What to do with a W/C settlement

[tonyb3]

After over two years of dealing with a Worker's Comp. case I have finally settled. With the lawyers fees and temporary disability pay subtracted from the final figure I was not left with a big sum of money, but under my circumstances I have to do the smartest thing with what I have.

Because these circumstances are so significant I have to list them here (as much as I don't want to) so you will understand my situation and hopefully be able to give some helpful advice.

-Unemployed due to a disability, spine problem from sitting at a desk and operating computers for decades (using speech software to do this post), finding a new career and unable to sit at a computer or lift heavy objects has been elusive and may have to apply for permanent disability.

-Divorced with child support (five more years) and paying an overly high rate due to ex-wife not working for the past 12 years.*She has recently started working this past year and I will attempt to get child support adjusted sometime this year, but for now it's pretty high.

-My 401(k) has had to be depleted by 50% during this Worker's Comp. case as I had to make periodic withdrawals to keep up with child support and keep a roof over my head.


I'm still in the process of trying to salvage the rest of my working career (I am 55) by trying to change careers, and teach music lessons on the side, but I really need to do the smartest thing I can with this lump sum of money. It's not a lot, there was only $65,000 left after all is said and done, and throwing it into a savings account will not generate much an interest. I've considered a money market account with the company that I have my 401(k)/IRA with, but at that point I'm riding the waves of the stock market and fear a stock market dip or crash could destroy what I have.

I really don't have any other good ideas to do with this money, any suggestions? This would be easy for someone in a more stable situation, but for me it’s not.

[disneysteve]

You haven't really given us much to go on.

What is your monthly income and is it stable for the foreseeable future? What are your monthly expenses? Do you have any debt? Other than your 401K, do you have any savings?

[tonyb3]

"Unemployed" Was the first thing I stated when I gave my circumstances.

No income at this time, temporary disability payments ended when I settled the case mid December 2015.

in the process of: seeking new career & applying for permanent disability if I can't secure a decent job or career path.

Main 2 expenses are child spt ($700) & rent ($900), along with the little things like gas/elec, internet, food.

Had an old Credit card debt from my divorce a decade ago but the collections agency stopped trying to contact me a few years ago.

No significant savings outside of 401k.

I hope this gives a better picture of what I'm dealing with and if more info is needed let me know.

[disneysteve]

No income at this time, temporary disability payments ended when I settled the case mid December 2015.

Main 2 expenses are child spt ($700) & rent ($900), along with the little things like gas/elec, internet, food.

No significant savings outside of 401k.

Is there no way to get a reprieve on child support seeing as you are disabled, unemployed, and have zero income?

As for what to do with the money you're getting, it sounds like you need it to live. You can't keep burning through your 401K or else you won't have anything to live on when you are retirement age.

You need $1,600/month plus utilities, internet, food, and assorted things like clothing, personal care items, medication, etc. Let's say that all comes to $2,100/month (just guessing here).

The $65,000 will carry you for about 31 months if my estimate is accurate. I'd park that money in a good online savings account like Ally bank (ally.com) and transfer it to your checking account as needed. You'll earn about 1% which isn't a lot but you can't afford to take any risks with this money if you need it to survive.

[tonyb3]

RE: child support
As I stated in my first post, I will try to get child support adjusted (Which is gonna start another war with the ex in what is already a tough situation concerning custody, visitation, and alienation) making it too easy to put off for the moment, but like I said "this year". I had decided in my mind to give the ex a year of earnings as a grace period before I made a move, even though that or my disability probably won't make a difference to her.

RE:401k
I've already brought it down to less than $100k because I've had to supplement the disability pay I was getting to survive and pay child support. I had hoped to re-enter the workforce and be able to contribute to it or an IRA, but I've been a bit discouraged in the career change area, and at 55 I'm not very marketable.

A savings account is the most secure way to store the funds yet not very productive and a money market account has risks, I was just hoping to find another option.

[disneysteve]

A savings account is the most secure way to store the funds yet not very productive and a money market account has risks, I was just hoping to find another option.

There are many options if this were money that you didn't need currently, but unfortunately that's not the situation. You should never invest money that you will need to access within 5 years. This is money that you will probably spend within the next 2-3 years. In that setting, it needs to be safe and accessible, not put at risk.

[snafu]

Is there any possibility of sharing accommodation to reduce expenses as you go through the process of trying to reduce child support and get funding for retraining?

[tonyb3]

Is there any possibility of sharing accommodation to reduce expenses as you go through the process of trying to reduce child support and get funding for retraining?

Now we're getting off the subject, but that's not a path I choose at this point. Having my own place is best for my situation in regards to having a place to bring my kid if she want to come over, my guitar teaching, and my overall stress level.

As for retraining, I've spent the last 2 years trying to find a career path that doesn't require computer use or lifting anything heavy and have come up empty. Haven't lost hope but very discouraged at this time.

[tonyb3]

I've been looking at the online-only banks like Ally like disneysteve suggested, but what about credit unions? Don't they pay better interest? Anybody have experience with them?

[disneysteve]

I've been looking at the online-only banks like Ally like disneysteve suggested, but what about credit unions? Don't they pay better interest?

Possibly. Look around and compare. I think Ally is right around 1%. If you can find something better, go for it.