MW 'The money is tax-free': I'm 76 and won $50,000 in a settlement related to cancer from nuclear waste. What should I do with it?
By Quentin Fottrell
'The money is tax-free and does not affect our income, which comes from investments and Social Security'
"I definitely want to make some charitable contributions and do a couple of other things with the money." (Photo subject is a model.)
Dear Quentin,
I'm 76 and I was recently awarded a $50,000 settlement from a federally mandated reparations program administered by the Department of Justice, as a result of developing a specific cancer caused by the dumping of nuclear waste in my area. I had to submit extensive documentation (proof of residency, pathology reports, etc.) to support my claim.
The money is tax-free and does not affect our income, which comes from investments and Social Security. My husband has told me I can use it however I wish. I definitely want to make some charitable contributions and do a couple of other things with the money, and I will probably invest what's left. I don't intend to spend the entire $50,000 if I can help it.
I'm now in the process of determining what kind of financial vehicle I can use to hold this money - one that will allow me to easily transfer funds out to replenish any amounts I might withdraw from our joint checking account. For context, we always pay our credit-card bills in full each month. I'd also like to earn more than 1.5% to 2% on this money.
So far, the only two options I've found that might fit my needs are Vanguard's Cash Plus Account and a donor-advised fund through Edward Jones. (We have extensive investments with both firms.) I would consider allocating part of the money to each of these. I'm exploring making one or more charitable contributions as a deduction from my required minimum distributions, if the organization qualifies.
What do you suggest?
Septuagenarian Survivor
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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.
While many people in your position might solely be looking inward, you are also looking the opposite direction.
Dear Survivor,
I'm as focused on why you were awarded this money as I am on what you should do with it now. Given that you received a cancer diagnosis due to living in a place that was contaminated by nuclear waste, I am frankly bowled over by your wish to give a significant portion of your settlement to charity. While many people in your position might solely be looking inward, you are also looking the opposite direction.
Remember that a donor-advised fund is irreversible. Once you deposit the money, it's gone. A qualified charitable distribution goes directly to a charity from your IRA and actually counts toward your required minimum distributions, thereby reducing your taxable income. Use a high-yield, liquid account, like a Vanguard Cash Plus, for flexibility, easy transfers to a checking account and, given your cautious-to-moderate risk profile, earning 3% to 5% interest.
Your $50,000 settlement allows you to create a simple and satisfying three-point plan: allocating $20,000 for spending from high-liquidity and easy-to-access accounts (such as a high-yield savings account or a Treasury-bond ladder); $10,000 for gradual charitable giving so it helps reduce your taxable income (the aforementioned qualified charitable distribution); and $20,000 for investment and growth in your 401(k)s, IRAs and brokerage accounts.
This settlement allows you to create a simple and satisfying three-point plan.
As the old adage goes: "You've got to give it away to keep it." In order to truly feel the benefit and gift that this money bestows, you clearly need to make sure it makes a difference elsewhere, too. That's a wonderful, generous way to live your life. You should start as you mean to continue, so your two-pronged plan for a cash-plus account and a donor-advised fund is a good one. If you want this money to also make money, there's a lot you can do.
Another takeaway from your letter: You appear to have enough money to last your retirement, and you are not interested in high-risk products. High-quality fixed-income investments and Treasuries typically perform well as interest rates decline from a recent peak. Short-term Treasury bills are suitable if you need to access the money in the near term. For longer-term investments, fixed income and sectors like real estate may offer some upside (although there are no guarantees).
Two other priorities are travel and fun, and security. Have you always wanted to see Vienna or take a European cruise? This is the time to fulfill your heart's desire, and also to set aside enough money in an emergency fund to cover at least six to 12 months' worth of expenses, if you have not done so already. Treat yourself: For some people, that might be a writer's retreat or yoga holiday, while for others it's a new downstairs bathroom or underfloor heating.
An opportunity and a reminder
You can still get CD and high-yield savings-account rates of up to 4.2%, which is not bad given that U.S. inflation was 2.4% year-over-year in February amid ongoing concerns about the geopolitical environment - the war in Iran and the resulting impact of a dramatic restriction on global oil supply on the economy, coupled with President Donald Trump's trade war and question marks about how the Federal Reserve will respond.
High-yield savings accounts are more liquid than certificates of deposit, meaning you can take your money out more easily. Typically, withdrawals are limited to half a dozen per month. With CDs, you are committing to a set period of time. But interest rates on high-yield accounts can change, based on the Fed's benchmark rate. When you buy a CD, the rate does not change. CD rates typically track the federal-funds rate.
I'm happy that you have investments and Social Security and, reading between the lines, that you are enjoying a comfortable retirement with your husband. The average American in their 70s has roughly $250,000 in savings, according to Fidelity, although it cautions that giving an accurate number is difficult, because some people may have money saved outside of their 401(k)s and IRAs - in real estate, brokerage accounts, savings accounts and nonretirement CDs.
You can still get CD and high-yield savings-account rates of up to 4.2%.
Aside from being a reminder to enjoy every minute life has to offer and take every day as a gift as well as an opportunity, this settlement is also a nudge to assess and, if necessary, update your wider portfolio, which should be mainly focused on tax management, capital preservation and, as you suggest, moderate growth in your mid- to late 70s. That looks like a 30/60 allocation of stocks to bonds and 10% cash - or 50/40 stocks to bonds, if you have a higher risk tolerance.
The key is, if at all possible, to avoid taking any more than your required minimum distributions from your 401(k) or IRA during a downturn in the market, which can be particularly damaging for people who are retiring into a recession or a market correction. All eyes will be on the traffic of oil tankers (or lack thereof) through the Strait of Hormuz, the conduit for one-fifth of the world's supply of crude oil, which is currently severely disrupted.
"From the 1960s through 2023, the average peak-to-peak recovery time for a diversified index of stocks in bear markets was roughly three and a half years," says Charles Schwab $(SCHW)$. "So, it's wise to keep two to four years' worth of living expenses in short-term bonds, certificates of deposit, or other reasonably liquid accounts. This way, you'll have access to cash during a downturn if you need it without selling stocks."
Have the time of your life spending, saving and donating your $50,000.
Related: I'm 59. My wife and I bought a second home for $484,000 at 6.2% interest. Will this be a drain on our retirement?
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-Quentin Fottrell
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March 20, 2026 05:16 ET (09:16 GMT)
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