Q.: I am a 90-year-old widow who owns her home. My only income is Social Security. I fear I might outlive the money I have left in my IRA ($83,000) and a couple of small savings accounts totaling $25,000. I have become very frugal.
Today I called my bank and asked them to send me paperwork for opening a savings account and an IRA transfer. I expect to transfer only $10,000 to the savings and accept a penalty for the IRA transfer. When my IRA matured, the $200-a-month interest income became $11; the interest had been 3 percent and now it’s 0.02 percent. I no longer have any CDs. When they matured, I put the money into my savings account. What is your opinion? — M.P.
A.: With your modest income, I don’t see any reason for you to completely close out your IRA since the tax advantage would be modest. When your IRA matured, the $200-a-month interest became $11 because the IRA is paying almost no interest.
You mentioned you put your money into a savings account when your CDs matured. That is a self-defeating proposition. I would be interested to know what a stock broker could do with your $100,000-plus investment. A broker should easily be able to find a very conservative 4 percent to 5 percent return. I realize this still is going to give you only $5,000 a year, but that is certainly a lot more than you are receiving on savings accounts and/or mutual funds.