Do you cut back on 401k/IRA saving if you expect to inherit millions?

[Anonymous]

Anonymous wrote:

Anonymous wrote:No, that’s idiotic. It’s the best tax loophole out there.

+1

Save tax free and build wealth to pass on to the next generation, just like you're expecting to have happen from your parents.

Once you reach a certain income level, it’s not tax advantaged any more.

[Anonymous]

Anonymous wrote:I feel like no one answering here is actually in a true position of inheriting real money. My parents are roughly 20M net worth and it will only grow as it is invested. They couldn’t spend down the principle if they tried. Of course, I am counting on inheriting a large amount in my due time, it would be foolish to plan otherwise. We save the minimum in retirement but otherwise aren’t worried about it in the slightest. We have other worries but money isn’t one of them. I know we will be just fine in retirement.

Actually, they could end up spending down that principal---if they require round the clock nursing care for 5-10 years.
But I get your point, it would require extenuating circumstances for that to happen.

Ideally, it would be better for your parents to gift you the federal max each year ($17K/person) and let you max out your tax advantaged retirement savings with it. Win win for both sides.

That is what we plan to do with our kids. It would be foolish for them not to maximize the tax savings and we win by reducing our estate levels (and yes, there are other ways to do that thru trusts).

[Anonymous]

Anonymous wrote:I’ll play. Expect to inherit about $5m. We still fully max 401k plus save extra. We do not count on that money coming to us. Elder care is very expensive.

Yes, at only $5M, your parents could easily blow thru that amount if they need long term elder care

[Anonymous]

Anonymous wrote:What does "expect" even mean? The only guarantees in life is tax and death. I don't know how you would "expect" something when the person is not even dead yet.

We are worth $30M+, and that number could easily go to $50M+ (at least a 60% chance of the increase). Our kids know they will inherit a large amount. There is no way we would blow thru that, even with major long term medical care. So there's a 99% chance each kid is getting well over $10M. They know that. However, they still save and but we supplement that by gifting them the max each year now, so that they can maximize their taxable savings and use the money to build a good life now.
But in their case, expecting to get a large sum is pretty much guaranteed.

[Anonymous]

Anonymous wrote:I feel like no one answering here is actually in a true position of inheriting real money. My parents are roughly 20M net worth and it will only grow as it is invested. They couldn’t spend down the principle if they tried. Of course, I am counting on inheriting a large amount in my due time, it would be foolish to plan otherwise. We save the minimum in retirement but otherwise aren’t worried about it in the slightest. We have other worries but money isn’t one of them. I know we will be just fine in retirement.

I feel like people with real money give their kids money while they're alive. I'm skeptical of money that's supposedly there but won't be mine until they pass: it may not actually be there, it may not be liquid, it may get spent on medical bills or a bad lawsuit, or they may live well into my retirement. My dad is in his 70s taking care of his mom on her 90s: if he inherits anything (unlikely, since she remarried) he'll be too old for it to have mattered to his retirement.

[Anonymous]

DH inherited 5M+ a few years ago. We always saved knowing there is an irrevocable trust in his name. Some years we didn't max 401ks, but there was never a time when we saved 0 in retirement accounts. They also gave us annual gifts and funded 529s in life. We plan to give annually to our kids and future grandchildren during our lifetimes.

[Anonymous]

Anonymous wrote:No, that’s idiotic. It’s the best tax loophole out there.

Actually, the best loophole is probably starting a business. I only do Roth or taxable investments because I already minimize taxes in so many other ways that I don't need the deduction and get access to my money any time.

As just one example, via the qualified business income (QBI) deduction, many business owners that make $200K get to knock that income down by 20% and only pay taxes on $160K of income. Not only is that $40K almost double what you can deduct in your 401(k), it's actually a *true* deduction, unlike the 401(k) which just pushes your taxes into the future.

[Anonymous]

Stop obsessing over every nickel in your mountain of money. You are wasting your life on it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Nope. You don't know what can happen.

THIS!!! My cousins (my parents' generation) had well over $20M decades ago. Their three children all expected to inherit it. Then their dad died and their mom got a new boyfriend. She cut off her kids and is leaving the money to him. Completely unexpected and my cousins (the three grown kids) had all based their lives around getting this money.

Your parents could also lose the investments, have long-term elder care needs that can zap through a big chunk, or anything else that could change a person's fortune.

Your cousins were morons and did not have an appropriate estate plan. This scenario could have been easily avoided.

If your parents have 20M+, and have an air tight plan, there is no reason to think you won't inherited the lionshare of that.

Odds are they have good LTC policies to help buffer some of that cost, but pending Armageddon, you're going to easily inherited 5M +

I agree with you regarding the lack of appropriate estate plan, but the point is that it sounds like OP is in the same boat. OP hasn't received this money and it's only an estimated $3-5M. Too many ways that OP might not ever get this.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I feel like no one answering here is actually in a true position of inheriting real money. My parents are roughly 20M net worth and it will only grow as it is invested. They couldn’t spend down the principle if they tried. Of course, I am counting on inheriting a large amount in my due time, it would be foolish to plan otherwise. We save the minimum in retirement but otherwise aren’t worried about it in the slightest. We have other worries but money isn’t one of them. I know we will be just fine in retirement.

I feel like people with real money give their kids money while they're alive. I'm skeptical of money that's supposedly there but won't be mine until they pass: it may not actually be there, it may not be liquid, it may get spent on medical bills or a bad lawsuit, or they may live well into my retirement. My dad is in his 70s taking care of his mom on her 90s: if he inherits anything (unlikely, since she remarried) he'll be too old for it to have mattered to his retirement.

+1 If you haven't already been receiving the money, then don't count on it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I feel like no one answering here is actually in a true position of inheriting real money. My parents are roughly 20M net worth and it will only grow as it is invested. They couldn’t spend down the principle if they tried. Of course, I am counting on inheriting a large amount in my due time, it would be foolish to plan otherwise. We save the minimum in retirement but otherwise aren’t worried about it in the slightest. We have other worries but money isn’t one of them. I know we will be just fine in retirement.

I feel like people with real money give their kids money while they're alive. I'm skeptical of money that's supposedly there but won't be mine until they pass: it may not actually be there, it may not be liquid, it may get spent on medical bills or a bad lawsuit, or they may live well into my retirement. My dad is in his 70s taking care of his mom on her 90s: if he inherits anything (unlikely, since she remarried) he'll be too old for it to have mattered to his retirement.

+1 If you haven't already been receiving the money, then don't count on it.

It’s safe to assume people in the PP’s position are already maxing out the annual exemption and have an eye on 2026, as well as a solid estate plan. It’s likely they also pay any and all tuition for the children and grandchildren. There are probably other gifts and distributions as well.

[Anonymous]

Anonymous wrote:No way. That is even more incentive to save tax free.

+1

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Nope. You don't know what can happen.

THIS!!! My cousins (my parents' generation) had well over $20M decades ago. Their three children all expected to inherit it. Then their dad died and their mom got a new boyfriend. She cut off her kids and is leaving the money to him. Completely unexpected and my cousins (the three grown kids) had all based their lives around getting this money.

Your parents could also lose the investments, have long-term elder care needs that can zap through a big chunk, or anything else that could change a person's fortune.

Your cousins were morons and did not have an appropriate estate plan. This scenario could have been easily avoided.

If your parents have 20M+, and have an air tight plan, there is no reason to think you won't inherited the lionshare of that.

Odds are they have good LTC policies to help buffer some of that cost, but pending Armageddon, you're going to easily inherited 5M +

I agree with you regarding the lack of appropriate estate plan, but the point is that it sounds like OP is in the same boat. OP hasn't received this money and it's only an estimated $3-5M. Too many ways that OP might not ever get this.

Yes, and most happily married couples don't put in their wills "my half goes to my spouse but is protected so that if they marry a gold digger it passes directly to my kids"

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Nope. You don't know what can happen.

THIS!!! My cousins (my parents' generation) had well over $20M decades ago. Their three children all expected to inherit it. Then their dad died and their mom got a new boyfriend. She cut off her kids and is leaving the money to him. Completely unexpected and my cousins (the three grown kids) had all based their lives around getting this money.

Your parents could also lose the investments, have long-term elder care needs that can zap through a big chunk, or anything else that could change a person's fortune.

Your cousins were morons and did not have an appropriate estate plan. This scenario could have been easily avoided.

If your parents have 20M+, and have an air tight plan, there is no reason to think you won't inherited the lionshare of that.

Odds are they have good LTC policies to help buffer some of that cost, but pending Armageddon, you're going to easily inherited 5M +

I agree with you regarding the lack of appropriate estate plan, but the point is that it sounds like OP is in the same boat. OP hasn't received this money and it's only an estimated $3-5M. Too many ways that OP might not ever get this.

Yes, and most happily married couples don't put in their wills "my half goes to my spouse but is protected so that if they marry a gold digger it passes directly to my kids"

You can protect the money and still provide the surviving spouse with security.

Once you reach a certain threshold of money, protection is all you need. Get an independent trustee, set a % each year they access no mater what and provide for HEMS. THe independent trustee won't approve of withdrawals that would not benefit the wife or their biological kids

If my wife inherits a $20m trust, she could get 5% a year no matter what. Could she blow that on the pool boy, sure. But hopefully the 20m grows more than 5% so the corpus is protected.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Nope. You don't know what can happen.

THIS!!! My cousins (my parents' generation) had well over $20M decades ago. Their three children all expected to inherit it. Then their dad died and their mom got a new boyfriend. She cut off her kids and is leaving the money to him. Completely unexpected and my cousins (the three grown kids) had all based their lives around getting this money.

Your parents could also lose the investments, have long-term elder care needs that can zap through a big chunk, or anything else that could change a person's fortune.

Your cousins were morons and did not have an appropriate estate plan. This scenario could have been easily avoided.

If your parents have 20M+, and have an air tight plan, there is no reason to think you won't inherited the lionshare of that.

Odds are they have good LTC policies to help buffer some of that cost, but pending Armageddon, you're going to easily inherited 5M +

I agree with you regarding the lack of appropriate estate plan, but the point is that it sounds like OP is in the same boat. OP hasn't received this money and it's only an estimated $3-5M. Too many ways that OP might not ever get this.

Yes, and most happily married couples don't put in their wills "my half goes to my spouse but is protected so that if they marry a gold digger it passes directly to my kids"

You can protect the money and still provide the surviving spouse with security.

Once you reach a certain threshold of money, protection is all you need. Get an independent trustee, set a % each year they access no mater what and provide for HEMS. THe independent trustee won't approve of withdrawals that would not benefit the wife or their biological kids

If my wife inherits a $20m trust, she could get 5% a year no matter what. Could she blow that on the pool boy, sure. But hopefully the 20m grows more than 5% so the corpus is protected.

But that's not how OP's hopeful inheritance is being managed. You're talking about how things could be, but that's not the current reality.