Question for the Money Doctors
Question submitted on Oct 20, 2022.
QuestionI currently am collecting a $2500 pension that will drop to $1500 when I turn 62. I have started working at another job making what I made before I retired and am participating in their 401K Roth -at 6% to get the company match. We are using the $2500 pension to pay down liabilities until April of 2023. Do you think the best investment for that $2500 would be to open staggering CD's or do something different with it?
Paying down debt is always a good idea and if you are paid off by April, 2023 - congratulations!
How about maxing out your 401(k) plan contribution? I assume you are over age 50, so for 2022 the maximum 401(k) contribution is $27,000. You will be able to afford the maximize your 401(k) contribution after April, 2023 after your debt is paid off.
Even when your pension drops to $1,500/month, you will still be able to afford the maximum contribution.
If you do not need the money currently, this will bolster your retirement savings in the most tax advantaged way.
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