The Moneyist

Dec. 5, 2021, 5:30 p.m. EST

My wife and I are in our 50s. We lost our house in 2008, declared bankruptcy and finally bought another home. We will inherit $200K. How should we invest it?

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By Quentin Fottrell

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Your thoughtfulness and calm recounting these various financial crises will, I hope, help to inspire other people to never give up, even if the odds seem stacked against them. I admire your determination to soldier on, to keep saving, and to start again. You and millions of Americans have had to start from scratch. Bravo!

Here is my hot take: Pay off your mortgage, especially given that you have a loan with 8% interest (the sooner you get rid of that burden, the better); maximize your 401(k); and put at least six months of expenses aside in an emergency fund should you have any other unforeseen medical or financial events.

A cautionary note for others: Your inheritance could have been at risk had you received it earlier. “The general consensus among the courts is that monies received by a debtor from a POD account during the 180 days following a bankruptcy filing are not to be considered property of the estate,” according to Foster Swift.

As for you, $40,000 is a modest sum in your 401(k) for your time of life. But Lorraine Ell, CEO and senior financial adviser of Better Money Decisions, a financial advisory firm near Albuquerque, says, “It’s never too late to save for retirement. The $200,000 is a windfall and he is right to respect the value of this gift.”

Greg McBride, chief financial analyst at, recommends you set up a Roth IRA for yourself and your spouse. Contribute the maximum of $7,000 each — that includes a $1,000 catch-up contribution for each of you — this year and next. “In short order, you would each have a Roth IRA valued at $14,000,” he says.

Do you have health insurance through your employer? Is a high-deductible plan with a Health Savings Account an option? “If so, you can set aside $7,300 plus an additional $1,000 catch-up contribution for 2022 that will grow and can be used tax-free for future healthcare expenses,” McBride adds.

The goal is to minimize your monthly expenses, maximize your annual retirement contributions and have a safe cash cushion. “Aim to pay current healthcare costs out of pocket — remember that plump emergency fund — so the money in the HSA can grow and compound for use in your later years,” he says.

Modest lifestyle in retirement

Ell also suggests working to 67 in order to maximize your full Social Security benefits. “A paid-for home will enable you to not only save more in retirement accounts … but will also enable you to live a modest lifestyle in retirement. Social Security benefits go a long way if you do not have to pay for housing,” she says.

Setting goals is the fun part. “The remaining $120,000 needs to be invested in a joint taxable account; then every year, take some of the money and contribute to a Roth IRA,” she adds. “That money will be available in five years to withdraw tax-free and the growth, interest and dividends will also be tax-free when withdrawn.”

Leonard C. Wright, a CFP and current chair of the American Institute of Certified Public Accountants, also recommends the benefits of aggressively saving in your company 401(k) plan. “If the investments you have appreciated at 7% per year over the next 10 years, the $120,000 plus $40,000 may grow to $320,000.”

“This is a wonderful gift in your times of need — not to mention the impact of saving over the next five years with more discretionary income. A financial plan would clearly guide your peace of mind,” he adds. “Your resolve has held you through! Vision, values, and goals. I think you are better off than you give yourself credit for.”

Continue to display the discipline and patience you have shown thus far, and keep your eye on a modest, healthy — and happy — retirement.

<STRONG> <EMPHASIS> <STRONG> <EMPHASIS> <STRONG>You can email The Moneyist with any financial and ethical questions related to coronavirus at, and follow Quentin Fottrell on <INTERNET LOCATION="EXTERNAL" URL="">Twitter.</INTERNET></STRONG> </EMPHASIS> </STRONG> </EMPHASIS> </STRONG>

<STRONG>Check out <INTERNET LOCATION="EXTERNAL" URL="">the Moneyist private Facebook</INTERNET></STRONG> <STRONG>group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.</STRONG>

The Moneyist regrets he cannot reply to questions individually.

More from Quentin Fottrell :

Please help! My brother took out $20,000 in student loans in my father’s name without his consent. My parents refuse to take action‘My uncle accessed my father’s bank accounts while he was dying’: He also took his house keys, truck, wallet and personal papers. What can we do?I sold my home to move into my husband’s fixer-upper. Now he won’t even put my name on the deed. What options do I have?‘I’m a proud, unvaccinated Trump supporter. Two of my siblings have not spoken to me in a decade. Should I cut them out of my $7 million estate?’

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