Social Security retiree: Should I invest? Answer: It's not top priority.
Social Security recipient wants to invest; how to rebuild savings; and other questions answered in the reader mailbag.
What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to five word summaries.Skip to next paragraph
The Simple Dollar is a blog for those of us who need both cents and sense: people fighting debt and bad spending habits while building a financially secure future and still affording a latte or two. Our busy lives are crazy enough without having to compare five hundred mutual funds – we just want simple ways to manage our finances and save a little money.
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Q1: Investing while on Social Security
I have a disability and I receive an SSDI payment each month. I want to invest, but I’m worried that I’ll be penalized for doing so and lose the SSDI payment. I have talked to the Social Security office about how much money I can make per month before my SSDI is affected. They said I can make up to $1000/month before it affects my SSDI. If I were to invest in an Index Fund, would I exceed that $1000 limit from returns on my investment? Or should I be looking at a different kind of investing for my purposes?
If I were in your situation, I’d put my money in places that would reduce my monthly expenses, not in places where I would earn significantly more.
I’d pay off all of my debts, first and foremost. If I were debt free, I’d sink my money into improving the energy efficiency of my home and other home upgrades. I’d replace my appliances when they needed to be replaced with energy efficient models. I’d keep an emergency fund to ensure that I never had to dip into debt again, and I’d pay cash for things like automobiles and the like out of my savings.
This way, no matter what happens in the future, you’ve got a situation for yourself that’s as flexible as possible.
Q2: Rebuilding savings after children
We are a family of 6, who has been struggling to survive on less than $3000 monthly income for the past few years. I became a stay-at-home mom when I gave birth to our first son, and for most of our marriage, my husband’s main source of income was as a real estate agent. We have always been fairly frugal (usually buying generic rather than store-bought brands, checking the unit price at grocery stores to make sure we’re getting the best value, reusing clothing as hand-me-downs, mending and patching things rather than throwing them out, giving my family haircuts rather than taking them somewhere to pay for one, etc.), and seemed to do OK. However, a few years ago my husband was diagnosed with testicular cancer. Although I’m happy to say he is cancer-free today, the astronomical medical costs sent our financial world in a tailspin. He had to have daily radiation treatments and couldn’t work as much as he had been accustomed to, due to sickness from the treatments. This was coupled with the collapse of the real estate market in Las Vegas, and our income was drastically cut. After years of stress, heartache, and constant struggling, we lost our home and had to file for bankruptcy. These past few years have brought changes I never in my life would have imagined would happen to me, and have been the most difficult of my life. Although we weren’t outwardly stupid with our finances (we didn’t even own credit cards), I am realizing now so many things we could have been doing differently. Nevertheless, you live and learn.