Navigating Your Financial Life

Questions from Readers

Q1: Investment Strategy for Senior Citizens

At 79, how should I invest my money?

A: Retirees should consider investing in a combination of cash, high-quality bonds, and stocks. Aim for a conservative portfolio with a balance that aligns with your age (e.g., subtract age from 110 to determine the percentage of investments in stocks).

Q2: Improving Financial Literacy

My adult children lack financial understanding. What resources can help them?

A: Recommend books such as "Get a Financial Life," "A Healthy State of Panic," and "Millionaire Mission." Consider online courses on platforms like Coursera or edX, and podcasts such as "Financial Freestyle" and "The Long View."

Q3: IRA Contributions for Working Retirees

I'm 73, still working part-time, and taking RMDs from retirement accounts. Can I still contribute to an IRA in 2024?

A: Yes, you can contribute to a traditional IRA without age restrictions or income limits. However, consider a Roth IRA if your tax bracket is low. The maximum contribution for 2024 is $7,000 ($8,000 for those 50 or older).

Q4: Prioritizing Debt Reduction vs. Car Purchase

I'm saving for a down payment on a car and paying down debt to improve my credit score. Which should I prioritize?

A: Focus on debt reduction first, especially if it has high interest rates. This will improve your credit score and lower your APR on a future car loan. Consider using the avalanche method to pay off debt with the highest interest rate first.

Q5: Tips for Securing a Favorable Auto Loan

What steps can I take to get the best car loan?

A: Maintain a high credit score by making timely payments, avoiding new credit accounts, and optimizing your credit utilization. Save a substantial down payment (20% for new cars, 10% for used cars). Shop around for lenders and compare rates based on your credit score and loan terms.