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Financial Q&A: Investing an inheritance on the brink of retirement

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Q: I am 62, retired, and will begin receiving my Social Security check in November. Between my retirement and Social Security, I will get about $2,500 per month. My husband, also 62, will work two more years and then retire, but get 80 percent of his present salary for five years before going on his TIAA-CREF retirement. This summer, I will inherit about $320,000 from my mother's estate. Any suggestions as to how to invest and preserve that money?

P.P., Bloomington, Ind.

A: To Peter North, a financial planner in Bath, Maine, there are many more moving parts here than meet the eye, such as understanding your expense needs, financial goals, and risk tolerances. But if someone approached him with a similar scenario, he says that he might suggest reconsidering starting Social Security at age 62 and instead wait until full retirement age (probably age 66).

Typically, Social Security uses 0.5 percent per month as a "yardstick" for adding to or subtracting from the targeted benefit amount at full retirement age. But Mr. North thinks the calculation is actually closer to a 7 percent return for waiting, which tends to create a break-even age in the mid- to late 70s.


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