MW My husband has a $225,000 pension. We don't trust his 'too big to fail' employer. Where do we invest it?

By Quentin Fottrell

"Ideally, we are looking for a guaranteed return with minimal risk'

"We don't expect to need these funds for at least 10 years, likely longer." (Photo subjects are models.)

Dear Quentin,

I am seeking advice on where to invest my husband's lump-sum pension. We don't fully trust his "too big to fail" employer to continue paying the monthly pension at the current rate, given their recent financial troubles.

We don't expect to need these funds for at least 10 years, likely longer. Ideally, we are looking for a guaranteed return with minimal risk. Where should we be focusing our search? The amount is approximately $225,000 after taxes.

The Wife

Related: 'It's a perilous choice': I've been offered a part-time job. Do I file for Social Security at 67 or 70?

You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com. The Moneyist regrets he cannot reply to questions individually.

To avoid taxes, you can do a direct rollover so the money goes straight from your husband's pension plan into an IRA.

Dear Wife,

Your aim is to minimize risk. You should also aim to minimize taxes.

If your husband takes a lump-sum distribution from a qualified pension plan, it is typically eligible to be rolled over into a traditional IRA. To avoid taxes, you should do a direct rollover - that way, the money goes straight from the pension plan to the IRA.

If the money is paid to you, the administrator of the pension plan is obliged to withhold 20% for taxes. You have 60 days from the date you receive the distribution to roll it over into another qualified plan or IRA to avoid taxes and penalties.

To roll over the full balance, you must replace the 20% withheld out of your own pocket. If you only deposit 80%, the remaining 20% is treated as a taxable distribution, which would likely be subject to a 10% penalty if you are under 59 1/2.

You can only roll a lump sum into an IRA, not monthly annuity payments. Crucially, rolling your husband's pension into an IRA keeps the money tax-deferred. You don't pay taxes until you withdraw it in retirement, hopefully when you're in a lower tax bracket.

Rolling this into an IRA keeps the money tax-deferred.

If you deposit the $225,000 in an IRA, you will have far more investment options (stocks, bonds, CDs, funds, etc.). But the best way to minimize your risk while building your capital is through diversification.

Given your situation - concerns about your husband's employer's long-term viability and the fact that you don't need this money for another 10 years - rolling the pension into an IRA is a very common move, as any fee-only fiduciary would tell you.

Setting up low-cost index funds within your husband's IRA provides broader market exposure, minimal fees and tax-advantaged growth. Vanguard, Fidelity and Charles Schwab $(SCHW)$ offer funds to cover the S&P 500 SPX or the entire U.S. stock market.

A broader question is how your husband should structure his portfolio. A common guideline is to subtract your age from 100 (or 110 or 120). That's roughly the percentage you can comfortably hold in stocks, particularly if you are risk-averse.

Related: 'I have more money than I know what to do with': I'm a single millionaire with no heirs and don't like spending. What's wrong with me?

Bond ladders and CD ladders

At 30, that's 70% in stocks and 30% in bonds. At 50, that's 50% in stocks and 50% stocks. At 55, that's 45% in stocks, etc. This is for relatively cautious investors, and I think, given your timeline, you can afford to be far more aggressive than that.

Alternatively, invest in high-quality bond funds or bond ladders (including Treasuries, investment-grade bonds), Treasury Inflation-Protected Securities (TIPS) to reduce inflation risk, and CD ladders or high-yield savings for absolute stability.

Consider a combination of a short-term bond fund and an intermediate bond fund for the money you decide not to put into equities. It's not just a question of stocks versus bonds. The duration of those bonds matters, too.

The Navy Federal Credit Union, a financial-services organization based in Vienna, Va., offers this guide for people in every age group. In your 50s, "your strategy shifts from aggressive growth to protecting what you've accumulated while continuing to grow.

You don't just face a question of stocks versus bonds.

"Review your portfolio annually and shift gradually toward more conservative asset classes," it says. "You might move from 70% stocks to 60%, then to 50% as you approach 60. The goal is to reduce volatility without sacrificing all growth potential.

"Explore fixed income investments. Consider dividend-paying stocks, bonds or real estate investment trusts (REITs) that provide regular income. These assets can supplement your salary now and provide cash flow in retirement."

In your 60s, focus more on distribution than accumulation. "Coordinate withdrawals across taxable, tax-deferred, and Roth accounts," it adds. "Smart sequencing (and possibly Roth conversions before age 73 RMDs) can reduce lifetime tax.

When you decide to take Social Security will be based on your age, expected longevity and how much you will rely on those benefits. You can take them at 62, but your lifetime benefit will be permanently reduced by up to 30%.

This is a nice addition to your nest egg and a good problem to have.

Related: 'I always did the graveyard shift': I worked for 54 years. Why on earth would I wait to claim Social Security at 70?

More columns from Quentin Fottrell:

'There is an imbalance of power': My husband has cancer. Why must we wait two hours for a 10-minute CT scan?

'I hope to retire early': I'm 56 and have 80% in a traditional IRA and 20% in a Roth. Am I in trouble?

'I'm very late to the game': I'm 48, earn $65,000, have $48,000 in debt and no retirement. Am I doomed?

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-Quentin Fottrell

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May 08, 2026 09:00 ET (13:00 GMT)

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