Question for the Money Doctors

Question submitted on Oct 20, 2022.

Question

I 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?

Answer

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.

Good luck!

For additional information visit //www.360financialliteracy.org/