The pandemic left him with an extra $50,000 — what should he do with it?

• Many Americans report being in better financial shape now than before the pandemic hit.
• After paying down debt and setting aside an emergency fund, use extra cash to treat yourself.
• Or consider investing to build wealth or buying long-term care insurance while it's still affordable.

I have a good problem: too much cash and I'm not sure what to do with it. I'm a single, middle-aged professional with no kids, and I paid off all my obligations (house, car, student loans, etc.) and have no debt other than my monthly bills. I have six months of living expenses in my checking account, as well as about $500,000 in a nest egg, mostly retirement accounts. 

What do I do with another $50,000 in cash I have that's sitting around earning no interest? I have no desire to buy investment properties and I don't want to start a side business. The stock market seems overvalued, so I'm hesitant to invest at record highs, and bond yields are so low it hardly seems worth my time.

Dear reader, 

It sounds like you're in an excellent financial position, and a lot of people are right now. A Pew Research report in March found that 30% of adults said their personal finances had improved since January 2020. Another 50% said their financial situation remained just as good as before the pandemic hit. 

By and large, the COVID-19 crisis had the perverse effect of making many Americans richer as they saved more than ever, paid down credit-card debt, and invested in the soaring S&P 500. 

At this point, you've ticked off all of the big financial to-dos — built an emergency fund, paid off debt (including your mortgage — impressive!), and invested for retirement. So it's no surprise you're wondering what to do with $50,000 you have lying around (which, as you mention, is a good problem to have). 

Since you're not interested in buying investment properties or starting a side business, I think your best options are to spend it, invest it, or buy long-term care insurance. Or, you can do a combination of all three. 

1. Spend it on yourself

You sound like a prudent person when it comes to money so it's probably not your first instinct to blow through $50,000. But you deserve to splurge after getting yourself onto solid financial ground.

Maybe you've been eyeing a new car or dreaming about upgrading your kitchen or outfitting your backyard with a pool — do it! Or hire a personal trainer to get in shape or a personal chef so that you can host stress-free dinner parties a few times a month. Enroll in a certificate program or go back to school part time. Take a vacation and upgrade your flight and accommodations, then eat at the best restaurants in town for the week or book a once-in-a-lifetime experience like a safari or helicopter ride. Take a friend or family member with you!

Give yourself permission to enjoy what you have earned or accumulated. Try something new.

2. Invest it in the stock market

With half a million dollars in retirement accounts, you already know the value of investing to build wealth. It's about time in the market and not timing the market, so you shouldn't worry about whether the stock market is overvalued right now. 

You say the stock market is at record highs, which is true, but that was also true before the pandemic hit. The highs are getting higher and there's virtually no way to predict those spikes. The best time to get in the market is whenever you have the money. It sounds like you don't want your $50,000 in cash earning nothing at all, and you don't need the money for expenses, so why not leverage it to build more wealth?

Whether you want to add to your retirement accounts or invest through a taxable brokerage account is up to you.

3. Buy long-term care insurance

OK, this is obviously the least fun option. But healthcare is one of the most often forgotten expenses people encounter in retirement. Costs that are not fully covered by Medicare, including in-home care, assisted living, and extended nursing home stays, can erode your nest egg.

More than half of Americans will need health assistance in their later years, but by then it's too late to buy coverage. The best time to buy long-term care insurance is when you're middle-aged and still healthy.

According to 2019 data from the American Association for Long-Term Care Insurance, a single male aged 55 pays an annual premium of $2,050, on average, for a policy, and a single female who is 55 pays an annual premium of $2,700, on average. How much you pay will ultimately depend on where you live, your age, your health, and how much coverage you select. You'll pay premiums until you make a claim, at which point the insurance carrier will step in and foot the bill. In some cases, you can add a rider to your policy that returns your premiums to you if you never use the policy.

Again, buying long-term care insurance may not sound like an exciting way to spend your extra cash, but it's a great way to protect all the wealth you're building now.

Tanza Loudenback, CFP®, is the personal-finance correspondent at Insider. She writes most frequently about saving money, planning for retirement, taxes, debt management, and strategies for building wealth. Have a money question for Tanza? Fill out this anonymous form.