Dear Dr. Don,
At age 63, if I get $250,000 in cash to invest, what’s my best course of action? I currently have about $12,000 in credit card debt and owe about $48,000 on my mortgage. At the same time, I have just applied for Social Security benefits. My wife is already collecting her Social Security.

I should also mention that my credit is not so good because of some unexpected situations in the past. It seems like I’m on track for a bit of a lucky break. How should I use the money to its best advantage?

— Martin Morass

Dear Martin,
What to do when a quarter of a million dollars falls into your lap? Well, since your credit isn’t good, I’d definitely recommend that you pay down the $12,000 in credit card balances.

I also think paying off the house before retiring is a sound financial goal, helping put you on a good track toward retirement. While caution is generally advised when thinking about raiding a retirement account to pay off a mortgage, a cash windfall is different.

I do have to ask, though: Where did this windfall come from?

I’d suggest you seriously reconsider the request to begin taking Social Security benefits, especially since your situation appears to have changed. Even if you’ve received your first check upon retirement, during the first 12 months of benefits, you have the right to change your mind. You can repay the money and file again later. I’d like you to wait until no earlier than your full retirement age of 66 to file for benefits. Otherwise, you’ll permanently reduce these benefits by about 20 percent.

How to invest the rest? I’d suggest working with a fee-only financial planner. The money professional would look at the big picture, determine income needs in retirement and help decide the best approach to meet those needs.

It is likely a bit more complicated than what we’re discussing here. My goal is for you to succeed now that you have been given a bit of a financial break.

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