Dear Dr. Don,
I am receiving a generous life insurance payment from my husband. I still work (as a teacher) and will continue to receive his pension. What suggestions would you give me regarding insurance, savings and investments?
-- Roz Reinvest
Dear Dr. Don,
I am a 63-year-old single woman who recently lost her job after 35 years with the same company. I now have to decide whether to take my pension in a lump sum or annuity. The lump sum would be $575,000, and the annuity would pay $3,706 a month. I also have approximately $200,000 in money market savings and approximately $1 million in my 401(k). I am not concerned about leaving assets since I have no children. What would you suggest?
-- Wanda Wonders
Dear Roz and Wanda,
I would offer the same advice to the two of you.
First, Roz, it sounds like you and your husband made some good financial planning decisions in the past for you to be in the position to make these decisions about your future.
I'd recommend taking a "life goal" approach to managing your finances. What do you want to accomplish over the rest of your life, and how can your income and assets help you achieve these goals?
After you've worked on the goal side, I'd suggest a mix of savings, insurance and investments that maximize the probability of attaining those goals with the least amount of risk practicable.
To help you reach your goals, you may need to talk to a life coach or a financial planner trained in life planning. A financial planner also can help with the asset allocation decisions.
As for you, Wanda, I would add that the lump-sum/annuity decision is always a difficult one. The annuity amount at $3,706 per month is a good quote, but you want to consider all your assets and income streams before deciding. That's where the planner comes in. Have a great retirement.
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