Layoff and lump sum

[GoodLiving]

Hey all,
I'm getting a substantial payout of all my sick pay in May. I'm not quite old enough to retire and for the next 5-6 years or so, things could be fairly unpredictable. I'm interviewing but as you get older, you're more "selective" and so it's possible I will need to have access to that for living on. Where would you put it? My hope is that in the next year or so I would find at least a part time job with healthcare coverage. Should I throw it in my high yield savings account or brokerage account to catch the eventual return of the market? I do have an emergency fund so I don't feel like we need to fund that anymore but it's possible I might need access. Let me hear your thoughts. If I calculated it correctly, it should be around $20k.

[kork13]

Until you have a new job lined up, I'd say keep the money in cash, in your savings account. Right now you're in a storm. Focus on getting through the storm before you start trying to optimize your returns with the money. If you get settled into the new job without tapping the cash from savings, great! Then you can start to invest it. But if it takes longer than your anticipate, you'll be grateful for the extra cash.

[rennigade]

Probably good to keep it in a high yield savings account.

How long will your emergency fund last? If it's a year plus then you could invest it or stick it in a Roth if you have one.

[disneysteve]

I agree with kork13. Until the dust settles and you have a new job, I'd park it in your high yield savings so it's fully liquid.

The most I would consider is doing some very short term treasuries. Ally is paying 3.6% on savings but you can get a 1-month treasury bond at 4.3% or so.

It just depends how quickly you could need access to the funds. If you're getting 20K and your monthly burn rate is a lot less than that, it wouldn't be a bad idea. At least it's 100% safe and secure.

When I was prepping to go per diem last spring, I moved cash from Ally to Vanguard and built a ladder of treasuries with 5K maturing every month to be sure we'd have adequate cash flow to cover our monthly expenses.

[bjl584]

Another vote for keeping it liquid until things settle and you figure everything out.

[myrdale]

When you say you hope to find at least a part time job "in the next year or so" kind of sounds like you're not planning on getting a job immediately. It sounds like you're good on the emergency fund, so you shouldn't have to touch the $20k, but I don't think I would coast along for the next 6 months not working just because I can. Being picky about the job is good, and with your experience that comes with age, you should have the highest earning potential of your life. I think I would chase something down in a hurry. And if it is a difficult job to locate, then you might consider just picking up something temporary in the mean time.

I like money market accounts, that's where I'd park it. But over the next 12 months, maybe what? $20 interest? If you bought a $5k CD every 3 months, might be another option, but again it's not like its make or break.

Honest, get a new job lined up so your good, and drop $6k into your 2022 Roth IRA and $6k into your 2023 Roth IRA. In the long term I think that will have the highest return.

[LivingAlmostLarge]

1 month treasuries probably or short term savings account. What's your burn rate?

[AllyStreelman]

Your high-yield savings account is the best option for now. However, if you haven't maxed out your IRA yet this year, you could invest a portion of the funds there. Then you would have your emergency fund, plus at least $14K leftover from your sick pay if you max out your IRA. Only you can determine if that's enought to rely on before you begin your next role.