Inheritance & How It Impacted Your Money Life

[broncocountry25]

Hello BH's,

My wife and I recently took a week off and stayed with her parents. They have mentioned inheritance before because they received a nice inheritance from their parents within the last 5 years.

They earned good money during their career but really just made money to live and spend small retirement savings on their own but put their kids through college and have a nice home.

Their parents always told them they would get an inheritance and it influenced how they lived and saved. Now they have a NW of about $4M I would guess and live a great life in a MCOL or LCOL (who knows these days).

They are now sharing all of their numbers with us (we are both 33) and are excited to be able to pass down their wealth. They do not trust the stock market however so they are primarily invested in Real Estate.

My question is how many Bogleheads received an inheritance and did anyone have a family that communicated to them in their 30's that they would be receiving money? How did that impact your savings? I get that most people say act like you will not get it but they constantly talk about it and have a will set up. My wife has a sister so it will be a 50/50 split. She also has an aunt without kids that has told us we will get a chunk of money from her as well (no idea on the reality of this...)

We have been super savers for a while and still are saving a lot because we are about to have our second kid. I want to pre fund college which is the last big expense I see before we work on early retirement funding only.

I am not asking about not saving but would you invest in a different way if you knew you were receiving a fairly large inheritance at traditional retirement?

My dad is well off as well but he has never mentioned of giving me any money so not expecting anything there.

Appreciate anyone's feedback who may have been in this admittedly fortunate position (there is no way we are the only ones on this forum).

We would love to get a little more help now with kids daycare/college/housing etc. feel like we are going to overshoot retirement savings and sacrifice to much in the next decade.

Edit: We have a NW of $1.54M and 16K in 529. Averaging saving around $100-$125K/year currently at our pace.

[123]

You can't count on an inheritance. Lots of things can change, death, divorce, remarriage, medical expenses, long-term care expenses, financial misfortune, and a thousand other things. Big promises tend to fade over time. Family relationships can become estranged. Sometimes an inheritance is suggested or promissed as a manipulative technique.

The best you can do is plan for your own financial future based on your own efforts and assets.

[Dunningedangkruger]

My personal opinion, do not count on inheritance. Your in laws and parents should prioritize their own financial well being. Don’t count on anything.

This means your parents should be preparing for long term care insurance, memory care etc. Unless they have assets at 3 mm or more now, they can deplete assets quickly. If they don’t have substantial and well funded pensions things can deteriorate. Meaning assets can deplete in multiple years. Especially with a prolonged recession.

Focus on your own investments and debt pay down. Live below your means. Avoid financing depreciating assets. If your elders pass leaving your family a legacy, great. But don’t bet on it. Determine your own destiny.

Personally, primary will be paid in 24 months. Low 7 figure nw. Inheritance is likely approaching high 6 figures. Pensions captured will pay for living expenses and 5-7 k monthly investment.

Don’t rely on anyone other than yourself. Prepare for worst scenario. Anything else is gravy. Don’t use debt.

Be well.

[123]

If you have a single surviving parent, you manage their finances, and they are in their later 80's you may want to consider a consolidated portfolio perspective. You might want to consider adjusting your portfolio somewhat to adjust for "deficiences" in theirs. If they have reached a stage in life where they are only comfortable with 100% fixed income perhaps you accept a higher risk level in your own portfolio in an effort to achieve consolidated family goals. Managing some kind of consolidated portfolio would assume that there are no other beneficiaries that would upset the applecart. Similar situations can arise with a spouse who accepts little risk or excessive risk in their accounts (like an IRA or 401K), the non-confrontational approach would be to adjust your accounts to achieve the balance you desire.

[celia]

They earned good money during their career but really just made money to live and spend small retirement savings on their own but put their kids through college and have a nice home.

This doesn't sound like they are savers.

Their parents always told them they would get an inheritance and it influenced how they lived and saved. Now they have a NW of about $4M I would guess and live a great life in a MCOL or LCOL (who knows these days).

This sounds like they are spenders. Do you think that after a life of not saving much, they would suddenly become savers one day?

My question is how many Bogleheads received an inheritance and did anyone have a family that communicated to them in their 30's that they would be receiving money?

DH and I both received smallish inheritances. The in-laws said to not expect anything since they would leave it all to charity. Turned out they were lying, their trustee had to be prodded to distribute assets after several years, and after things were split 5 or 7 ways, the portions weren't very big.

We were lucky that our parents lived into their 90s and had enough assets to pay for their own Assisted Living, medical care, and their living expenses. But since we weren't expecting anything, we ended up standing on our own.

I believe the best gift parents can give their kids is to NOT be a financial burden on their kids in their golden years.

OP, would you agree with that?

[Small Savanna]

I inherited a few hundred K in late 2018, in my late 50s - most in an IRA which I was the beneficiary of. It hasn't really impacted my life much:

My dad and stepmother both passed away within a few years of each other. If she had lived another ten years, the inheritance would have been used up. So before it happened, I didn't think it was prudent to make any plans based on getting an unknown amount at an unknown time. My general view on potential future money is that it isn't real until it actually happens.

By my late 50s, the kids were already through college. My retirement plan was on track. Our house is more than big enough, and I've got a decent car. It's possible that the extra money has led to some lifestyle creep, but nothing major.

I've been taking RMDs, but the inherited IRA has a bigger balance now than it did in 2019. At this point it's my "I can retire tomorrow if I want to" fund.

[HomeStretch]

When I was in my 30s, my parents and in-laws were in their 50s. They were savers but eventually used their portfolios to support their retirement years and end-of-life care costs. Our inheritances were small.

Continue to save for your retirement and non-retirement goals. Ignore possible inheritances. Are your in-laws in their 50s and retired already? Their inheritance is likely going to be used to fund their retirement and possible care costs. I wouldn’t count on a lot being left for an inheritance.

… We would love to get a little more help now with kids daycare/college/housing etc. feel like we are going to overshoot retirement savings and sacrifice to much in the next decade.

Edit: We have a NW of $1.54M and 16K in 529. Averaging saving around $100-$125K/year currently at our pace.

If you mean you would like financial help from parents/in laws/aunt now, I don’t see that you need it as you are able to support yourselves. You have a large portfolio, great income and are saving a large amount each year. You are likely on track for an early retirement.

[22twain]

if you knew you were receiving a fairly large inheritance at traditional retirement?

[emphasis added]

What if one of your parents has to spend their last eight years in a nursing home, as my mother-in-law did? Would it still be a "fairly large" inheritance?

In our 30s, my wife knew she would probably inherit something from her mother, but never figured it into her/our lifestyle. I never figured on inheriting anything substantial from my parents, who were not as well off as my in-laws. We saved for retirement from our own salaries as if that would be all we would have, plus Social Security.

In the end, my mother died suddenly without needing expensive end-of-life care, so we each received a mid 6-figure sum (in today's dollars) in our 50s, 15 and 20 years ago.

We're basically keeping this money in reserve for our own possible end-of-life health expenses. We have no kids or other younger close relatives. The closest ones are a few cousins who are older than us. So we're on our own as far as those expenses are concerned. Except of course for Medicaid as a last resort...

[Parkinglotracer]

As has been said - plan for nothing from them. Congrats you have done a great job so far and keep it up.

We inherited 50k from one side of the family and 150k from the other side of our family as parents died young. We paid off our house and upped our savings in our 40’s.

If parents ask for help or are open to help I would not be hesitant to recommend they get professional investment and estate planning advice. I would agree to be executor IF ASKED. (I was my fathers executor with 5 siblings). I would not personally handle their investments or estate planning. Keep an arms distance. Love them. Enjoy them while they are here. Just don’t plan for anything or act like it’s coming your way. So many end of life bills and changes can occur.


How did it affect my life ? We now have 20-25 % more in our retirement accounts than we would have had. We were able to save more and pay cash for our kids college. It was an extra level of padding that enabled us to retire at 50; then go back to work at 53 because we wanted and to retire at age 60. We could have done it all w/o inheritance but it was a nice 25% boost.

[stoptothink]

You can't count on an inheritance. Lots of things can change, death, divorce, remarriage, medical expenses, long-term care expenses, financial misfortune, and a thousand other things. Big promises tend to fade over time. Family relationships can become estranged. Sometimes an inheritance is suggested or promissed as a manipulative technique.

The best you can do is plan for your own financial future based on your own efforts and assets.

I watched this change my mother's life. She was told by her father (who she worked for for nearly 30yrs) that she would be receiving a significant inheritance. He was a physician who owned a large practice, worth 8-figures (or at least close to). She never prioritized saving (though it would have been hard) because she thought it was taken care of. Grandfather remarried late in life, died a few years later and left everything to wife, his widow developed dementia, and my mother's youngest (step)sister took advantage - she ended up with absolutely everything (completely life-changing money, her and her husband immediately retired, bought large new home/cars/vacations) and my mom and her other siblings got zilch. It did motivate my mom to start getting her financial life in order, in her mid-50's. We are hoping she will eventually be financially fine on her own, but she will have to work until she no longer physically can and it isn't a given.

Our inheritance will be financially taking care of my in-laws, and possibly my mom (to lesser extent). Wife and I have always known this and planned for it - that has impacted our life.

[carolc]

I inherited money in my mid 60’s. It has changed my lifestyle. I travel well and live in a more expensive condo than I otherwise would have been able to afford. I don’t have to worry about paying for home care when I get old.

carolc

[Tdubs]

How did it affect my life? The inheritance has come later in my professional life. I knew it was likely to happen, but I didn't let that affect how I invested.

But when it came, it solved a heavy imbalance in my portfolio--having hardly anything in my after-tax account. So, I now have my SS bridge money and extra to do Roth conversions. Buying a new home later this year and can avoid a mortgage at current high rates.

To do all those things, I would have needed to work an extra two or three years.

[Wanderingwheelz]

At your age I’d plan for nothing.

Once you become aware of your parents financial specifics when they’re past age 80, then I think it is something you can lend greater headspace to, especially if it’s far more money than they could ever possibly spend. Of course, you’ll already be most of the way if not all of the way to your own inheritance issues with your own kids, hopefully, since you’ll be somewhere in your 50s by that point. That’s what happened for me.


The details of my parents estate plan will just about double our net worth, but I can’t think of a single way it’s changed our investments or the way we’ll invest going forward. It was about a year ago I was told the specifics, and my wife and I had already done our own estate planning. Which.. was sort of awkward in a couple of ways since the attorney we chose just so happened to be the one my parents use too.

[eldinerocheapo]

What's that old saying....."believe half of what you see, and none of what you hear" ? My parents steadfastly stated they had a college fund for their four kids, and guess what? It never existed. We all worked and took out student loans, graduated, got good jobs and paid the loans back. None of us blamed my parents, they did the best they could. As years went by, they began floating inheritance figures. We all took it in stride, as we didn't need or count on a windfall. By the time our parents passed, the nursing home had eaten up most of their estate, and the portions doled out to the kids were modest. My point here mirrors everyone else, don't fall into the trap of thinking there's a large estate waiting for you from anyone. Take what you've learned from them, and apply it to your own life. To me, it's worth more than a monetary inheritance.

[broncocountry25]

My personal opinion, do not count on inheritance. Your in laws and parents should prioritize their own financial well being. Don’t count on anything.

This means your parents should be preparing for long term care insurance, memory care etc. Unless they have assets at 3 mm or more now, they can deplete assets quickly. If they don’t have substantial and well funded pensions things can deteriorate. Meaning assets can deplete in multiple years. Especially with a prolonged recession.

Focus on your own investments and debt pay down. Live below your means. Avoid financing depreciating assets. If your elders pass leaving your family a legacy, great. But don’t bet on it. Determine your own destiny.

Personally, primary will be paid in 24 months. Low 7 figure nw. Inheritance is likely approaching high 6 figures. Pensions captured will pay for living expenses and 5-7 k monthly investment.

Don’t rely on anyone other than yourself. Prepare for worst scenario. Anything else is gravy. Don’t use debt.

Be well.

They do have roughly $4M right now and they are still working in their early 60's.

[broncocountry25]

If you have a single surviving parent, you manage their finances, and they are in their later 80's you may want to consider a consolidated portfolio perspective. You might want to consider adjusting your portfolio somewhat to adjust for "deficiences" in theirs. If they have reached a stage in life where they are only comfortable with 100% fixed income perhaps you accept a higher risk level in your own portfolio in an effort to achieve consolidated family goals. Managing some kind of consolidated portfolio would assume that there are no other beneficiaries that would upset the applecart. Similar situations can arise with a spouse who accepts little risk or excessive risk in their accounts (like an IRA or 401K), the non-confrontational approach would be to adjust your accounts to achieve the balance you desire.

I like this advice and I think this is more about what my question is. I am not solely counting on this inheritance. We have a healthy networth and saving rate, I am instead trying to decide how to invest to match the potential of more income at 60+ then if we didn't have this.

[broncocountry25]

You can't count on an inheritance. Lots of things can change, death, divorce, remarriage, medical expenses, long-term care expenses, financial misfortune, and a thousand other things. Big promises tend to fade over time. Family relationships can become estranged. Sometimes an inheritance is suggested or promissed as a manipulative technique.

The best you can do is plan for your own financial future based on your own efforts and assets.

I think that there is risk in just about anything in life. There are very good odds however that there will be some level of inheritance.

[broncocountry25]

They earned good money during their career but really just made money to live and spend small retirement savings on their own but put their kids through college and have a nice home.

This doesn't sound like they are savers.

Their parents always told them they would get an inheritance and it influenced how they lived and saved. Now they have a NW of about $4M I would guess and live a great life in a MCOL or LCOL (who knows these days).

This sounds like they are spenders. Do you think that after a life of not saving much, they would suddenly become savers one day?

My question is how many Bogleheads received an inheritance and did anyone have a family that communicated to them in their 30's that they would be receiving money?

DH and I both received smallish inheritances. The in-laws said to not expect anything since they would leave it all to charity. Turned out they were lying, their trustee had to be prodded to distribute assets after several years, and after things were split 5 or 7 ways, the portions weren't very big.

We were lucky that our parents lived into their 90s and had enough assets to pay for their own Assisted Living, medical care, and their living expenses. But since we weren't expecting anything, we ended up standing on our own.

I believe the best gift parents can give their kids is to NOT be a financial burden on their kids in their golden years.

OP, would you agree with that?

I do agree with that, because on the flip side of this I imagine I will have to help my own mother as she ages with limited retirement money and no inheritance.

They are not huge spenders actually and they have already spent on everything they really want. They renovated their home and plan to age in place in it, they also are in the middle of renovating all the property they own. They will have roughly $10-$15K a month of cash flow from the rentals on the conservative side.

They plan to continue to work until social security max benefits and then will get that as well. They have some other paper assets too but the bulk is RE that they do not want to sell.

I do believe that they will still own most of the property when they pass but this is hopefully 30+ years from now...

[broncocountry25]

I inherited a few hundred K in late 2018, in my late 50s - most in an IRA which I was the beneficiary of. It hasn't really impacted my life much:

My dad and stepmother both passed away within a few years of each other. If she had lived another ten years, the inheritance would have been used up. So before it happened, I didn't think it was prudent to make any plans based on getting an unknown amount at an unknown time. My general view on potential future money is that it isn't real until it actually happens.

By my late 50s, the kids were already through college. My retirement plan was on track. Our house is more than big enough, and I've got a decent car. It's possible that the extra money has led to some lifestyle creep, but nothing major.

I've been taking RMDs, but the inherited IRA has a bigger balance now than it did in 2019. At this point it's my "I can retire tomorrow if I want to" fund.

Thanks for the input.

[broncocountry25]

When I was in my 30s, my parents and in-laws were in their 50s. They were savers but eventually used their portfolios to support their retirement years and end-of-life care costs. Our inheritances were small.

Continue to save for your retirement and non-retirement goals. Ignore possible inheritances. Are your in-laws in their 50s and retired already? Their inheritance is likely going to be used to fund their retirement and possible care costs. I wouldn’t count on a lot being left for an inheritance.

… We would love to get a little more help now with kids daycare/college/housing etc. feel like we are going to overshoot retirement savings and sacrifice to much in the next decade.

Edit: We have a NW of $1.54M and 16K in 529. Averaging saving around $100-$125K/year currently at our pace.

If you mean you would like financial help from parents/in laws/aunt now, I don’t see that you need it as you are able to support yourselves. You have a large portfolio, great income and are saving a large amount each year. You are likely on track for an early retirement.

They are in their early 60's and still plan on working until 67. They have a NW of roughly $4M at this point.

I agree that we don't NEED the help now. I am saying that it would have a bigger impact getting some help in these years vs. later in life when we will hopefully already have a strong footing ourselves.

[broncocountry25]

if you knew you were receiving a fairly large inheritance at traditional retirement?

[emphasis added]

What if one of your parents has to spend their last eight years in a nursing home, as my mother-in-law did? Would it still be a "fairly large" inheritance?

In our 30s, my wife knew she would probably inherit something from her mother, but never figured it into her/our lifestyle. I never figured on inheriting anything substantial from my parents, who were not as well off as my in-laws. We saved for retirement from our own salaries as if that would be all we would have, plus Social Security.

In the end, my mother died suddenly without needing expensive end-of-life care, so we each received a mid 6-figure sum (in today's dollars) in our 50s, 15 and 20 years ago.

We're basically keeping this money in reserve for our own possible end-of-life health expenses. We have no kids or other younger close relatives. The closest ones are a few cousins who are older than us. So we're on our own as far as those expenses are concerned. Except of course for Medicaid as a last resort...

Thanks for the input.

I actually still think even with the 8 years in the nursing home it would be fine. I think that probability is they both don't end up in a nursing home for 8 years. Most of the time one person outlives the other. They only had one person out of their four parents that was in hospice at the end of their life for less then a year. I think the cash flow from the rentals would pay for it and if that didn't cover it they could sell their home and use as much of that money as was needed.

That would move a $4M inheritance down to $3M split two ways in todays dollars.

[broncocountry25]

As has been said - plan for nothing from them. Congrats you have done a great job so far and keep it up.

We inherited 50k from one side of the family and 150k from the other side of our family as parents died young. We paid off our house and upped our savings in our 40’s.

If parents ask for help or are open to help I would not be hesitant to recommend they get professional investment and estate planning advice. I would agree to be executor IF ASKED. (I was my fathers executor with 5 siblings). I would not personally handle their investments or estate planning. Keep an arms distance. Love them. Enjoy them while they are here. Just don’t plan for anything or act like it’s coming your way. So many end of life bills and changes can occur.


How did it affect my life ? We now have 20-25 % more in our retirement accounts than we would have had. We were able to save more and pay cash for our kids college. It was an extra level of padding that enabled us to retire at 50; then go back to work at 53 because we wanted and to retire at age 60. We could have done it all w/o inheritance but it was a nice 25% boost.

Super helpful, thank you for the perspective.

My wife is the executor of their estate and her aunts. I agree that there are lots of unknowns.

[TomatoTomahto]

When I was in my 30s, my parents and in-laws were in their 50s. They were savers but eventually used their portfolios to support their retirement years and end-of-life care costs. Our inheritances were small.

Continue to save for your retirement and non-retirement goals. Ignore possible inheritances. Are your in-laws in their 50s and retired already? Their inheritance is likely going to be used to fund their retirement and possible care costs. I wouldn’t count on a lot being left for an inheritance.

… We would love to get a little more help now with kids daycare/college/housing etc. feel like we are going to overshoot retirement savings and sacrifice to much in the next decade.

Edit: We have a NW of $1.54M and 16K in 529. Averaging saving around $100-$125K/year currently at our pace.

If you mean you would like financial help from parents/in laws/aunt now, I don’t see that you need it as you are able to support yourselves. You have a large portfolio, great income and are saving a large amount each year. You are likely on track for an early retirement.

They are in their early 60's and still plan on working until 67. They have a NW of roughly $4M at this point.

I agree that we don't NEED the help now. I am saying that it would have a bigger impact getting some help in these years vs. later in life when we will hopefully already have a strong footing ourselves.

I’m a big proponent of “giving with a warm hand,” but at a first glance, I’m not sure that your parents are in a position to begin making gifts to you now.

[RadAudit]

My question is how many Bogleheads received an inheritance and did anyone have a family that communicated to them in their 30's that they would be receiving money? How did that impact your savings? .

Yes, we did receive an inheritance. We used it to pay off what remained of the mortgage and retired at the end of that year at 63 and after 39 years of employment. We lived off of SS, pensions, and small withdrawals from the inheritance until RMDs kicked in.

Nothing about what we'd inherit was communicated to us until the reading of the will. We continued to save in a manner that was designed to meet "our number" by our targeted retirement date from the first day of employment until the last.

As for what we're doing now - we're making modest distributions from our estate to our kids on an annual basis and hope to be able to continue that for some time. What they do with it, I have no clue. Hope they are bright enough to invest it.

[broncocountry25]

You can't count on an inheritance. Lots of things can change, death, divorce, remarriage, medical expenses, long-term care expenses, financial misfortune, and a thousand other things. Big promises tend to fade over time. Family relationships can become estranged. Sometimes an inheritance is suggested or promissed as a manipulative technique.

The best you can do is plan for your own financial future based on your own efforts and assets.

I watched this change my mother's life. She was told by her father (who she worked for for nearly 30yrs) that she would be receiving a significant inheritance. He was a physician who owned a large practice, worth 8-figures (or at least close to). She never prioritized saving (though it would have been hard) because she thought it was taken care of. Grandfather remarried late in life, died a few years later and left everything to wife, his widow developed dementia, and my mother's youngest (step)sister took advantage - she ended up with absolutely everything (completely life-changing money, her and her husband immediately retired, bought large new home/cars/vacations) and my mom and her other siblings got zilch. It did motivate my mom to start getting her financial life in order, in her mid-50's. We are hoping she will eventually be financially fine on her own, but she will have to work until she no longer physically can and it isn't a given.

Our inheritance will be financially taking care of my in-laws, and possibly my mom (to lesser extent). Wife and I have always known this and planned for it - that has impacted our life.

Wow that is another good perspective. I guess my wifes parents were very lucky that they were promised this and it actually came through for them. We are saving independently no matter what but are trying to factor this in on some level.

[broncocountry25]

I inherited money in my mid 60’s. It has changed my lifestyle. I travel well and live in a more expensive condo than I otherwise would have been able to afford. I don’t have to worry about paying for home care when I get old.

carolc

Enjoy!

[Wanderingwheelz]

If you have a single surviving parent, you manage their finances, and they are in their later 80's you may want to consider a consolidated portfolio perspective. You might want to consider adjusting your portfolio somewhat to adjust for "deficiences" in theirs. If they have reached a stage in life where they are only comfortable with 100% fixed income perhaps you accept a higher risk level in your own portfolio in an effort to achieve consolidated family goals. Managing some kind of consolidated portfolio would assume that there are no other beneficiaries that would upset the applecart. Similar situations can arise with a spouse who accepts little risk or excessive risk in their accounts (like an IRA or 401K), the non-confrontational approach would be to adjust your accounts to achieve the balance you desire.

I like this advice and I think this is more about what my question is. I am not solely counting on this inheritance. We have a healthy networth and saving rate, I am instead trying to decide how to invest to match the potential of more income at 60+ then if we didn't have this.

Why would you change a strategy that’s working based on a legitimate unknown that’s perhaps 30 years or more off, if it happens like you hope it will at all?

My Edward Jones broker bother was seated next to me last year when we were given a pretty detailed rundown of our parents assets and he and he and his wife just bought a vacation home- with cash. I mean, why not spend everything you currently have if you know your retirement is secure, regardless? So.. yes. There are some who will change their behavior based on money not yet received- whether it’s an inheritance or something else.

[broncocountry25]

How did it affect my life? The inheritance has come later in my professional life. I knew it was likely to happen, but I didn't let that affect how I invested.

But when it came, it solved a heavy imbalance in my portfolio--having hardly anything in my after-tax account. So, I now have my SS bridge money and extra to do Roth conversions. Buying a new home later this year and can avoid a mortgage at current high rates.

To do all those things, I would have needed to work an extra two or three years.

Enjoy your new home!

[pizzy]

but are trying to factor this in on some level.

I'll repeat what others have said... "Don't factor it in!"

[HomeStretch]

When I was in my 30s, my parents and in-laws were in their 50s. They were savers but eventually used their portfolios to support their retirement years and end-of-life care costs. Our inheritances were small.

Continue to save for your retirement and non-retirement goals. Ignore possible inheritances. Are your in-laws in their 50s and retired already? Their inheritance is likely going to be used to fund their retirement and possible care costs. I wouldn’t count on a lot being left for an inheritance.

… We would love to get a little more help now with kids daycare/college/housing etc. feel like we are going to overshoot retirement savings and sacrifice to much in the next decade.

Edit: We have a NW of $1.54M and 16K in 529. Averaging saving around $100-$125K/year currently at our pace.

If you mean you would like financial help from parents/in laws/aunt now, I don’t see that you need it as you are able to support yourselves. You have a large portfolio, great income and are saving a large amount each year. You are likely on track for an early retirement.

They are in their early 60's and still plan on working until 67. They have a NW of roughly $4M at this point.

I agree that we don't NEED the help now. I am saying that it would have a bigger impact getting some help in these years vs. later in life when we will hopefully already have a strong footing ourselves.

Assuming their health and employers allow them to remain employed until age 67, they will have a life expectancy of ~17-20 years at that point. As they haven’t been savers, they will need to use the portfolio portion of their $4 million net worth + SS/pensions to live on. Add to that potential LTC costs and it’s very possible their portfolio may be significantly reduced by the time they both die.

So that’s where the caution comes in to not let a possible inheritance affect your own savings level. At your age, you can likely justify a high allocation to equities. Perhaps stay at a higher equity allocation if you think a meaningful inheritance is in your future.

I agree that financial assistance earlier in life can be much more impactful than later than life. It might change your spending/savings ratio, it might allow one parent to stay at home with kids, etc. Some parents with larger portfolios may start disbursing funds - i.e., start a periodic gifting plan, paying for family vacations, starting a grandchild education fund, etc. - while alive (this is called ‘giving with a warm hand’ in forum threads). However, that needs to be initiated by the parents. I can’t think of a graceful way for a child or child’s spouse to suggest it. So again it lends itself to saving/investing without taking into account a potential inheritance.

When your children reach adulthood, remember this thread and perhaps start your own ‘giving with a warm hand’ program. Our parents didn’t have enough to do it but we should so that’s what we plan to do. Hopefully our kids will pay it forward to their kids and so on.

If you would like feedback on your portfolio, consider posting in the “Asking Portfolio Questions” format linked below. Perhaps you will get some feedback that can enhance your portfolio results and/or tax efficiencies.
https://www.bogleheads.org/wiki/Asking_ ... _questions

[broncocountry25]

At your age I’d plan for nothing.

Once you become aware of your parents financial specifics when they’re past age 80, then I think it is something you can lend greater headspace to, especially if it’s far more money than they could ever possibly spend. Of course, you’ll already be most of the way if not all of the way to your own inheritance issues with your own kids, hopefully, since you’ll be somewhere in your 50s by that point. That’s what happened for me.


The details of my parents estate plan will just about double our net worth, but I can’t think of a single way it’s changed our investments or the way we’ll invest going forward. It was about a year ago I was told the specifics, and my wife and I had already done our own estate planning. Which.. was sort of awkward in a couple of ways since the attorney we chose just so happened to be the one my parents use too.

Doubling your networth will not change your lifestyle at all? I imagine it will open up a lot of new options to your family or even planning to donate it if you don't need to spend it.

[broncocountry25]

What's that old saying....."believe half of what you see, and none of what you hear" ? My parents steadfastly stated they had a college fund for their four kids, and guess what? It never existed. We all worked and took out student loans, graduated, got good jobs and paid the loans back. None of us blamed my parents, they did the best they could. As years went by, they began floating inheritance figures. We all took it in stride, as we didn't need or count on a windfall. By the time our parents passed, the nursing home had eaten up most of their estate, and the portions doled out to the kids were modest. My point here mirrors everyone else, don't fall into the trap of thinking there's a large estate waiting for you from anyone. Take what you've learned from them, and apply it to your own life. To me, it's worth more than a monetary inheritance.

Thanks for the input.

[broncocountry25]

When I was in my 30s, my parents and in-laws were in their 50s. They were savers but eventually used their portfolios to support their retirement years and end-of-life care costs. Our inheritances were small.

Continue to save for your retirement and non-retirement goals. Ignore possible inheritances. Are your in-laws in their 50s and retired already? Their inheritance is likely going to be used to fund their retirement and possible care costs. I wouldn’t count on a lot being left for an inheritance.

… We would love to get a little more help now with kids daycare/college/housing etc. feel like we are going to overshoot retirement savings and sacrifice to much in the next decade.

Edit: We have a NW of $1.54M and 16K in 529. Averaging saving around $100-$125K/year currently at our pace.

If you mean you would like financial help from parents/in laws/aunt now, I don’t see that you need it as you are able to support yourselves. You have a large portfolio, great income and are saving a large amount each year. You are likely on track for an early retirement.

They are in their early 60's and still plan on working until 67. They have a NW of roughly $4M at this point.

I agree that we don't NEED the help now. I am saying that it would have a bigger impact getting some help in these years vs. later in life when we will hopefully already have a strong footing ourselves.

I’m a big proponent of “giving with a warm hand,” but at a first glance, I’m not sure that your parents are in a position to begin making gifts to you now.

Yeah, we want them to get their own retirement rock solid before helping us.

[TomatoTomahto]

My Edward Jones broker bother was seated next to me last year when we were given a pretty detailed rundown of our parents assets and he and he and his wife just bought a vacation home- with cash. I mean, why not spend everything you currently have if you know your retirement is secure, regardless? So.. yes. There are some who will change their behavior based on money not yet received- whether it’s an inheritance or something else.

Is the underlined a Freudian slip?

[broncocountry25]

My question is how many Bogleheads received an inheritance and did anyone have a family that communicated to them in their 30's that they would be receiving money? How did that impact your savings? .

Yes, we did receive an inheritance. We used it to pay off what remained of the mortgage and retired at the end of that year at 63 and after 39 years of employment. We lived off of SS, pensions, and small withdrawals from the inheritance until RMDs kicked in.

Nothing about what we'd inherit was communicated to us until the reading of the will. We continued to save in a manner that was designed to meet "our number" by our targeted retirement date from the first day of employment until the last.

As for what we're doing now - we're making modest distributions from our estate to our kids on an annual basis and hope to be able to continue that for some time. What they do with it, I have no clue. Hope they are bright enough to invest it.

That is very cool you are helping your kids now! I know I would use parental help right now to prefund my kids college costs!

[Garco]

We received an inheritance from both sides of our family. This was at just about the end of my working career. The money was divided among several surviving sibs -- 5 on my side, 3 on my wife's side. This didn't change our life style very much, but it increased our net worth by about one-third. One immediate effect was that we paid off a student loan (for professional school) of one of our children.

On the whole, the main effect was to allow us to relax. No big spending spree, but we have a reserve, on top of what we put together from a good career of working, saving, and investing. We created a supplemental investment account -- an emergency fund of sorts.

[broncocountry25]

When I was in my 30s, my parents and in-laws were in their 50s. They were savers but eventually used their portfolios to support their retirement years and end-of-life care costs. Our inheritances were small.

Continue to save for your retirement and non-retirement goals. Ignore possible inheritances. Are your in-laws in their 50s and retired already? Their inheritance is likely going to be used to fund their retirement and possible care costs. I wouldn’t count on a lot being left for an inheritance.

… We would love to get a little more help now with kids daycare/college/housing etc. feel like we are going to overshoot retirement savings and sacrifice to much in the next decade.

Edit: We have a NW of $1.54M and 16K in 529. Averaging saving around $100-$125K/year currently at our pace.

If you mean you would like financial help from parents/in laws/aunt now, I don’t see that you need it as you are able to support yourselves. You have a large portfolio, great income and are saving a large amount each year. You are likely on track for an early retirement.

They are in their early 60's and still plan on working until 67. They have a NW of roughly $4M at this point.

I agree that we don't NEED the help now. I am saying that it would have a bigger impact getting some help in these years vs. later in life when we will hopefully already have a strong footing ourselves.

Assuming their health and employers allow them to remain employed until age 67, they will have a life expectancy of ~17-20 years at that point. As they haven’t been savers, they will need to use the portfolio portion of their $4 million net worth + SS/pensions to live on. Add to that potential LTC costs and it’s very possible their portfolio may be significantly reduced by the time they both die.

So that’s where the caution comes in to not let a possible inheritance affect your own savings level. At your age, you can likely justify a high allocation to equities. Perhaps stay at a higher equity allocation if you think a meaningful inheritance is in your future.

I agree that financial assistance earlier in life can be much more impactful than later than life. It might change your spending/savings ratio, it might allow one parent to stay at home with kids, etc. Some parents with larger portfolios may start disbursing funds - i.e., start a periodic gifting plan, paying for family vacations, starting a grandchild education fund, etc. - while alive (this is called ‘giving with a warm hand’ in forum threads). However, that needs to be initiated by the parents. I can’t think of a graceful way for a child or child’s spouse to suggest it. So again it lends itself to saving/investing without taking into account a potential inheritance.

When your children reach adulthood, remember this thread and perhaps start your own ‘giving with a warm hand’ program. Our parents didn’t have enough to do it but we should so that’s what we plan to do. Hopefully our kids will pay it forward to their kids and so on.

If you would like feedback on your portfolio, consider posting in the “Asking Portfolio Questions” format linked below. Perhaps you will get some feedback that can enhance your portfolio results and/or tax efficiencies.
https://www.bogleheads.org/wiki/Asking_ ... _questions

I like the giving with a warm hand idea. I would never suggest they help us now, they know we are on top of it financially. In order for us to be worth $1.5M at 33 we have had to make sacrifices and they saw that. We did not get a big one time payout it was incomes and savings annually.

I will 100% give with a warm hand if we are in a position to later in life for our kids. I think it makes a bigger impact for kids and they see it annually that you helped them instead of just a big check when you are gone.

[broncocountry25]

We received an inheritance from both sides of our family. This was at just about the end of my working career. The money was divided among several surviving sibs -- 5 on my side, 3 on my wife's side. This didn't change our life style very much, but it increased our net worth by about one-third. One immediate effect was that we paid off a student loan (for professional school) of one of our children.

On the whole, the main effect was to allow us to relax. No big spending spree, but we have a reserve, on top of what we put together from a good career of working, saving, and investing.

That is great, that feeling of relaxing and cutting a check to pay off a loan is amazing.

[Wanderingwheelz]

At your age I’d plan for nothing.

Once you become aware of your parents financial specifics when they’re past age 80, then I think it is something you can lend greater headspace to, especially if it’s far more money than they could ever possibly spend. Of course, you’ll already be most of the way if not all of the way to your own inheritance issues with your own kids, hopefully, since you’ll be somewhere in your 50s by that point. That’s what happened for me.


The details of my parents estate plan will just about double our net worth, but I can’t think of a single way it’s changed our investments or the way we’ll invest going forward. It was about a year ago I was told the specifics, and my wife and I had already done our own estate planning. Which.. was sort of awkward in a couple of ways since the attorney we chose just so happened to be the one my parents use too.

Doubling your networth will not change your lifestyle at all? I imagine it will open up a lot of new options to your family or even planning to donate it if you don't need to spend it.

I’d guess that most truly FI Boglehead in their 50s wouldn’t change their *current* behavior if their NW had a high probability of doubling at some unknown time in the future.

That’s what many here have already told you.

[alex_686]

It is foolish to assume you are going to get a inheritance which may never come. It is foolish to ignore a inheritance you might get, which would put a high level of stress during you accumulating years.

This is why I love statistics and opinion pricing.

On one side of you balance sheet you have a set of assets. Financial capital (stocks & bonds), human capital (including social security), and possible windfalls (inheritances). You can play around with the risk & returns, you have a spread of outcomes.

On the other side of the balance sheet you have a set of liabilities and pseudo-liabilities. Some are hard, like student loans and mortgages. Others are soft - most people call them goals. Some goals are required (minimum level of retirement), some are desired (funding college education), some are stretch (lake cabin).

Your asset allocation should match risk tolerance, market expectations, and goals.

You inheritance is a pseudo-asset. What are the properties and ranges of outcomes?

So when setting up you AA, I would assume a $0 inheritance for your minimum required goals. However the prospect of a inheritance does increase your ability to take risks, which will impact your AA.

[broncocountry25]

At your age I’d plan for nothing.

Once you become aware of your parents financial specifics when they’re past age 80, then I think it is something you can lend greater headspace to, especially if it’s far more money than they could ever possibly spend. Of course, you’ll already be most of the way if not all of the way to your own inheritance issues with your own kids, hopefully, since you’ll be somewhere in your 50s by that point. That’s what happened for me.


The details of my parents estate plan will just about double our net worth, but I can’t think of a single way it’s changed our investments or the way we’ll invest going forward. It was about a year ago I was told the specifics, and my wife and I had already done our own estate planning. Which.. was sort of awkward in a couple of ways since the attorney we chose just so happened to be the one my parents use too.

Doubling your networth will not change your lifestyle at all? I imagine it will open up a lot of new options to your family or even planning to donate it if you don't need to spend it.

I’d guess that most truly FI Boglehead in their 50s wouldn’t change their *current* behavior if their NW had a high probability of doubling at some unknown time in the future.

That’s what many here have already told you.

I am with you on that.

I am asking you personally that you will not change your life if your inheritance doubles your networth?

[broncocountry25]

It is foolish to assume you are going to get a inheritance which may never come. It is foolish to ignore a inheritance you might get, which would put a high level of stress during you accumulating years.

This is why I love statistics and opinion pricing.

On one side of you balance sheet you have a set of assets. Financial capital (stocks & bonds), human capital (including social security), and possible windfalls (inheritances). You can play around with the risk & returns, you have a spread of outcomes.

On the other side of the balance sheet you have a set of liabilities and pseudo-liabilities. Some are hard, like student loans and mortgages. Others are soft - most people call them goals. Some goals are required (minimum level of retirement), some are desired (funding college education), some are stretch (lake cabin).

Your asset allocation should match risk tolerance, market expectations, and goals.

You inheritance is a pseudo-asset. What are the properties and ranges of outcomes?

So when setting up you AA, I would assume a $0 inheritance for your minimum required goals. However the prospect of a inheritance does increase your ability to take risks, which will impact your AA.

Well said.

[MnD]

After my Dad passed I was the financial advisor for my Mom so i knew exactly what the $ figure was.
It did not affect our savings because a) it was going to be split 5 ways so not a huge number after that and b) my Mom was in assisted living with Parkinson's and could have depleted it all had she lived significantly longer than she did.

I inherited 200K split 50/50 between a taxable account and an inherited IRA at the peak of the .com bubble and it just about immediately went to 120K.

I still have both accounts and both are larger than when inherited. We spent a bunch out of the taxable account over the past 23 years, basically everything it earned above inflation. This helped tremendously because we could max out our retirement savings, never touch any of our own savings of any kind and still enjoy a very nice thing from time to time before retirement. We used the "excess" earnings above inflation to buy a couple of new cars for example.

The IRA requires RMD's which are still relatively small so it has grown significantly more than inflation. We use the RMD to take a nice trip each January and toast Mom and Dad when we do so.

[easygoesit]

You can't count on an inheritance. Lots of things can change, death, divorce, remarriage, medical expenses, long-term care expenses, financial misfortune, and a thousand other things. Big promises tend to fade over time. Family relationships can become estranged. Sometimes an inheritance is suggested or promissed as a manipulative technique.

The best you can do is plan for your own financial future based on your own efforts and assets.

Words of wisdom here..

[CloseEnough]

We use the RMD to take a nice trip each January and toast Mom and Dad when we do so.

That toast is a very nice thing to do with inheritance! A meaning beyond money.

I agree with the general advice, as demonstrated by some of the life comments above, that you can not count on any inheritance, and can't make it part of your "money life" until it happens. A couple of thoughts I would add:

1. Part of the reason you can't count on it is that people sometimes live to a very old age these days. Not at all uncommon for 90s, late 90s etc. So, since you can't count on it, if/when you inherit doesn't happen until you are a senior, it is less likely to make all that big a difference, in a sense, it comes too late.

2. The main thing about inheritance, for me, it to make sure that my kids don't have a negative inheritance - that is to say, that they don't end up with any financial burden for me in later years.

3. I also think about this the other way, that is, if I have the financial resources to pass on an inheritance, would I want to do some of it earlier to my heirs so it will make more of a difference to them when it is meaningful to building their money life. That is the follow-on to point 1.

[Mike Scott]

If there is an inheritance for you, it is likely 30+ years down the road and it may or may not happen at all. In any case, you need to have secured your own retirement based on your own savings and risk assessment before then. If there is an inheritance, pass on some as gifts to your kids/grandkids or something. It may make discretionary funding in retirement easier.

In my family, there was no expectation of inheritance and there was none. Spouse's family had some modest savings and a continuing small business but the business is closed and they have spent almost everything on completely unexpected health care costs for each of them in the last year. They will likely keep their small house but everything else is already gone.

[RadAudit]

That is very cool you are helping your kids now! I know I would use parental help right now to prefund my kids college costs!
[/quote]

Thanks for the kind words. But it is one of the more challenging / maddening things you can do in your money life if you have a modest portfolio. Charitable donations, donations to help cover grandkids' college costs, early distributions from the estate, maintaining enough money to take care of the spouse, long term care of the spouse, equitable distribution of your portfolio to the kids, and enough to have a couple vacations/cruises along the way.

And always there is someone to suggest that you should've done it differently somewhere along the line.

YMMV. Best of luck.

[firebirdparts]

I'm not sure if you want this data, but I was very certain NOT to inherit anything, and I was a bit concerned that maybe I wouldn't get social security or not much (that appears so far not to have been a reasonable fear). That affected me tons and tons. Lots. I was very convinced at a young age to save early and invest early, take advantage of compounding that growth. Always been priority 1 with me, but at a limit of maybe 15% of my income for most years. Once it got to that point we blew the rest.

My wife has always been the opposite. She did not want to work (has an engineering degree) nor save either. We have always been pretty misaligned that way. Fortunately she isn't the type to take out credit cards or borrow money secretly and she can't spend what's in my 401k. She will inherit, but her parents are young, so by the time she inherits, it'll be too late to affect us really. She just had other priorities.

I think there's a ton of anecdotal evidence (if that's not an oxymoron) that it's very bad for succeeding generations to think they're going to become rich by this sort of magic. It's not good for your character.

[Scubadude]

Literally can’t remember how many friends/family counted on the “big haul” of an inheritance to never materialize. Shocking and absolutely motivational killer- saw many “failures to launch” some only to have elderly parents live to 95+, or move to weird foreign countries that would allow money to flow in with “no questions asked” but laws that make taking money out of the country virtually impossible. Stories get sadder the older the receiver becomes.

[ScaledWheel]

If you have a single surviving parent, you manage their finances, and they are in their later 80's you may want to consider a consolidated portfolio perspective. You might want to consider adjusting your portfolio somewhat to adjust for "deficiences" in theirs. If they have reached a stage in life where they are only comfortable with 100% fixed income perhaps you accept a higher risk level in your own portfolio in an effort to achieve consolidated family goals. Managing some kind of consolidated portfolio would assume that there are no other beneficiaries that would upset the applecart. Similar situations can arise with a spouse who accepts little risk or excessive risk in their accounts (like an IRA or 401K), the non-confrontational approach would be to adjust your accounts to achieve the balance you desire.

I like this advice and I think this is more about what my question is. I am not solely counting on this inheritance. We have a healthy networth and saving rate, I am instead trying to decide how to invest to match the potential of more income at 60+ then if we didn't have this.

There's really nothing to change in your plans, in my opinion.

I am a few years older than than you, and I know we'll receive inheritance from my grandmother (because my mom passed away and my siblings and I split her share) and my father. Both of them are in their 80's, so my timeline for inheritance is hopefully a lot shorter than yours, albeit smaller in magnitude.

Even with this shorter timeframe, we're not changing anything about our investment approach. The only caveat being that we are more aggressive (90% equities until age 45, when we'll start adding more bonds). So if you were planning on doing a 60/40 portfolio for the next 30 years, maybe you can tilt more aggressive.

Reason being, we are already financially secure so any inheritance will just give us more security; obviously not a bad thing but it won't change our lives. So my suggestion to you is think about how you want to handle inheritance for your own children. Our plan is to gift early and often while they're adults, and spend money so we can spend time together (think international trips with adult children).

My mom died when she was 67 after being the epitome of good health until she was diagnosed with cancer. She got to meet her first grandchild but will never be able to meet her second. All this is to say encourage your parents, if they need encouraging, to spend some money now because you never know what will happen in the future