With a Pension and Social Security Disability Payment of $6,100 per Month, I Want My Money to Work for 20 Years. What Should I Do?

With a Pension and Social Security Disability Payment of $6,100 per Month, I Want My Money to Work for 20 Years. What Should I Do. I am a 60-year-old single woman with a monthly income of $6,100 from Social Security disability and a pension. My partner is disabled, and despite living together, we are not married primarily for financial reasons.

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Table of Contents

Income Breakdown and Tax Challenges

My Social Security disability benefits amount to $2,900, alongside a $3,200 monthly pension. However, I find myself in a challenging tax bracket due to these sources of income. Seeking advice on how to navigate this tax situation has become a priority.

Current Financial Snapshot

I reside in a small townhome, refinanced my $185,000 mortgage at 3.1%, and will soon complete payments on a 2018 SUV. With $100,000 in savings and $70,000 in investments, including a 403(b) and a traditional IRA, I am seeking guidance on optimizing my finances for the next 20 years.

Financial Planning and Budgeting

Understanding the importance of budgeting, especially in light of your partner’s disability and your retirement plans, is crucial. Analyzing your cash flow will provide a foundation for making informed decisions about your future financial stability.

Long-Term Planning and Conservative Approaches

Given your desire for your money to last at least 20 years, consider a conservative approach to your budgeting. Anticipate a longer life expectancy and factor this into your calculations, ensuring your retirement funds can sustain you for an extended period.

Making Your Money Work for You

Explore different account options, balancing liquidity and returns. Asset allocation is key, with considerations for easily accessible funds in case of emergencies. Evaluate your investment portfolio in your 403(b) and IRA, seeking professional advice to align with your long-term goals.

Finding Professional Guidance

Engage a qualified financial planner to determine the optimal asset allocation and devise tax-efficient strategies. Take time to find a trustworthy adviser who aligns with your needs and priorities. Utilize resources like the Financial Planning Association’s PlannerSearch and the XY Planning Network’s tool.

Supplementing Income Responsibly

Consider exploring side hustles to supplement income within the Social Security disability limits. Striking a balance between additional earnings and benefits is crucial. Assess potential tax implications and weigh the benefits of having an extra financial cushion, especially for healthcare expenses.

Future Planning and Estate Documents

Initiate discussions with your partner about expectations for the future. Address estate planning matters such as wills and healthcare proxies to ensure your wishes are respected. Patience is key in navigating these steps, and taking them one at a time will lead to a more secure financial future.

Seeking Reader Suggestions

Readers are encouraged to share their suggestions and insights in the comments section for additional perspectives on financial planning and retirement.

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Conclusion

Meticulous financial planning and strategic decision-making are essential for securing a stable retirement. By navigating budget constraints, seeking professional guidance, and addressing long-term goals, individuals can build a resilient financial foundation for a fulfilling retirement journey.