I'm 65 Years Old and Want To Retire in 6-12 Months

“I’m 65 and want to retire in 6-12 months. I have $125k in an annuity and $100k sitting in my 401(k). I don’t know what I’m doing. I need some advice.”

Congratulations as you prepare for your impending retirement. Before trying to figure out what to do with this $100k, you need to first ask yourself a major question - that is - what do you need the money to do for you?

Take a look at your current income sources, spending needs, and other financial obligations. Determine how much money you’ll need to live on per year and then you can break that down into how much you will need every month, taking into account any income from Social Security, personal savings or any other sources like a pension.

Before going on any further, I hope the $100k in your 401(k) is 100% invested in a money market or stable value account. Since you’re near retirement, you should not have any of your funds invested in any investment options that contain stocks, mutual funds, etc. It should all be in safe investment vehicles at this juncture. 

Your $100k can be utilized in many ways - you can withdraw it, transfer it to another retirement account or keep the money in your 401(k). And what’s right for you depends on how you want to use that money. To determine the right decision, you may seek a financial advisor who will gather your financial information and ask questions about yourself.

They’ll analyze your current financial situation and determine the best place for your money. Of course, you can do this yourself too - though that will require understanding how much money you’re going to need to retire and how much risk you’re willing to take with that $100,000, and more.

The $125k in your annuity is probably a good option. It protects your principal and gives you an opportunity to accumulate interest over the years. Since you will be soon leaving your current employer, you may want to eventually think about rolling-over your $100k into an IRA account - which could give you better investment options.

Whether you decide to go it alone, or hire someone, remember that financial planning is so much more than just handling investments. It’s about reducing potential risks to your retirement, tax-efficiency, asset protection, estate preservation and more. 

If you don’t have a long-term care plan, the risk to your nest egg is greatly increased compared to if you had one. Not having a proper, proactive care plan can devastate a lifetime of savings.