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Widow seeks advice on matured IRAs

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.The Associated Press
Tuesday, August 19, 2014 08:43 am
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.

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