$20,000 won't take you far into retirement

— -- Q: I have $20,000 and would like to retire next year at age 65. What investment can I buy to make that happen?

A: These kinds of questions are difficult to answer because everyone's financial situation is so different.

I don't know what your monthly expenses are, how much you might receive from Social Security or whether you have any pensions. I also have no idea what kinds of things you want to do in retirement, such as travel.

But I do know that $20,000 won't carry you far into retirement. And there aren't many investments that would be suitable for a 65-year-old that would turn $20,000 into enough money to fund a 25-year retirement.

Unless you can live on about $1,400 a year (around $120 a month) in addition to Social Security, or you don't plan to live long, you might consider putting off retirement to keep working. Again, that depends on the variables mentioned above.

I can't think of a way to stretch $20,000 over 25 years. I suppose you could roll the dice and try to hit some stock that would skyrocket and put you on Easy Street. But that's not a great investment plan, because you could lose your entire nest egg if the gamble doesn't pan out.

Let's work through the math. You're most likely looking at a 5% average long-term annual return on a diversified basket of stocks and bonds. And that is probably too aggressive, because you're not in the position to risk your capital. But let's use 5% to prove a point.

And let's say you will be retired for 25 years. I don't know how healthy you are, but these days it's possible to live to 90.

As a best case, putting the $20,000 initial investment, 5% average annual return and 25 years of retirement into a financial calculator, you're looking at an annual return of $1,419 a year. Yes, a year. Clearly, that's not going to work too well unless Social Security is ample and you don't need much to live on.

You might consider working longer and finding ways to lower your cost of living. But again, there might be variables to your situation I don't know about. All these things need to be considered before you quit your job and retire.