We’re in our 70s, have $1.3 million in IRAs and $1.15 million in money. But we now have ‘no clue’ what to do with the cash. 

We did have a monetary adviser for 10 years, however we let him go as we didn’t imagine he helped us so much. Should I go away the cash as is or roll it right into a Roth? I’m open to strategies.

Confused & Lost

See: ‘I’m hoping to stay in my dwelling’: I’m 76 with no relations. What ought to I do with my property?

Dear Confused & Lost, 

Having hundreds of thousands of {dollars} you don’t want and with the ability to simply sit in a number of accounts is a reasonably good drawback to have, and a testomony to the way in which you and your partner have saved by way of the years. 

But you’re proper, it’s finest to be proactive and get that cash working for you.

One of one of the best instruments retirement savers have is diversification, and that may are available many varieties. The two most influential, maybe, are asset diversification and tax diversification. With the previous, you’re utilizing a number of kinds of asset lessons in your portfolio development, so that you’ve a mixture of conservative and aggressive investments that work collectively when one a part of the market is down (or the opposite is doing significantly nicely). The latter refers back to the automobiles you’re utilizing, and the methods you withdraw from them.   

It’s good to have a mixture of accounts — taxable, tax-deferred and after-tax property — as a result of it provides you extra energy in deciding how a lot you pay in taxes. For instance, if sooner or later you wish to withdraw a few of your financial savings however don’t wish to pay a hefty tax invoice, you may faucet right into a Roth account (assuming you’re following the foundations and taking certified distributions) in order that your withdrawals are tax-free. If you wish to protect your Roth accounts however want additional money, you may withdraw from a tax-deferred account, similar to a standard IRA, however solely take as a lot as you may as much as the highest of your tax bracket, so that you just’re not pushing into the subsequent bracket. You can at all times do a mixture of distributions, too. 

Roth accounts are nice to have, and will even result in a tax-free inheritance on your family members. They do include guidelines, although. For instance, so as to actually reap the advantages of a Roth account, you’d must have that account together with your transformed property open for 5 years (which is a separate five-year clock from while you opened your individual Roth IRAs).  

How a lot you change to a Roth account is solely as much as you, however you’ll pay taxes while you make that conversion (so that you most likely don’t wish to go overboard). You also can use a few of your money financial savings to pay the tax invoice on that Roth conversion in order that the account’s steadiness doesn’t dwindle on account of the switch. 

Having liquid property is crucial at any age, however particularly in retirement. That mentioned, you will have greater than sufficient to cowl a number of years’ price of residing bills. Before making any drastic strikes, be very thoughtful and considerate about the kind of investments you select on your financial savings — and make a plan you may repeatedly revisit (say, as soon as each six or 12 months, and undoubtedly after main life occasions). 

I do know you mentioned your monetary adviser didn’t enable you a lot, nevertheless it shouldn’t dissuade you from consulting one other certified and reliable skilled, who can also be a fiduciary. Advisers on the funding corporations housing your property may be useful, however there are many different professionals who may very well be useful, together with licensed monetary planners. They can construct you a number of portfolios to fulfill your entire wants, clarify intimately the kinds of investments it is best to have in your accounts and likewise coordinate any tax and property liabilities. I like to recommend on the very least procuring round for a planner, and conducting a number of interviews. You don’t must work with anybody, after all, however this train could also be helpful and chances are you’ll join with somebody who could make it simpler to avoid wasting and benefit from the cash you’ve accrued.

Readers: Do you will have strategies for this reader? Add them within the feedback beneath.

Have a query about your individual retirement financial savings? Email us at HelpMeRetire@marketwatch.com