Spouse inherited $3 million

[Anonymous]

Anonymous wrote:Thank you for the very solid comments here. I also did a double take at “income producing prostitutes.” Hilarious. I do like the idea of taking some set amount of money and deciding to spend it each year. We are financially conservative, although not for any particular reason. Like many, we have saved regularly and our investments have done well over the past two decades. We were unable to have additional children so that kept our expenses low. That said, we don’t deny ourselves anything. It would take some thought to spend an extra $50,000 a year. I think I’d like to put us on a waiting list for a new car. There are a few new electric cars coming out that interest us.

I know there are some software programs that model how much you can spend, I like to do my own research rather than hire help. My experience with hired financial advisors has not been great. Our estate documents will funnel this money to our child so that has been done. Spouse is already basically retired, working one or two days a week for pure pleasure.

OP, try to maximize your tax sheltered/tax advantaged savings.. Here's a list I can think of.
- 401K - 29,500 + 6,500 catchup
- Mega roth (if available).
- Backdoor Roth - for you and spouse
- iBonds - for you, spouse and kid - $30K/year. While this is not tax advantaged per se, it is tax deferred for 30 years.
- Company ESPP (typically get 10-15% discount)

If any of the above results in a shortfall with your budget, offset that by drawing down earnings from the inheritance.

[Anonymous]

1. Spend some money on therapy, because you are obviously having trouble coming to grips with the fact that you are extraordinarily wealthy and can afford almost anything you want to do or buy.

2. For god's sake, get a financial adviser instead of relying on advice from anonymous DCUM randos.

3. Find a good cause to support!

[Anonymous]

Anonymous wrote:My spouse recently inherited $3 million, increasing our net worth from just over $2 million to now north of $5 million. Our household income is about $210,000 a year and our suburban townhouse is paid off. Our budget is well defined and I am not sure whether we should change anything. Investments are all with Vanguard in diversified index funds. We are ages 49/50 and our only child‘s college fund has enough for her undergraduate education which will begin in two years. There will be no more inheritances. I have always managed the finances in our family but I am unsure whether to make any revisions to our budget. We are saving 1 401K, and two back door Roth IRAs plus a family HSA.

The only place money could come from in our budget is if we reduced savings. Would you do this? My spouse works part time and high don’t have any plans to retire until I am closer to 60. I don’t think we have enough money yet to handle the cost of early retirement health insurance and we both come from long-lived families.

Congrats DH! You married well.

[Anonymous]

Anonymous wrote:Spouse needs to get a post-nup. It's his money, not yours.

Inheritor was a she, goofball. Read between the lines.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We discussed keeping the inheritance separate but spouse was adamant that we commingle it. We have a strong marriage and I think there is gratitude that I have been the primary wage earner for our entire marriage. That’s a good idea to pump up the 529 since our daughter has been talking about graduate school. She hasn’t decided but it would be good to begin funding that. We could always transfer it to a grandchild if necessary. If we were to take nicer vacations I would have to reduce savings. That would be hard for me but I guess our kid will only be with us a few more years so it’s probably worth it.

I appreciate the reassurance that early retirement is not the answer here. I didn’t think so. And I don’t really want to retire yet.

Have you discussed this with an estate attorney? This isn't just about your strong marriage. What happens if your spouse passes before you, and you remarry someone with kids? If you don't comingle, the funds can be put into a trust that you can access for as long as you live and then transfer to your kids. If you don't, you'll have to figure this out in a pre-nup or in your will. Much easier to figure this out now by not comingling.

I commingled a smaller but six-figure inheritance some years ago without any hesitation. I don't really care what happens to the money if I'm dead; I didn't do a thing to earn it, my parents didn't earn it (it came from my grandparents), and my spouse knew and loved them, too, so why should I be the only person who gets any of it? If my grandparents wanted to make sure any and every dollar they left me went to my children and only my children, they'd have left it to my children in trust. They didn't. I understand there are logical reasons not to commingle assets like this, but people on here act like it's absolutely insane to even consider doing it. I really strongly disagree.

I agree with you to an extent. I would comingle, and similarly, I'm not overly concerned about "my" assets after my death, even the ones I earned myself. Still, I told my husband that if I die early and he re-marries, he needs to get a prenup figured out to ensure our kid ends up with whats left of "my half" of our marital assets in the end, instead of a new wife and step kids. He's a really good person, and loves our kid, I trust him to honor that (and vice versa). I don't expect him to marry a gold digger, but money can do weird things to people. We talked through ways to do this via a trust & will, and it just is much simpler to trust the surviving spouse to act ethically. Not ironclad, but good enough for me.

That was dumb. You could have put it in a revocable trust that turns into an irrevocable trust at your death, with your husband the beneficiary and your children the remaindermen at his death.

We have a lot of money in tax sheltered accounts then we have a house, and not really much else. Was advised not to put 401ks (etc) in to the trust for tax reasons. We considered your idea, but not clear that we would want to kcik out a surviving 2nd wife / 2nd husband when we both die. This all can be dealt with via a prenup. our main goal was to set thigns up in case both of us die. If there is one adult left, they get to make the adult decisions from then on out.

[Anonymous]

Anonymous wrote:1. Spend some money on therapy, because you are obviously having trouble coming to grips with the fact that you are extraordinarily wealthy and can afford almost anything you want to do or buy.

2. For god's sake, get a financial adviser instead of relying on advice from anonymous DCUM randos.

3. Find a good cause to support!

Disagree, except 3 is good advice for anyone with spare funds.

OP doesn't need a therapist; perhaps if you are not frugal like OP you do not understand the time it takes time to process a windfall like this. OP is not extraordinarily wealthy, just average wealthy where you still have to mind your spending.

Financial advisors are all about their 1% management fee--fine if you are not comfortable investing on your own, but OP is. OP doesn't have to take advice from DCUM randos; he can take it from Bogleheads randos instead. They do have a wiki on windfalls, which he may wish to check out.

[Anonymous]

Anonymous wrote:1. Spend some money on therapy, because you are obviously having trouble coming to grips with the fact that you are extraordinarily wealthy and can afford almost anything you want to do or buy.

2. For god's sake, get a financial adviser instead of relying on advice from anonymous DCUM randos.

3. Find a good cause to support!

Extraordinarily wealthy is very generous. Does OP need to worry about day to day bills, no?

Can they travel first class, go to Europe several times a year, own a vacation home, pay for grandkids education/college, etc...no

I guess it's all relative..

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I would start taking better vacations.

This would be my approach as well. I think my family sounds a lot like OP’s. I’m a Fed, and was the primary earner for maybe 3 of the last 20 years while DH pursued entrepreneurial opportunities. After that, DH has earned from 3 to 10x my salary, which has given us enormous financial freedom. I have sadly ended up with around $2 million inheritance over the years, and never thought about keeping it separate.

Once our retirement and 529s were in good shape, we paid off our mortgage and then contemplated things for a couple of years. We are in the stage now where we are comfortable paying up to $500 a night for a great hotel or resort when we travel, and it’s kind of amazing how many more fun things that brings you than the Motel 6 experiences of our youth. We could add more luxury and sometimes do, but even these baby steps are lovely. The biggest thing we’ll do is both retire by 60, which is obviously much easier if you are a Fed with health insurance options.

$500 a night for a hotel room sounds completely out of reach. We have always been quite frugal. It’s hard to imagine switching from a mindset of savings to loosening up. We really don’t like one of our cars (2010 CR-V) so maybe our first move should be to replace it. I think we would get more enjoyment out of that than a vacation anyway.

I completely understand being horrified by the idea of a $500 a night hotel room. We worked our way up to that level very gradually as our net worth grew, and still only do it for 3 or 4 days max. Still perfectly happy to stay in an Embassy Suites or Holiday Inn, and we frequently do. But from your comment above, it sounds like you don’t get much enjoyment out of vacations (or else just are extremely excited by the idea of a new car)? That’s sad if true, because there are so many amazing places to visit, even if you never leave the U.S., and experiencing new things together adds spice to a marriage. In your wife’s shoes, the first thing I’d want to do is take a celebratory trip with my DH. The best thing about money is it offers you options and freedom, and this is a great occasion to get away and really think about what the two of you would like the coming decades to look like.

[Anonymous]

I think you’re right, a vacation sounds like a great way to start. Kid goes to camp for six weeks this summer and we are talking about what we can do during that time just the two of us. We haven’t been away alone together since she was born, 16 years ago. We bought an expensive telescope ($1,800?) during the pandemic and we are thinking of going somewhere with less light pollution to use it. Maybe we could take a new car. Bogleheads is a great resource and where I modeled our portfolio from. I am comfortable investing although I acknowledge that tax planning has become exponentially more difficult since I was in my 20s. I used to be able to figure my taxes on the simple spreadsheet and now that’s just about impossible.

I have been viewed as a cheapskate in the past (not recently) and I don’t want to be that. I want to enjoy a rich, full life. And have health insurance subsidized for another decade or so.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Thank you for the very solid comments here. I also did a double take at “income producing prostitutes.” Hilarious. I do like the idea of taking some set amount of money and deciding to spend it each year. We are financially conservative, although not for any particular reason. Like many, we have saved regularly and our investments have done well over the past two decades. We were unable to have additional children so that kept our expenses low. That said, we don’t deny ourselves anything. It would take some thought to spend an extra $50,000 a year. I think I’d like to put us on a waiting list for a new car. There are a few new electric cars coming out that interest us.

I know there are some software programs that model how much you can spend, I like to do my own research rather than hire help. My experience with hired financial advisors has not been great. Our estate documents will funnel this money to our child so that has been done. Spouse is already basically retired, working one or two days a week for pure pleasure.

OP, try to maximize your tax sheltered/tax advantaged savings.. Here's a list I can think of.
- 401K - 29,500 + 6,500 catchup
- Mega roth (if available).
- Backdoor Roth - for you and spouse
- iBonds - for you, spouse and kid - $30K/year. While this is not tax advantaged per se, it is tax deferred for 30 years.
- Company ESPP (typically get 10-15% discount)

If any of the above results in a shortfall with your budget, offset that by drawing down earnings from the inheritance.

Anonymous wrote:

Anonymous wrote:Thank you for the very solid comments here. I also did a double take at “income producing prostitutes.” Hilarious. I do like the idea of taking some set amount of money and deciding to spend it each year. We are financially conservative, although not for any particular reason. Like many, we have saved regularly and our investments have done well over the past two decades. We were unable to have additional children so that kept our expenses low. That said, we don’t deny ourselves anything. It would take some thought to spend an extra $50,000 a year. I think I’d like to put us on a waiting list for a new car. There are a few new electric cars coming out that interest us.

I know there are some software programs that model how much you can spend, I like to do my own research rather than hire help. My experience with hired financial advisors has not been great. Our estate documents will funnel this money to our child so that has been done. Spouse is already basically retired, working one or two days a week for pure pleasure.

- 401K - 29,500 + 6,500 catchup
This is $20,500 + 6,500 catch up, I believe. I’m still 49 so only the $20,500 this year. Done.

- Mega roth (if available).
Yes, I was eligible for this for the first time this year and have it set to max out. Between employee and employer contributions, I’ll hit the max of $61,000. Done.

- Backdoor Roth - for you and spouse
Yes, $6,000 to each Roth IRA through a TIRA contribution. Done.

- iBonds - for you, spouse and kid - $30K/year. While this is not tax advantaged per se, it is tax deferred for 30 years.
Tried this once about 10 years ago but got stuck with some IRS bank requirement that I couldn’t figure out.

- Company ESPP (typically get 10-15% discount)
I defer 10% of my salary to ESPP and get 10% discount quarterly. I sell immediately and use as cash.

We live on the rest (no mortgage) so don’t have a lot of spare take home pay. We will need to draw down the investments to fund a fancy vacation or new car. This is what makes it harder. It’s not like we have extra cash month to month. We would have to plan and sell something. We do have a donor advised fund with like $35k that we donate from regularly.

[Anonymous]

Draw down on your taxable assets for the car, vacation, extras. If you have $5 million in investment assets, then you have $150,000 - $200,000 that you can use a year. You are frugal, so you will use much less. But don't be afraid to use it to improve your quality of life. Maybe one year you will use more in order to upgrade your house. That's okay. You will have enough.

It's tough to go from a saving to spending mindset, especially if frugal.

[Anonymous]

Anonymous wrote:

Anonymous wrote:1. Spend some money on therapy, because you are obviously having trouble coming to grips with the fact that you are extraordinarily wealthy and can afford almost anything you want to do or buy.

2. For god's sake, get a financial adviser instead of relying on advice from anonymous DCUM randos.

3. Find a good cause to support!

Extraordinarily wealthy is very generous. Does OP need to worry about day to day bills, no?

Can they travel first class, go to Europe several times a year, own a vacation home, pay for grandkids education/college, etc...no

I guess it's all relative..

With $3 million dollars, they can do almost all those things. Buy a $1 million vacation home. Put $500,000 away for kids college. That leaves you $1.5 million. Earn 5% on that and you can take two or three first class trips to Europe every year.

[Anonymous]

Anonymous wrote:I think you’re right, a vacation sounds like a great way to start. Kid goes to camp for six weeks this summer and we are talking about what we can do during that time just the two of us. We haven’t been away alone together since she was born, 16 years ago. We bought an expensive telescope ($1,800?) during the pandemic and we are thinking of going somewhere with less light pollution to use it. Maybe we could take a new car. Bogleheads is a great resource and where I modeled our portfolio from. I am comfortable investing although I acknowledge that tax planning has become exponentially more difficult since I was in my 20s. I used to be able to figure my taxes on the simple spreadsheet and now that’s just about impossible.

I have been viewed as a cheapskate in the past (not recently) and I don’t want to be that. I want to enjoy a rich, full life. And have health insurance subsidized for another decade or so.

Oh, wow. Definitely look into taking that telescope to Joshua Tree or one of the other dark-sky national parks. You will have an incredible time!

[Anonymous]

Anonymous wrote:you will get bored in early retirement. biggest mistake people make.
jut bank the money and live a relaxed life knowing you have the money to relax.

what do you suggest? It's nearly impossible to find cushy part time gigs that would keep you intellectually challenged and give you decent amount of free time to do what you sacrificed doing by trying to earn your nest egg.

Every job has accountability, deadlines and stress. It can consume you even if you aren't leaning in like you did in your earlier years to earn that nest egg. Nothing compares to not having to worry about anything else but your own family and home. It's a luxury

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Thank you for the very solid comments here. I also did a double take at “income producing prostitutes.” Hilarious. I do like the idea of taking some set amount of money and deciding to spend it each year. We are financially conservative, although not for any particular reason. Like many, we have saved regularly and our investments have done well over the past two decades. We were unable to have additional children so that kept our expenses low. That said, we don’t deny ourselves anything. It would take some thought to spend an extra $50,000 a year. I think I’d like to put us on a waiting list for a new car. There are a few new electric cars coming out that interest us.

I know there are some software programs that model how much you can spend, I like to do my own research rather than hire help. My experience with hired financial advisors has not been great. Our estate documents will funnel this money to our child so that has been done. Spouse is already basically retired, working one or two days a week for pure pleasure.

OP, try to maximize your tax sheltered/tax advantaged savings.. Here's a list I can think of.
- 401K - 29,500 + 6,500 catchup
- Mega roth (if available).
- Backdoor Roth - for you and spouse
- iBonds - for you, spouse and kid - $30K/year. While this is not tax advantaged per se, it is tax deferred for 30 years.
- Company ESPP (typically get 10-15% discount)

If any of the above results in a shortfall with your budget, offset that by drawing down earnings from the inheritance.

Anonymous wrote:

Anonymous wrote:Thank you for the very solid comments here. I also did a double take at “income producing prostitutes.” Hilarious. I do like the idea of taking some set amount of money and deciding to spend it each year. We are financially conservative, although not for any particular reason. Like many, we have saved regularly and our investments have done well over the past two decades. We were unable to have additional children so that kept our expenses low. That said, we don’t deny ourselves anything. It would take some thought to spend an extra $50,000 a year. I think I’d like to put us on a waiting list for a new car. There are a few new electric cars coming out that interest us.

I know there are some software programs that model how much you can spend, I like to do my own research rather than hire help. My experience with hired financial advisors has not been great. Our estate documents will funnel this money to our child so that has been done. Spouse is already basically retired, working one or two days a week for pure pleasure.

- 401K - 29,500 + 6,500 catchup
This is $20,500 + 6,500 catch up, I believe. I’m still 49 so only the $20,500 this year. Done.

- Mega roth (if available).
Yes, I was eligible for this for the first time this year and have it set to max out. Between employee and employer contributions, I’ll hit the max of $61,000. Done.

- Backdoor Roth - for you and spouse
Yes, $6,000 to each Roth IRA through a TIRA contribution. Done.

- iBonds - for you, spouse and kid - $30K/year. While this is not tax advantaged per se, it is tax deferred for 30 years.
Tried this once about 10 years ago but got stuck with some IRS bank requirement that I couldn’t figure out.

- Company ESPP (typically get 10-15% discount)
I defer 10% of my salary to ESPP and get 10% discount quarterly. I sell immediately and use as cash.

We live on the rest (no mortgage) so don’t have a lot of spare take home pay. We will need to draw down the investments to fund a fancy vacation or new car. This is what makes it harder. It’s not like we have extra cash month to month. We would have to plan and sell something. We do have a donor advised fund with like $35k that we donate from regularly.

Good job! Figure out the iBonds thing. It's quite a good deal now.

Money is fungible. Think of it this way.. All of your savings listed above is nothing but you guys moving money from your inheritance into tax-protected accounts. So if you contribute a total of 100K into these accounts, draw that down from your inheritance for expenses/vacation, etc. Think of it as your investment account lending money to your salary account to store the money in tax beneficial accounts.