 lump sum settlement?
I am turning 59 in 2.5 months, and my employer is forcing me out. I’ll be receiving a $250,000 settlement for a workers compensation injury.

Terry Says

OK, this is a tough question to answer — though the first step is to deposit the check in an FDIC money market deposit account in the bank.  Don’t worry that it isn’t earning much interest — at least you are keeping the money SAFE until you make some smart decisions about it!

The first thing you must consider is the possibility of taxes.  According to Social Security, most workers‘ compensation benefits are not taxable at the state or federal levels. However, a portion of workers‘ comp benefits may be taxed if you also receive Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI).

Next, you need to consider this lump sum in the context of your entire financial future.  You need to make a plan — ok, a budget — for your living expenses and your longevity.  And I’m sure you don’t want to risk much, if any, of this award. I’m assuming you will qualify for SocialSecurity — and should try to wait until you reach full retirement age (around 66) to start taking benefits.  It would be better to use this money first to live on , and delay taking Social Security because it will give you a much bigger Social Security check if you wait.  AND, if you work and earn some money,taking SS early could give you a big penalty tax on those earnings!

And so that’s why you need to talk to a qualified and trusted FIDUCIARY financial planner — someone who is trained to look at your entire picture, your living expenses, and your future lifestyle, earning ability, and the impact of inflation.  Again, let me stress that there is NO RUSH TO DO ANYTHING WITH THIS MONEY BUT LEAVE IT IN THE BANK!!

I suggest going to, where you can find a FIDUCIARY financial planner, one who will put your interests first. You may need only one or two meetings. But these advisors are NOT trying to sell you anything!   Please write back if you have more questions – -and before you do anything beyond leving it in the bank. This is a very vulnerable moment — and there are so many rip-off “advisors” out there who will try to take your money.

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