Facing Your Finances Alone

Q: I'm 57 years old. My husband died in a diving accident a little over a year ago, just weeks after our 15th wedding anniversary. We didn't have children, and I don't work. From his death benefits, I was able to pay off all our debts, with the exception of about $250,000 on our mortgage. I have $30,000 in savings and $5,000 in an IRA. Should I invest some of that money or live on what I have until I get a job? I'm still in a fog, and money hasn't been an issue yet. Where do I go from here?

A: I'm so sorry to hear of your loss. The fog surrounding you is perfectly natural. After a loved one's death, it takes time to see clearly again. That's why I encourage people in your position to put off any big money decisions—it's best to wait until you can focus. I hope that with each passing day, you feel a little stronger.

With a $250,000 mortgage, your savings probably aren't going to support you for as long as you'd like. Assuming that the monthly mortgage, insurance, and property tax payments are running you about $2,000, it might cost you more than $3,000 a month to get by when you add in other living expenses. You'll certainly need to start working. In the meantime, keep your savings in a high-yield bank account. These days, they can generate more than 4.5 percent interest.

Your IRA should be invested in stocks. Because you won't be tapping the money for at least a few years, they offer the best chance of earning large returns that can outpace inflation. I recommend keeping 80 percent in U.S. stocks and 20 percent in international stocks. We live in a global economy, so our portfolios should reflect that. Good low-cost options are the T. Rowe Price Equity Index 500 for the domestic portion and T. Rowe Price International Equity Index for the foreign portion.

Now that you're on your own, I want you to trust yourself to take control. There's no reason to turn to someone else to handle your money; you can do it. Take care of your heart first, and then tend to the bottom line.