[USER]

Hi everyone, For those who are in the boat of potentially receiving heft inheritance (>2million) which may be 20 years from now but who knows. How do you plan for retirement savings.

Perhaps the money is not guaranteed but in all likelihood will happen. (Similar to how people don’t account for SOC security)

We don’t want to over save now and forego experiences (memory dividends). We are probably 18-20 years away on our own from FI number.

I know not a complete picture but of us on the windfall aspect.

Addendum: thank you for all perspective. I can see the point of pretending it’s not there. Sure something can always happen.

I think my question is really about balancing investments and memories/experiences while kids are young with my FI journey.

I was using the excuse of a multi million inheritance. It’s directly from parents, no sibling rivalry exists between us. No In laws involved to speak of.

Die with zero and “your money or your life” got me thinking a lot. But hard for me to loosen up on investment.

[Charlotte]

“Don’t count your chickens before they hatch.”

[Rick]

Ignore it. Go be a multimillionaire on your own. That will give you all the tools you need to deal with it, should it happen.

[Kevin]

Unexpected medical, especially LtC, can eat up a lot of $. I think you have to plan to not get it

[Amy]

Plan for your retirement without counting on any inheritance. You have no idea what could happen between now and then. A horrible accident that the decedent caused, so claims and attorney fees eat up the estate.

The decedent goes all in on an investment that turns out to be a Ponzi scheme.

The decedent gets married to a different spouse and decides to leave everything to the spouse.

The decedent gets dementia and gets scammed out of everything before any family member realize it. The decedent gets some terrible disease and decides to spend everything on on experimental treatment that insurance declines to pay for.

Etc., etc., etc. Sure, the risk of any one of those things may be pretty small.

But just think about how many different ways people can lose their life savings, and when you consider the possibility of just one of those things happening, it’s non-zero.

You are being financially irresponsible if your plan for retirement counts on receiving an inheritance.

[Sharon]

I would not include it in any retirement planning or projection at this time.

Save as if you know nothing of that possible inheritance.

There may come a time when estate planning is started with your benefactor but there also may be a whole lot of expenses, change in circumstances or changes of heart along the way.

[Amy]

It’s wiser to plan as if you won’t receive that. All sorts of things could happen in 20 yrs & it’s foolhardy to live your life thinking it’s in your future.

If you do receive it, it’s icing on the cake.

[Jenn]

I wouldn’t count it. My grandfather always told me he was leaving me money (I never counted on it) but then got some dementia at the end of life and gambled it all at the race track and I ended up helping to pay his medical bills in the end.

You just never know

[Zélie]

I was expecting something and was left with absolutely zero. Please don’t plan on that.

Just try to balance your life between savings and life experiences.

Regardless your income.

[Valerie]

Never plan assuming you will get an inheritance. If you do, great, if not you are still prepared. A lot can happen between now and then.

If you get it and you decide you over saved, donate gleefully.

[Lori]

Don’t count on it. It is a gift. A lot can happen. I have read horror stories.

[Bunny]

We do not include it in our retirement planning. We will treat it as a windfall. If we need any of it to reach our goals, then we will use it for that.

The remainder we will use to help our two kids have solid financial boosts in their lives.

Pass it through.

[Kyra]

Plan like it’s not going to happen. If it does, treat it like a windfall.

Bogleheads has info on what to do with a windfall.

[Jeff]

I would act like I was not going to get any inheritance. Make it on your own steam and any windfalls will be icing on the cake

[Endri]

That there won’t be any form of social security is ludicrous just to think of. Is it gonna be to the same amount in purchasing power of today?

Probably not. But there definitely will be social security.

Now, your inheritance, lol, I have seen that go south in 2 years, not 20. Live life as it doesn’t exist.

It makes relationships and everything better.

[Kimmy]

Even if it does happen, $2m isn’t really as much as you think. Certainly not enough to adjust your saving/investing behavior in anticipation of it.

My advice would be to pretend you’re not getting anything and continue on your planned path.

[Sonja]

2 plans- one with the inheritance (full of dreams) and one without to ensure a comfortable retirement just in case.

Work toward the second plan.

[Damon]

We don’t consider any inheritance.
We don’t know when someone is going to die and you don’t know how much they might have left at that time.

Maybe if this were some type of trust earmarked for me, with legal documents showing I am the beneficiary and that was unable to change I might feel differently.

[Julia]

Absolutely be responsible and don’t count on the money. Keep saving as if you won’t get it. You have no idea what will happen. Marriage, drawn out illness, donation to a nonprofit.

You also should always demonstrate financial responsibility y saving yourself so they don’t think there will be issues leaving the money to you.

From the time I was a child my father told me when he died I’d get the money he inherited from his mother.

It always made cry thinking about him dying. He talked about if FOR YEARS. I kept planning as if I wouldn’t get it. He died when I was 39. He and my stepmom fought bitterly over leaving it to me.

He called me so upset saying he’d divorce her despite his terminal illness if he had to.

His wife is 17 years younger than he was and that money is still tied up in a trust (she won and that was the compromise).

I have no idea when I’ll inherit it I just hope it’s by the time I retire but it’s not looking so good.

[Joel]

I would never assume an inheritance.
Twenty plus years ago my father spent a lot of time making sure I understood “where the money was at”. He wasn’t rich, but reasonably well off.

In retirement my father spent nothing beyond their SS benefits and a qualified annuity. The Wills had their estate split equally between the kids.

But that’s not really how things played out. He started showing symptoms of dementia and an insurance salesman talked him into a questionable fixed index annuity that lost money in an up market.

Part of that probably was because the insurance company had to recoup a 17.5% commission paid to the salesman.

He quickly wound up in a nursing home and my mother blew pretty much all of the savings she could lay her hands on supporting my younger brother.

My mother is still alive and kicking and living mostly off of SS in the family house, which she owns outright. But besides the house and her car, there’s nothing really left of the estate.

Even my younger brother has nothing to show for all that support he received.

I will still receive an inheritance, assuming she doesn’t acquire much debt at the end of her life.

But instead of my father’s nest egg growing, I’ll be lucky to get 10-20% of what they had 20+ years ago.

[Natalia]

I asked this question before and was told by almost everyone not to count on it. But I somewhat disagree.

Yes, things can happen but if these are close family and you all love each other, I would include something in my calculations.

Maybe half of the potential amount.

Typical response I read is about potential family drama where all over sudden parents or siblings start hating each other.

I know for sure it won’t happen in my family. If you are sure in your family, I think you can include it.

[Shane]

Don’t count on it. I know a guy who was suppose to get a nice property and ended up not getting much at the end because some things got changed and some things did not work out the way it was supposed to be.

Hit your number on your terms and if it works out throw a big ass party.

Tomorrow is not a given. Good luck on your journey!

[Katie]

I’m not counting on it at all. I’d be thrilled if my parents and in law enjoyed their money while alive.

There’s also lots of siblings and some steps that could make things weird, so who knows.

I’d guess we will get something from at least one side, but I’m not planning on it.

Any of the parents could also become very ill and burn through money for medical or long term care costs.

[Ann]

Whatever they have told you that they plan to leave for you, divide it by half and subtract $500k. If the result is greater than $0, then assume that you *might* get this amount.

This calculation accounts for a stock market crash and a large medical expense.

You can then have two retirement scenarios, one with this amount of inheritance and another without.

[Marie]

I wouldn’t plan on it as well. But if and when received, I would try to use it as fun or luxe money.

Like unplanned travel or non necessary upgrade of our house.

[Paul]

You shouldn’t assume you’ll receive it and have no idea if or when. And it smells of entitlement.

I had my dad change his beneficiaries to skip me and pass what would have gone to me to my kids. I’ve paved my own way, an inheritance would not materially change my lifestyle.

But for my thirty-something kids, it could have a significant positive impact.

[Author]

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