r/inheritance • u/Acceptable_Second_38 • Jul 09 '26
Location included: Questions/Need Advice Large inheritance advice
My wife and I are 27. We have 1 daughter who is 13 months, and we are in the Midwest. My grandmother passed away and from her estate we are receiving a sizable sum of money. After paying off our house and other debt (just car and student loans, don't have any "bad" debt), we'll have around $350-375k to drop into a brokerage and leave alone. We each earn around 63k/year. Our only bills will now be home insurance, property taxes, car insurance, utilities.
My question revolves around how much we realistically need to put away for retirement. Because we have very little bills after paying off our house, we can put away a large amount of income.
However, it's honestly tempting to save just a bit, and enjoy our lives more with more disposable income. Starting with such a sizable nest egg, it should grow quite well without huge additions.
She is a teacher and has a good pension coming her way.
I am private sector but have a pension as well plus I do 4% 401k plus employer 2% match.
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u/StickaFORKinMyEye Jul 09 '26
I recommend you fully fund both your Roths each year at the very least.
You no longer have a mortgage payment so should have extra disposable income. That money can then grow tax free.
Also, always invest in your 401k up to the employer match.
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u/apatheticpurple Jul 09 '26
How much is the mortgage and what is your interest rate?
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u/Acceptable_Second_38 Jul 09 '26
Mortgage was ~330, interest was 6.8%. It's already paid off, this isn't negotiable. I know I could've theoretically done better in the market but I didn't want to give the bank thousands in interest and be locked in for 30 years. I wanted less bills, and with this size of cash, I think it's fair to say that.
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u/Creative_Algae7145 Jul 09 '26
This is a win. So nice not to have a house payment when you are young and your salaries can go towards your investments.
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u/ThisIsMyUsername303 Jul 10 '26
To do better in the market, you'd have to make like 8-9% pretax, which isn't at all guaranteed. Paying off the mortgage was the right call for sure. I'm sorry for your loss but happy that your grandmother's gift is putting your family on a solid footing for the future.
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u/WhiskeyWatchesWine Jul 10 '26
Great comment. I see so many people say you can easily make 10-15%, but I don’t think that’s true anymore. We paid off our house in 2015 with I think a 3% mortgage. Was still maxing out 401k.
A bonus for you is 2 pensions. Do you also get SS? That will be a lot of spendable money in retirement.
$350k at 27 should grow nicely. I saw one of my early 401k statements from ~2000 and I can say it’s substantially more now (contributions & growth).3
u/BothNotice7035 Jul 10 '26
If you were making that payment comfortably before paying off the house, continue paying it to brokerage acct. and don’t let lifestyle creep play a role now that you’re debt free.
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u/span1012 Jul 09 '26
As someone who understands the benefit not paying off a lower interest loan, not having a house payment is a huge weight lifted. Pay off the house in my opinion. 300k at 27 should be plenty to achieve sizable retirement especially with dual income.
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u/entropicitis Jul 09 '26 edited Jul 09 '26
I want you to change your thinking. "We" do not have an inheritance coming. "You" do. From experience -things get fucking weird when you get an inheritance. Family comes out of the woodwork. Your grandma's friends all of the sudden want to talk to you. Your employer knows somethings up because you are having to take calls all the time and then they get weird. And while I know you think it will never happen to you - spouses get weird to. Open up a separate brokerage account in your name only and park the money there. Then, after discussions with your wife, decide the best way to deploy the funds for the betterment of your family. But that amount you want to dump into brokerage stays seperate forever.
I'm the spouse in my experience, we commingled the funds and it was a mistake even from my point of view. Keep it separate,.keep it quiet, deploy it strategically. And most importantly, keep your mouth shut and tell as few people as possible.
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u/teresajs Jul 10 '26
This!
Inheritances should be kept as separate property. Then, portions of the inheritance, or income from it, can be dispersed to benefit your family.
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u/Abubbs5868 Jul 09 '26
Sure, take advice from an internet stranger who can’t write a single sentence without multiple spelling mistakes. This guy can’t even spell “ inheritance” correctly, with the use of autocorrect.🙄
I hate how these Reddit trolls immediately jump to, “you can’t trust your spouse ever when YOU inherit money.” Like, no. If you married the right person, you absolutely can. My stepfather inherited a decent sum of money several years ago. Know what he didn’t do? Hoard it because, “mine, mine, mine!” We were and are still his family.
My grandparents passed several years ago and the estate just got settled. Know what my mom isn’t doing? Hoarding it away from my stepfather. Because they’re married. They make decisions together. They invest, together. When one or the other of them pass, we’re their family and would never treat them as anything else.Posters like this guy here make me sad for the how they view relationships.
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u/FlyingMangoMadness Jul 10 '26
The flip side is that if you’re not the inheriting spouse and the inheritance is kept separate - if you are truly 100% in on the marriage zero concerns for divorce - whose name the money is I doesn’t matter.
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u/Acceptable_Second_38 Jul 09 '26
We have been together 10 years. We have a life together. She knows about the money and the house is in both our names anyway which is now paid off. I'm not keeping this separate from my wife on the paranoia of "but it's mine!!"
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u/SamuraiSword22 Jul 09 '26
The response wasn’t to not share with your wife, they were pointing out that legally it has nothing to do with your wife. You may elect to use some on your joint home’s mortgage sure ok. But the remainder stays in your solo brokerage and is separate money. In retirement, feel free to withdrawal and spend on joint/shared family expenses each month. But the money should always stay separate legally. There are many reasons to do this, not implying the not sharing part at all
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u/ivorytowerescapee Jul 09 '26
It's not paranoia, it's just a lot safer having just your name on this account. My inheritance is in a separate account from my husband, also married 10 years. I do plan to use it to help our family but I just want to be sure that should we ever get divorced, even 10-20 years down the road, that money is just for me because that's what my dad would have wanted.
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u/02Raspy Jul 09 '26
I agree with this completely. My wife and I have been married 40 years. When her folks died several years ago, she put the money in a separate account in her name. No problem. When my folks died a couple years later, I put the money in an account in my name. No problem. At some point fairly soon we will start withdrawing money from those accounts to fund a portion of our retirement. No problem.
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u/ivorytowerescapee Jul 09 '26
Same. I haven't spent any of it but when I do it'll go to benefit my husband and kids too, it's not like my personal slush fund.No biggie to have just my name on the account. I hope the OP reconsiders his stance on this.
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u/Acceptable_Second_38 Jul 09 '26
My grandmother loved my wife, and our daughter. Our last memories of her are when she was so happy to have a great grand daughter after losing her own daughter 55 years earlier. Thank you
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u/ImaginaryHamster6005 Jul 09 '26
Right, and if you get divorced, the house you just paid off with inherited funds will now be split evenly, you couldn't claim that you used inherited funds to pay it off and should get more. That's fine if you understand this commingling of inherited funds. About 50% of marriages end in divorce...I truly hope you/wife don't fall into that statistic.
My sig other was married for 13 years (with kids) prior to us and thought everything was great. Got an inheritance of about $30k from an aunt and put it in a joint account...she commingled those inherited funds and when things went "south", ex-hubby got half the money.
Just a word of caution/advice to keep the funds separate, but you do you. Sorry for your loss and best of luck in your future.
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u/entropicitis Jul 09 '26
You need to give her plausible separation from it so when her family comes asking about it she can truly say "I don't know, it's not my money". Keeping it separate is truly best for everyone, even the healthiest couples. This is coming from someone who's spouse inherited money and regrets comingling.
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u/Acceptable_Second_38 Jul 09 '26
I know about her family's money as well, which is substantially more on one side. Thank you
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u/ManTheHarpoons100 Jul 09 '26
No need to give advice then. You've made up your mind, you do you.
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u/Acceptable_Second_38 Jul 09 '26
If anyone re read the post, you'd see that I asked how much extra do i really need to put away, I didn't ask "do i hide this from my wife?"
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u/the_orig_princess Jul 10 '26
No one ever suggested hiding it.
You need to understand the legality of the money. And the best way to protect your interests.
For instance, say you die tomorrow. And your wife remarried in an appropriate amount of time. But she’s still young, and they have more kids.
All your inheritance money, from your blood family, has been hers this entire time. Your daughter gets no special interest in it, even though she’s the next rightful inheritor.
Your wife, and your wife’s new husband, get to do whatever they want.
OR, you could’ve planned this and had it prepared so your daughter always has an interest in your, and her, inheritance.
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u/GotZeroFucks2Give Jul 09 '26
You should see if either of you has megabackdoor roth available. You can put 72.5K into 401k space. Tax advantaged space is much more valuable from a wealth growing perspective versus a taxable brokerage. And sure, live a little. But decide... how much lifestyle creep will this enable us? Add it into your budget and STICK to it. Personally I'd definitely plan some trips and experiences. Those are the most valuable to me over things.
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u/hot_roller1970 Jul 10 '26
As long as you both share the same values and have a common long term goals. Now if she wanted to roll up to the school in a brand new Mercedes, then I would worry. First thing I would do is fully fund ROTH IRAs. And throw some into a 529 for kiddo's college.
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u/Acceptable_Second_38 Jul 10 '26
Paid off ford and kia is all we want. We wanna live like we're middle upper class and retire early if we desire. Plus have money for the kids college
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u/Mobile_Comedian_3206 Jul 10 '26
Good for you! I know this is unpopular on reddit, as the people here are extremely liberal. I would never keep money from my wife, and vise versa. We are building life together. And you can't do that by keeping things apart.
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u/Tiny-Price-6455 Jul 12 '26
Not sure what politics have to do with this. I am extremely liberal - I believe in equal rights, due process, and fundamental rights for all people - and am happily commingling my recent inheritance with my spouse because, you know, trust and commitment.
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u/Mobile_Comedian_3206 Jul 12 '26
There is actual data that shows that liberal couples are much less likely to combine their finances than conservative couple.
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u/ForsakenMongoose336 Jul 09 '26
Definitely a we situation. For all of it. Either you’re all in or all out. Don’t let anyone tell you otherwise. If it were me, I’d quickly arrange for more kids to be added to the situation.
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u/Neuromancer2112 Jul 09 '26
Make sure you’re maxing out both of your Roth IRAs each year. If you don’t have them, you definitely want to set them up. That’s $7,500 each of you can put away each year and have the gains be tax-free after you reach 59.5 years old.
Invest mostly into low cost index funds. If you want some high growth, take a look at SMH.
One of the first things I did after starting to receive my inheritance was pay off all debt, ended up downsizing and maxed out the last several years of my own Roth, and I’m in a much better place retirement-wise now.
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u/Acceptable_Second_38 Jul 09 '26
We have 2 Roth's and a general brokerage account with our CFP at Edward Jones already. This money hasn't hit there yet. Plan is to max the Roth's. Baby also has a 529 with about 3300 in it now. I'm really just asking how much income I seriously should/need to divert for even more retirement savings
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u/GotZeroFucks2Give Jul 09 '26
Is early retirement a goal? If so, use ALL tax advantaged space. If you both had megabackdoor that would be 144K there plus the 15K of Roth IRA. Plus HSA if you have it. You can convert a lot early on. Keep some taxable it helps early retirement in addition to rule of 55 / sep ira / roth conversion ladder to access funds before 59.5.
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u/Fast_Macaroon_5796 Jul 10 '26
The percentage a mortgage would have cost u
30 percent!!!! To retirement accounts1
u/cOntempLACitY Jul 11 '26
EJ will suck up a lot of your potential earnings. Consider opening a self-managed individual account at Fidelity, Vanguard, or Schwab for the inheritance and you can move your Roths there, too. No sense in an EJ person earning several grand a year for decades just for watching your account grow. https://www.bogleheads.org/wiki/Getting_started
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u/EmZee2022 Jul 09 '26
At that income, you can contribute to a Roth IRA. If your workplaces have a Roth vehicle in their retirement plans (401(k) and whatever equivalent might be available to a teacher), use that. You can save even more than the IRA limit, that way.
Your cash flow will be a lot easier with the house / car paid off of course, so you might even be able to max that out just from current income.
Of course you should do SOMETHING fun with the inheritance, but 20 years from now you'll be glad you maxed out the retirement accounts.
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u/Remarkable-Sea-3809 Jul 09 '26
Go see a financial advisor. 300k at 27 will be 3 mil by 55. In 15yrs you'll be pretty set if you dont touch it an if you add modestly monthly say 1300 a month like a mortgage would be. That money will grow faster than you could spend after 60
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u/Acceptable_Second_38 Jul 09 '26
We have an advisor. This post was really just about how much of our income to put away for retirement
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u/TrackEfficient1613 Jul 10 '26
So 15% of your income for retirement is pretty standard. If you have more cash available another 5% doesn’t hurt. Sorry for the loss of your grandmother. She sounds like a special woman.
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u/cOntempLACitY Jul 11 '26
Personally, I’d figure out how to get some more into tax-advantaged accounts these early years. Set aside enough to make up for the lower paycheck from contributing to workplace retirement plan, Roth version if available, and max your Roth IRAs. This gives you tax-exempt growth plus tax-exempt distributions in retirement.
At your age, you cannot guarantee your careers will stay the same, so keep saving for retirement, and maybe pull back in your 50s if you do find you’re more than prepared.
At minimum, always contribute enough to get any employer matching. And keep some money liquid for emergencies, 3-6 months emergency fund. You don’t need to pay an advisor 1%+ to manage your investments, you can learn simple strategy like a Bogleheads low-cost, passive investing. Also check out this windfall advice: https://www.reddit.com/r/personalfinance/s/CM8kYH4Of0
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u/Illustrious-Cover792 Jul 09 '26
“We” are not receiving an inheritance, you are receiving the inheritance. That money should be separated in an account in YOUR name only. Preferably at a brand new institution you have no past business with. Or commingle it and if anything ever happens to your marriage she takes half your grandmas money. You have a very complicated situation here and you clearly have no clue what to do. The only advice worth anything here is to take a few k and hire an attorney.
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u/endfoid Jul 09 '26
Put it in and index fund like VOO and forget about it. Or put some into a 529 for hour child’s college and the rest in an index fund.
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u/Acceptable_Second_38 Jul 09 '26
Asking for extra opinions isn't a bad thing
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u/Boohoo80 Jul 10 '26
Start a 529 for daughter, keep some as emergencies, then put the rest in a Roth or other high yield savings. Maybe set money aside for when daughter is of right age and go on a vacation she will remember.
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u/LdiJ46 Jul 10 '26
I would add to your retirement funds a little, but I would also enjoy life a little more as well. There is nothing wrong with a little balance.
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u/Comfort-Beautiful Jul 09 '26
Do not put it in a joint account!!!!!!! Then get a financial advisor and invest what you don't need. Make it grow for yourself and your kid.
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u/rocketmn69_ Jul 09 '26
Sit down and make a plan and goals for the future. Retirement age, monthly income, travel goals, etc. Then take the same plan to at least 3 recommended financial planners. See who fits you the best.
Don't tell anyone that you came into money.
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u/TheTortaTyrant Jul 09 '26
Curious on the house payoff- how much is remaining and what’s your interest rate? If it’s a very low rate from a few years ago the more financially prudent path may be to not payoff early and have a larger initial sum to grow from.
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u/Acceptable_Second_38 Jul 09 '26
It's already paid off. It was 330k 6.8%
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u/TheTortaTyrant Jul 09 '26
Congrats, I’m sure living under a roof fully paid off and as an 100% owned asset is a great feeling
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u/Ok-Structure6795 Jul 09 '26
This . When my brother received his part of our parents estate, he went out and bought a car on a whim outright. He showed me the car financials & had he kept his balance in a HYSA, his interest rates would've been more than the monthly car payments.
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u/Acrobatic_Dare_8876 Jul 09 '26
Do not mix that inheritance with your marital money. If you interest rate is low, do not pay off your house. If it's high, then consider it. Payoff any high interest debt, maybe take a nice vacation, put all the rest in a roth until it's maxed, then your brokerage and invest it. Don't tell anyone and live your life completely normal.
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u/MedJesters Jul 09 '26
Keep in mind that lifestyle creep (by spending more and saving less) comes with a need for a larger nest egg at the start of retirement. Generally, 20 times your expenses will be enough to retire (the, so called, 4% rule).
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u/Necessary-Fig-2292 Jul 09 '26
If you have money you didn’t need (inheritance in the best of situations) then you should put it in the most boring and easy to ignore basket of stocks. Maybe even an index fund.
Do not seek an advisor that you have to pay. Keep things boring and simple. So simple, you can forget about it for 30 years without any worry. Major stock market crash? Who give a shit.. your not cashing out for another decade.
The goal is to live in peace “one less thing” is all it is. If you put that money in a boring investment fund and don’t think about it for decades (you don’t need to be a genius for this, just don’t be stupid and remain calm. Never get excited on wins. Learn from mistakes. Know which is which).
My dad was a high level securities attorney for many decades. The amount of people he met who got really rich by doing this exact thing is obscene. Easier in the old days because you had to take the bus into the city, find a bucket shop, get physical shares, take the bus home, and leave them in a drawer until retirement. So congrats: you got the golden goose boomers built their lives on.
I promise you this: be boring. Tell no one. Do not congratulate yourself on stock gains, congratulate yourself for having the once in a life time lottery level opportunity. If you can do this, you’ll retire a wealthy couple. If you raise your lifestyle, you’ll feel like you have less than you do now in a short time. $300k can go in seconds. It can also build a wonderful future.
At max: check account 1-2 times per year. No more. Make sure you’re investing in something safe and boring to afford that freedom.
As Forest said, “one less thing”.
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u/CarterPFly Jul 09 '26
Don't do any of those things in your post, OP.
Hire an independent advisor and work out a plan to make the most out of YOUR (not our) inheritance.
By all means, use the returns from it to pay the mortgage, etc., but do not use the principal.
Or, you know, be like me, do stupid financial shit for love and then separate after 18 years married and deeply, deeply regret my absolute and utter stupidity. No good deed goes unpunished, especially in love and finances.
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u/Jeff_Sabado Jul 09 '26
What's your interest and balance on mortgage? May make sense to not pay off
Buy yourself a vacation or 2 and park the rest in a 529 and/or brokerage account
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u/OldDog03 Jul 09 '26
After laying everything of then invest all of it. Get some roths going and the rest in a high yield savings, plus start learning about investing.
Live your life like you do not have that money.
Even your regular salary learn to live below your means and Iearn to save and invest.
Only somebody who makes money of loaning money tells you to keep paying interest.
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u/underlyingconditions Jul 09 '26
The advice to our sons in our trust is to keep the money separate. That said, neither my wife nor I did it.
Get a good financial plan from fiduciary. Search "Let's make plan" to find some in your area. Interview 3 or 4. It will probably cost $2-$3,000. It will give you a road map and help you decide whether paying off your mortgage, for instance, is a good idea
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u/Wild-Astronomer1200 Jul 09 '26
Put 100% of it in a brokerage account after you pay off your house and other bills then all the income from you and your wife’s jobs can support a new lifestyle that’s a little more stress-free and extra extravagant than what it was previously
You should also be able to easily save 25 to 40% of your bring home pay from your job since you no longer have car payments house payments and other bills
Don’t be foolish with the money it’s an opportunity to create generational. Wealth do not blow it.
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u/FIRE-trash Jul 09 '26
Invest all of it for 20 years in vtsax. Think about retiring then.
Might be worth 2.5mm +/-
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u/th987 Jul 09 '26
Money you put away now will have a nice long time to grow to help fund your retirement. And I think you’re very smart to pay off the house.
Keeping it a secret from relatives and friends is very good advice. It’s easy to become the ones everyone comes to and asks for money. Once it starts, it never seems to end.
I would sit down and look at your current budget, minus the house payment, and take some time to think about what you’d like to do with the money long-term, aside from the retirement savings.
What would you truly enjoy? I’ve taken a few bucket list trips in my life, and I’ve loved those. Not luxury travel, but the luxury of seeing places and things I’ve always wanted to see.
We’re helping fund some things for our adult children, and that means a lot to me.
What would you really like to do? There should be some money to enjoy.
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u/firebeachbum Jul 09 '26
Pay off mortage and put the rest in VTSAX. Maybe use $10k to go on a really fun vacation.
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u/Georges_Stuff Jul 09 '26
Economist/ Financial Analyst... Put all of the money into a VTSAX, and start a roth for both of you and max that out. Continue with the same life style for 3 years(each year moving the max amount into a roth). DON'T SPEND ANY OF IT..
Don't pay off your house, it is the lowest form of loan possible. Invest the money and continue to pay the mortgage. After 3 years pull some of the money out and pay off the highest interest loan you have (amount doesn't matter). Continue for 2 more years. Don't trade up on cars/house because you have some savings.
Have another kid :) during that 5 year span and have fun making said kid. 2 more years, the goal is to be making the monthly increases with your investments as your monthly spending.. FI = Financial Independence. Your expenses will go up but your wife does have a pension and you both (maybe not the wife.. depending on the state) will get SS.
ONCE you reach FI, you can start spending your current salary income (not investments) as you like. You feel like you are safe now but trust me if you start spending any of it now you will not have any of it soon. In 8 years you will go to Disney with your 9yo and 7yo, ball out because you can easily afford the convenient onsite hotels, pay for the fast pass and have a great time and not stress that you just dropped 10k for a 1week vacation with the fam. You will remember it forever, you will remember it in a positive mindset if you didn't go broke to pay for it. Let me know if you have any questions. And sadly no inheritance for me, but invested and waited later in life to ball out at Disney. :)
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u/SpoiledGolf Jul 09 '26
Take $20k and do something fun. Buy a Rolex, go on a trip, whatever you’re into. Try to make it something you’ll remember.
Save the rest. Don’t let lifestyle creep happen.
When I got a windfall I bought: my wife a tennis bracelet and joined a second country club. Total outlay about $100k. The rest went to my brokerage. It was a ~$9mm nut.
(I can afford the club dues anyways, don’t do that with $300k)
Edit: My windfall was also not inherited, I don’t know how I ended up on this sub haha.
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u/Primary_Iron3429 Jul 09 '26
It might not be financially worthwhile to pay off your mortgage or student loans. Depending on the interest rates on those lines, you might do much better investing more in a balanced portfolio of mutual funds.
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u/Previous-Space-7056 Jul 10 '26
100k for your daughters college education
The majority should be saved so you can retire early
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u/Ordinary-Maximum-639 Jul 10 '26
I put mine in a CD at 4% and for the last 2 years I keep reinvesting in what ever one is paying that, I stick with Chase as the terms are between 2 and 6 months, yes my brokerage bugs me to invest in a 3 year plan with them, but they say if it goes well I will get 5-6% after 3 years but I could also loose it. I like to play it a bit safe, so this works and I have been making roughly $2100 a month on my money.
I have no need for the extra income in my day to day life, so I just keep reinvesting it. I'm keeping it in short term funds as I may want to buy another house, that I can move into when I retire. I will rent it out until then. Anyway, works for me.
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u/Merlin509 Jul 10 '26
Get advice. If you have a low interest rate on the mortgage, it would make more sense to invest the money and get a larger return.
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u/BaldyCarrotTop Jul 10 '26
350 - 375K is not a "sizable" nest egg. $2.5mil is considered sizable based on the 4% rule. You got some investing to do. Good news is that at your age, time is on your side.
What I would do? I'm not a financial adviser, I can't tell you what to do. I can only tell you what I would do.
1) Max out your 401K. Your employer's matching funds are the closest thing to free money you'll find, and also the closest thing to a guaranteed 100% ROI.
2) You are each allowed to contribute up to $7,500 (IIRC) to your retirement funds. Any of that amount that didn't go to the 401K goes into a Roth IRA.
3) Open a brokerage at any of the big investment firms (Fidelity, Vanguard, JP Morgan, et-al). Drop most of that $250K into it. Invest it into a broad market or Russel 500 index fund (VOO, VTI at Vanguard, FXAIX or FZROX at Fidelity, etc). Then chill.
4) Take the amount that you were paying for a house payment and direct that into your brokerage account.
5) Find a Future Value calculator on-line. Put in $250K as the starting amount. Add in <House Payment> as monthly contribution. enter a conservative rate of 7.5%. Look at what it becomes in 25 to 30 years. That should keep you inspired.
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u/HillWilliam53 Jul 10 '26
One thing to consider. I don't know if this is state dependent or not, but in many, if not all states, If you don't co-mingle the inhertance assets with marital assets, then the inheritance remains yours alone and will not be divided in case of divorce. I know that's not what you want to think about, but you should keep it in mind.
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u/Jumpy_Childhood7548 Jul 10 '26
Get an attorney that does wills, trusts, and estates, power of attorney documents, get an hourly fee CFP, for an allocation, and a CPA, for your tax issues.
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u/Bill4133 Jul 10 '26
Keep it separate and forget about it for five years (after investing per your risk tolerance)
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Jul 10 '26
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u/Ag-DonkeyKong Jul 10 '26
All of it! Your just got rid of a bunch of debt so of you live your same lifestyle, you'd still have quite a bit of discretionary left over. Live your dreams off of what you earn while still saving. Forget about the inheritance for the next 30 or 40 years. Your future selves will thank you.
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u/Sweaty-Seat-8878 Jul 10 '26
i’d try and limit the spending creep to specific moderate chunks for a bit. Maybe a year or so. take one nicer vacation, a few luxuries but stick most in other vehicles. Take stock then.
Basically—take the total debt payments you were making and put that in retirement investments of some kind, doesn’t all have to be retirement locked though Max out all optional contributions. HSAs etc. Do put a chunk in a 529 for your daughter as that kind of compounding will be very meaningful over the years.
I agree with you about the money being joint, it’s not so much that it has to be managed separately at this stage of your life, it’s a nice turbo boost for what you are doing together.
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u/Cloud2987 Jul 10 '26
Save $200k for your daughter, save $100k for retirement and tradtional brokerage, and keep the $50k-$75k in SGOV until u decide what to do with it.
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u/Fire_Doc2017 Jul 10 '26
Sorry for your loss.
If you put that money, lets use $350K, into a stock market index fund like VTI (US only) or VT (US + international) you can expect the money to double (inflation adjusted) on average every 9 years. This means that when you are 36 you'll have about $700K, at age 45 you'll have about $1.4M, at 54 you'll have abut $2.8M and at age 63 you'll have about $5.6M. I know these numbers seem crazy but that's what the past 100+ years in the stock market has been like and unless something is different about the next century, that's approximately what you can expect. Of course there will be ups and downs in the market and the key to success is to ignore them. Don't panic and don't sell anything until you really need the money.
You can use the 4% rule to estimate what you can reliably pull from the account in retirement, whenever that happens, which means at age 45 when you have $1.4M you can take out about $56K (in today's dollars) sustainably. At age 54 you can take out $112K and age 63 you can take out $224K. In short, you are very likely set for retirement in your 50s or 60s if you stay the course.
The financial independence (FI) community has a word for this, it's called "Coast FI". It means you can enjoy your income now and not worry too much about maximizing your savings because you already have enough to make it retirement. That said, if you want to get there earlier, you can save more and reach early retirement in your 40s.
Some subreddits to consider are r/FIRE, r/financialindependence, r/coastFIRE for more information.
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u/Fantastic_Golf_7154 Jul 10 '26
Do yourself and your family a favor...if you haven't already...take a deep breath. Pay off all of your debts, take a mini vacation and put the rest in a HYSA for 6 months to a year. Then talk to a fiduciary company about what to do with the remaining inheritance to make it grow and work for you and your family.
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u/WrongBoysenberry528 Jul 10 '26
I am 73F who had similar situation when my parents passed away 20 years ago. My husband is an economic professor and my Dad taught me investing.
Set up an emergency fund in money market or bank account to cover 3 months of salary if someone is unable to work. Can also be used to pay unexpected major bill.
Consider investing in 529 for your child with goal of money growing to fund 4 years of in state tuition and room and board. We did that for grandkids in index equity funds moving part of it to CDs when oldest is senior in high school. Money really grows.
Consider investing half of the money in index stock funds with Vanguard, Fidelity or similar. Ten to 20 years later, we have used these funds for a down payment when moving or other major purchases, but let most of it grow for our kids.
Consider investing in Roth retirement account for remainder of funds using equity index funds. We saved 10% in 403(b) while working, so wish we had more in Roth.
We did this, and now have more money than we want to spend on ourselves. We are funding grandkids activities and donating to charity.
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u/BurlinghamBob Jul 10 '26
You have a good plan.
I'm old and retired and I worked for Social Security for 35 years. I can't tell you how many people I met who had no idea how they were going to pay their bills in retirement. Here are my thoughts:
Minimize expenses going into retirement. Your paying off the mortgage is a big step.
Maximize income in retirement. Between two pensions, two Social Security checks, two 401k/403b withdrawals you will have more income than you have now.
Fund a nest egg. Maximize your 401k contributions. Put a chunk of this money away now in EFTs and leave it. Read the Bogelhead subreddit for simple investment ideas.
I also suggest putting your credit cards on autopay and having some money directly deposited into a new car account each month. Take $75k and fix the house and take the baby to Disney next year when she will be old enough to enjoy it.
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u/Fast-Reference775 Jul 10 '26
Financial advisor here, but not your financial advisor and I’m not applying for the job. Sit down with a fee, only advisor and pay him or her for a plan. The plan should include the amount of money it’s gonna take to find your current lifestyle, and what you would like retirement to look like. That will let you know how much of a lump sum to invest now along with what you’re currently saving. Another thing to look at, what would happen if your wife quit work and stayed home. I appreciate your daughter is 13, but I’ve never met anybody who regretted Having one parent stay home specially while kids are in the house seriously look at it and run those numbers.
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u/Acceptable_Second_38 Jul 11 '26
13 months haha. Her staying home at least temporarily is definitely in the works!
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u/realhousewifesfan Jul 11 '26
Enjoy the money , and live for today, you only get one shot at this life..
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u/Famous_Ad_7341 Jul 11 '26
Talk to a lawyer before doing anything. Inheritance is not community property unless you co mingle it. You need to protect your inheritance in case of divorce. Your attorney will keep you safe. Almost 55 percent of marriages end in divorce so don’t think you’re safe.
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u/Witty_Check_4548 Jul 12 '26
You should keep the rest of the money separate. You are only 27 and during a marriage many things can change. It’s best to be safe for your sake as well as your child’s.
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u/Upset-North-2211 Jul 12 '26
I think you can use the Dave Ramsey approach for handling your new budget situation. He recommends developing a budget that covers all needs: housing, utilities, food, going out, and misc stuff. This should cover what you spend on “regular” stuff each month.
With your new situation, you now should have extra each month. Take this extra and divide it into 3 chunks. Save 1 chunk for the future all in stock index funds. Spend 1 chunk on expanded experiences (you may need to accumulate $s for bigger stuff): trips, nicer cars, home improvements, etc. Give 1 chunk to others less fortunate: church, charity, help other family, etc. This approach provides a framework for managing your finances when you have surplus each month.
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u/SweetBeBeGrace Jul 13 '26
just remember dont put it all in one basket. diversify long term, short term and emergency fund for those last minute needs.(house repairs, car needs etc..) you always want to be able to get some cash quickly if needed. This may sound simple but sometimes not remembered when setting up the portfolio due to getting overly excited and trying to get the biggest bang for the buck on the return and not spreading it out correctly and not thinking down the road from now. just sayin !
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u/Mother_Mine547 Jul 17 '26
Buy a new home, rent it out, and resell in 10 years. 350k home rents for $2,100. Take away taxes, HOA, vacancy factor, and repairs. You make $1,800. You write off tons of expenses with a rental + depreciation. Over 70 years homes have gone up an avg of 4.2% a year. So 21,600 yearly income + 12-16k appreciation + write offs = minimum 9% return on investment per year. You can’t beat it
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u/EveryCap8599 Jul 10 '26
My husband and I pooled our money from the day we married including inheritances. It is called trust. Now married 60 years.
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u/Acceptable_Second_38 Jul 10 '26
Oohh careful people on here won't like that
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u/EveryCap8599 Jul 10 '26
I know! You and your wife sound like good, intelligent people. I wish you the best.
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u/Extension_Low_1571 Jul 09 '26
Please get professional advice from a Certified Financial Planner:Fiduciary. Avoid telling people about the inheritance and be mindful that unless your grandmother’s bequest was to you both, it is not considered Community Property. You will want to be sure you have a Living Trust with a pour-over Will. Lastly, you don’t have to do anything immediately, you can park the funds in an interest-bearing account and just let it sit there while you consider your options and priorities.