35k inheritance

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Topic Author
Wolveraider
Posts: 3
Joined: Mon Jan 09, 2023 10:42 am

35k inheritance

Post by Wolveraider »

I recently received a 35k inheritance. 5k would be for emergencies. 30k would be for travel.

A little background information. I am 57 and my wife is 60. We would both probably retire at the age of 65. We've never made a large annual salary, an average of 30-40k combined. We are used to living on a shoestring budget and we do not have any debt.

I'm reading "The Bogleheads Guide to Investing" and watched some videos linked to this site. These resources have made it easier to understand investing, but it's still a lot of information and doesn't all address our specific goals.

We're not afraid to live frugally. We've never had the income to travel. Just from what I've learned, I know I don't want the money sitting in my bank savings account. But that said I'm not sure what our best options are.

Any help/advice will be greatly appreciated.

Thank you
JD2775
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Re: 35k inheritance

Post by JD2775 »

Wolveraider wrote: Wed Jan 18, 2023 3:25 pm I recently received a 35k inheritance. 5k would be for emergencies. 30k would be for travel.

A little background information. I am 57 and my wife is 60. We would both probably retire at the age of 65. We've never made a large annual salary, an average of 30-40k combined. We are used to living on a shoestring budget and we do not have any debt.

I'm reading "The Bogleheads Guide to Investing" and watched some videos linked to this site. These resources have made it easier to understand investing, but it's still a lot of information and doesn't all address our specific goals.

We're not afraid to live frugally. We've never had the income to travel. Just from what I've learned, I know I don't want the money sitting in my bank savings account. But that said I'm not sure what our best options are.

Any help/advice will be greatly appreciated.

Thank you
If the 30k is already designated for travel I am not sure there are many better options than just leaving it in a high interest savings/ money market account.
sailaway
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Re: 35k inheritance

Post by sailaway »

Over what time frame do you want to spend this in travel? Do you want to do a trip every year until runs out or are you looking to travel once you retire?

Timeframe matters when it comes to investing. Despite what you have read, a High Yield Savings may well be a simple and good solution. It is certainly a good place to keep the money while you imagine your travel plans.
aristotelian
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Re: 35k inheritance

Post by aristotelian »

Do you have any other investments? Why not use it to start a Roth IRA while you are still working? Then any interest or investment growth will be tax free.
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JoeRetire
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Re: 35k inheritance

Post by JoeRetire »

Wolveraider wrote: Wed Jan 18, 2023 3:25 pm I recently received a 35k inheritance. 5k would be for emergencies. 30k would be for travel.

A little background information. I am 57 and my wife is 60. We would both probably retire at the age of 65. We've never made a large annual salary, an average of 30-40k combined. We are used to living on a shoestring budget and we do not have any debt.

We're not afraid to live frugally. We've never had the income to travel. Just from what I've learned, I know I don't want the money sitting in my bank savings account.
If you have already decided that you are going to spend this 30k on travel, a high yield savings account is perfectly reasonable.

No need to be fancy with relatively short term money.
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mikejuss
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Re: 35k inheritance

Post by mikejuss »

Depending on what you have saved up for retirement, OP, it may not be advisable for you to use most of the inheritance on travel.
kelvan80
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Re: 35k inheritance

Post by kelvan80 »

Both your wife and you are eligible for Roth IRAs based on your income. You could contribute to 2022s IRA up until April 18th this year and also contribute the maximum amount for 2023 at the same time. You are eligible for catch up contributions based on your ages. There are some really attractive CD rates right now that you could dump the rest of it into for your emergency fund. I would do this unless you are fully funded for retirement. Do you know what to expect for social security payments for you and your spouse?
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CAsage
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Re: 35k inheritance

Post by CAsage »

You might consider shopping around for interest rates. You can get a good market search on depositaccounts.com, just search savings or CD rates by whatever term you want, and then decide. Some bank or CU plain savings rates are poor right now, but money market and CD rates are higher. Earmarking it for future needs is wise, too. I can't see bothering with a Roth IRA at your (presumed) modest tax rate.
Salvia Clevelandii "Winifred Gilman" my favorite. YMMV; not a professional advisor.
Topic Author
Wolveraider
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Re: 35k inheritance

Post by Wolveraider »

Thank you for the replies.

No, we don't have any other funds saved (or any investments) for retirement. I have looked at what we would get per month if we both retired at the age of 65 and we will have no issue getting by on what we will receive. It'll actually be slightly more than our monthly income now. We have pretty much always lived on a shoestring budget.

Probably not the wisest move to use the money to travel. But we've never had the opportunity to travel. So I'm weighing how much would 30k make a difference to our quality of living or using it to see and experience something we wouldn't be able to otherwise.

From the replies, the 5k for emergencies would be best in a high yield savings account? If we weren't going to travel until after retirement, so the money would be untouched for a minimum of 5 years, how much does that change our opportunities for investment? We want to stretch it out as far as possible ultimately.

Thank you for all the advice, it is much appreciated.
Workinprogress
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Re: 35k inheritance

Post by Workinprogress »

Given the additional information, I think the high yield sanings is still the best bet. Secure, fair return, liquid.
Time to start planning on how/where
you will travel.
mikejuss
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Re: 35k inheritance

Post by mikejuss »

Wolveraider wrote: Tue Jan 24, 2023 3:59 pm No, we don't have any other funds saved (or any investments) for retirement.
So you have nothing saved for your retirement? If not, I highly recommend you save every penny of this inheritance. Planning to live on Social Security alone is very risky.
trinc
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Re: 35k inheritance

Post by trinc »

mikejuss wrote: Tue Jan 24, 2023 4:27 pm
Wolveraider wrote: Tue Jan 24, 2023 3:59 pm No, we don't have any other funds saved (or any investments) for retirement.
So you have nothing saved for your retirement? If not, I highly recommend you save every penny of this inheritance. Planning to live on Social Security alone is very risky.
if nothing else saved, i would also suggest lowering the 30k for travel.

If you have not traveled, i would stick to the wonders of our national parks. you can go on shoulder months and get great value.

Tim
annebert
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Re: 35k inheritance

Post by annebert »

Congratulations on a windfall that can bring some real joy to your life. If you will be waiting on the travel for 5 years, than opening Roth IRAs for both of you seems like the best option to me. As noted above, you can put $7000 each for 2022 and $7500 each for 2023 in it right now. Put the remaining $6000 into a high yield savings account, which will provide around 3% interest. If you set up the Roth with something like 50% total stock market mutual fund and 50% total bond market mutual fund, your returns should exceed 3% over that 5 year period. So the money is poised for your travel plans, but able to grow a bit more than the savings account. The Roth rules are that you can withdraw contributions in less than 5 years with no penalty, and can withdraw earnings after 5 years with no penalty.

As you each turn 62, buy yourself a US Park Service senior lifetime pass - free entry to all national parks (I was just at Acadia and the $ 30 car fee). And have fun!
Topic Author
Wolveraider
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Joined: Mon Jan 09, 2023 10:42 am

Re: 35k inheritance

Post by Wolveraider »

Thank you for all that replied. I have some good options and research to do based on your advice.
BlackcatCA
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Re: 35k inheritance

Post by BlackcatCA »

Wolveraider wrote: Sun Jan 29, 2023 8:08 am Thank you for all that replied. I have some good options and research to do based on your advice.
If you don’t plan to use the money for 5+ years, you may want to look into i-bonds… get you a bit more yield than simple high yield savings accounts.
Harmanic
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Re: 35k inheritance

Post by Harmanic »

mikejuss wrote: Wed Jan 18, 2023 5:56 pm Depending on what you have saved up for retirement, OP, it may not be advisable for you to use most of the inheritance on travel.
That depends. If travel is for an extended period of several months, they might actually end up saving money by living frugally overseas in a low cost country. That would be especially true if they can dispose of US housing and live in short term rentals.
EdNorton
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Re: 35k inheritance

Post by EdNorton »

Do the opposite, use $5k for travel. Invest the rest.
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momvesting
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Re: 35k inheritance

Post by momvesting »

My suggestion, if you aren’t willing to commit to putting it in retirement funds, shop around and find a high interest CD. Put all $35k in and have it set up not to reinvest the interest. You will earn $125-$150/month in interest. Spend this freely and feel better because you have the full $35k untouched.
momvesting
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Re: 35k inheritance

Post by momvesting »

My suggestion, if you aren’t willing to commit to putting it in retirement funds, shop around and find a high interest CD. Put all $35k in and have it set up not to reinvest the interest. You will earn $125-$150/month in interest. Spend this freely and feel better because you have the full $35k untouched.
mega317
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Re: 35k inheritance

Post by mega317 »

Wolveraider wrote: Tue Jan 24, 2023 3:59 pm But we've never had the opportunity to travel. So I'm weighing how much would 30k make a difference to our quality of living or using it to see and experience something we wouldn't be able to otherwise.
That sounds like a massive travel budget for someone who lives frugally and hasn’t traveled.
We just took a family of 4 to Maui for less than 3k- that’s airfare, hotel, rental car, all food activities souvenirs.
https://www.bogleheads.org/forum/viewtopic.php?t=6212
backpacker61
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Re: 35k inheritance

Post by backpacker61 »

I've gone on many, many car camping trips that cost in total perhaps $200-$300 (mostly gas; and a few meals on the road).
I find areas where 'Dispersed Camping' is allowed.
https://www.tripsavvy.com/dispersed-cam ... sts-503960

After you retire, you could use a portion of the $35K for some quality car camping gear (tent, ice chest, sleeping bags, gas stove, day packs, rain gear, footwear). This is the type of traveling I enjoy doing now (in addition to backpacking trips on foot), and I have hopes of doing a lot of car camping on road trips after I retire.

In the mean time, I would bank most of it into Roth IRA's as others have suggested, so that any growth it experiences will be tax free.
Last edited by backpacker61 on Sun Jan 29, 2023 8:04 pm, edited 2 times in total.
“Now shall I walk or shall I ride? | 'Ride,' Pleasure said; | 'Walk,' Joy replied.” | | ― W.H. Davies
Freeadvice
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Re: 35k inheritance

Post by Freeadvice »

mega317 wrote: Sun Jan 29, 2023 7:03 pm
Wolveraider wrote: Tue Jan 24, 2023 3:59 pm But we've never had the opportunity to travel. So I'm weighing how much would 30k make a difference to our quality of living or using it to see and experience something we wouldn't be able to otherwise.
That sounds like a massive travel budget for someone who lives frugally and hasn’t traveled.
We just took a family of 4 to Maui for less than 3k- that’s airfare, hotel, rental car, all food activities souvenirs.
$3000 per person?
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