Does anyone have advice for Sibyl? She commented on an article reviewing Jane Bryant Quinn’s latest book with a question pertaining to her own finances. Sibyl was kind enough to include many details about her family’s finances.
I have some suggestions, but this is always a good opportunity to have readers provide theirs as well.
Here is her story:
I just inherited $10,000. What do I do with it so that it earns rather than loses value? I currently have it in a checking account earning 3.25%.
I’m female, age 61, and married. Our income comes from my husband’s retirement ($1,700 a month), two annuities ($1,040 per month and $2,000 per year), and a part-time job ($20,000 per year). I do not work outside the home.
We can collect Social Security in January 2011 as we will both be 62 in October. My husband expects about $1,700 a month from Social Security and I expect about $700 a month. He hopes to retire after we receive Social Security. Is this a good idea or should he keep working?
We have no expenses except the household (our cars and house is house are paid for). Our current credit card debt totals $3,000 at 0% and we have about $8,000 in savings earning 3.48%.
After my mother’s estate is settled in January 2012, I may receive as much as $100,000. Should I ask again at that time?
My opinions: It sounds like Sibyl is in a solid financial situation. Her main question is what to do with the $10,000 inheritance. First, a 3.25% is a great interest rate for a checking account right now. At this time, cash flow doesn’t seem to be a problem, although I’m confused about the $1,700 a month they are drawing from his retirement right now. Debt is not a problem either. Since cash flow is covered, I think Sibyl should consider investing the $10,000 in a mix of tax-advantaged bonds and stocks with a time horizon of twenty years or so.
Sibyl’s next question is whether her husband should retire or keep working. Although she has provided her annuity income, but I’m not sure about the terms of the annuities. Annuities have a tendency to be too expensive for the benefits they provide, but they can offer some stability in income along with growth. The biggest danger with annuities would be the penalties you have to pay in order to access your money if needed.
If Sibyl’s plans for retirement are modest, they should be in a good position for her husband to stop working when he would like to do so.
An additional inheritance of $100,000 will be a nice shot in the arm. Sibyl didn’t mention children, so I’m not sure if she has pans to pass her estate down to another generation, give all her funds away to organizations, or spend all that is left on her “bucket list.” $100,000 will help boost any of these goals.
Keep in mind I’m not a financial adviser. These are only my opinions and I can’t be held liable for the results of any actions made based on information posted on Consumerism Commentary.
What advice would you give Sibyl and her husband?