MW 'I feel overwhelmed': I'm 56 and have a $60,000 SEP IRA. Is it too late for me?
By Quentin Fottrell
'My husband has a pension, but I worry that if he passes before me, I could be left with nothing'
"I really need guidance and I am motivated to invest wisely." (Photo subject is a model.)
Dear Quentin,
I have a SEP IRA with $60,000 in it. It's diversified in the S&P 500 SPX and has been performing pretty well. I started investing later in life, and I'm currently 56. My husband has a pension, but I worry that if he passes before me, I could be left with nothing - that's how his pension is structured. Because of this, I've been working on building something of my own so I'll have more than just Social Security.
I feel overwhelmed by all the advice online. I don't want to work with an Edward Jones or Charles Schwab $(SCHW)$ adviser. (My current adviser tends to disregard any ideas that don't align with the S&P 500.) Someone suggested finding a financial adviser who won't steer me toward their own products. Where can I find someone like that? I really need guidance and I am motivated to invest wisely - I just need some direction.
Investor & Wife
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You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com. The Moneyist regrets he cannot reply to questions individually.
An S&P 500 index fund gives you suitably diversified exposure to the stock market, but while it may have more liquidity, you will still have to pay taxes on withdrawals.
Dear Investor,
Before you do anything, confirm whether your husband's pension is single life, or if it has a joint and survivor inclusion.
Until then, keep your faith and keep doing what you're doing. You have at least 10 to 15 years of work left, and you are presumably entering (or have entered) your peak earning years. So this is the time to double down and maximize your 401(k) matches. The current SEP IRA contribution limit for individuals over 50 is the lesser of 25% of compensation or $72,000, according to the Internal Revenue Service. Unlike traditional or Roth IRAs, SEPs do not allow catch-up contributions for people age 50 or older like your good self.
You will benefit from compounding whether you put money into an S&P 500 index fund, SEP IRA or 401(k). With a Roth IRA, you get significant tax advantages, including tax-free growth and qualified withdrawals, and no required minimum distributions if you are the original owner. An S&P 500 index fund gives you suitably diversified exposure to the stock market, but while it may have more liquidity, you will still have to pay taxes on withdrawals. If you make an IRA withdrawal before the age of 591/2, you will have to pay a 10% early-withdrawal penalty.
You can still get CD and high-yield savings account $(HYSA)$ rates of up to 4.2%, although there are often conditions on the amount you can invest. Still, that gives you a slight advantage on inflation, which is running at 2.4% amid ongoing concern that the Federal Reserve may not cut interest rates further due to stagflation fears, a rise in energy prices and the war with Iran. HYSAs are more liquid and withdrawals are limited to half a dozen per month. With CDs, you are committing to a set period of time; when you buy a CD, the rate does not change.
Advisers may invest your money in ETFs and/or mutual funds, actively manage your finances or give you tips and not even touch your money, and advise you on tax-efficient withdrawals. Find out whether your adviser candidate is a member of the Financial Industry Regulatory Authority, and whether or not they operate under a dual-registered model. As you approach 60, a moderate risk profile would be 60% stocks (including non-U.S. equities), 30% bonds and 10% in cash or cash equivalents - although many people are far more aggressive than that.
Fee-only fiduciary adviser vs. revenue-sharing
How they get paid will tell you a lot. A fiduciary is legally and ethically bound to act in your best interest, prioritizing you (in theory, at least) over their own self-interest. Fiduciaries must avoid conflicts of interest, and must disclose any potential conflicts. That said, ask any candidates if they have revenue-sharing arrangements with any of the products they recommend and/or if they receive commission. (Read more here.) You can contact the National Association of Personal Financial Advisors and look up the Securities and Exchange Commission adviser database.
Merrill Lynch offers these questions to ask your prospective adviser, should you wish to engage one: "Do you have a special area of expertise? What is your track record? How - and how often - will we communicate? How can you help me stay on track as I work toward my goals? Can you help me invest in a way that reflects my values? Will you call me if the markets get scary? How do I pay you for your work - and how much will it cost?" (It could cost 1% of assets under management or $3,000 for a one-off plan. In your case, I don't think it's necessary.)
The key is to have enough savings and/or work long enough so you're not forced to take withdrawals in a down market in the first years of retirement (known as the "sequence of return" risk). The reason: If you have to take income from your retirement fund before your RMDs hit, you're losing possibly decades of potential returns. Given your age, your RMD age is 75; the window after you retire and before you avail yourself of your RMDs is considered the sweet spot for converting your IRA into a Roth (while your income is low).
Your other decision relates to when to take Social Security. The longer you hold out, the better - especially if you expect to live into your 80s. If you retired at 62, a $1,000 benefit would be reduced by 30%, according to the Social Security Administration. Every year you delay claiming past "full retirement age" (age 67) will add 8% to that benefit until you reach 70. That may seem like a long way off now, and it is - but the older you get, the faster the years pass you by. (For the record, the median retirement savings for someone age 56 and over is $185,000.)
Keep on truckin', working and saving. And if your husband's pension has no survivor clause, consider a life-insurance policy to help fill that gap.
Related: My in-laws, 95, are leaving us $250K. What's the smart way to invest this money?
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-Quentin Fottrell
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April 04, 2026 07:45 ET (11:45 GMT)
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