I’m terminally ill with 3-5 years left to live. I have $270K saved and $30K in debt. What should I do with my money?

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I’m terminally ill with 3-5 years left to live. I have $270K saved and $30K in debt. What should I do with my money?

I’m terminally ill with only about 3-5 years left to live — I have $270K in a 401(k) and $30K in debt. Should I withdraw everything at once or take smaller withdrawals to minimize taxes?

You’ve lived life as a typical middle-class American — balancing spending and saving, planning for retirement and accumulating some debt along the way. Then the unimaginable happens: you’re diagnosed with a terminal illness and given just three to five years to live.

It’s a reality no one wants to face, yet some of us may one day find ourselves in this position.

With limited savings, mounting medical expenses and concerns about your loved ones’ financial future, you may consider draining your 401(k) to cover costs. At first glance this might seem like the simplest solution, but is it the smartest one? Let’s explore the pros and cons.

Let’s consider the scenario of someone who’s just received an end-stage diagnosis. When facing that news, ensuring a comfortable and stress-free end-of-life experience becomes a top priority.

In-home palliative care can cost up to

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if not covered by Medicare — and that’s assuming you don’t require round-the-clock care. Using the $270,000 in your

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could help pay for these expenses, allowing you to focus on your well-being without financial stress.

Beyond medical costs, tapping into your retirement savings could significantly improve your quality of life. That money could allow you to address your $30,000 in debt, stop working, travel or check off bucket-list experiences with your family.

Additionally, terminally ill individuals may qualify for

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from their retirement accounts under the SECURE 2.0 Act, making early access to funds more financially feasible.

However, before making any major financial decisions, consider the long-term consequences.

If you have dependents, emptying your 401(k) may not be the best move for their financial security. While penalty-free withdrawals are possible, the money you take out

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, potentially impacting your beneficiaries’ tax brackets and overall financial stability.

Estate planning also becomes a critical factor. If you withdraw and spend all your retirement savings, your loved ones will inherit significantly less. Keeping funds in your 401(k) allows for better estate management, ensuring your assets are distributed according to your wishes.

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And then there’s the unknown factor — life expectancy is never guaranteed. According to the Journal of Palliative Medicine,

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live beyond six months. If you outlive your initial prognosis, having already depleted your funds could leave you in a difficult financial situation.

Read more: Home prices in America could fly through the roof in 2025 —

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If you believe you are about to pass on soon, ignoring debts seems like an easy choice. But your debt does not disappear after death.

Creditors can still go after what you owe. Any money, property and other assets left in your estate will be used to

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before getting distributed to your beneficiaries. If you already drained your retirement account, you risk leaving loved ones in an even ******* financial bind.

If your estate does not cover all the debt you owe, creditors may choose to

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. But again, this is only after exhausting all remaining assets.

There are options for terminally ill individuals to help with debt before their passing. Debt consolidation, charitable assistance programs and

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may all be avenues to manage debt. Consider focusing on

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first, such as car loans and mortgages, as those could be repossessed for failure to pay.

Most importantly, these options should be explored before passing to secure your estate.

No one’s future is certain, and living with a terminal illness only emphasizes that more.

Whether you’ve decided to spend your final days living life to the fullest or remaining cautious for the sake of your family, smart financial planning is always the best choice.

Drafting a will, establishing beneficiaries, listing your assets and updating your estate plan ensures a smoother path through end-of-life care, allowing you to spend the most time with your family and to make your final moments and dollars count.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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