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How Does Inheritance Change your Financial Picture

If you’re lucky enough to inherit money, you might wonder: how will an inheritance change my financial picture? According to the Center for Retirement Research, two-thirds of baby boomers can expect an inheritance.[1] For some, an inheritance could mean a drastic change in their finances. For others, inherited money might be a nice cushion against unexpected events.

If you do receive an inheritance, here are some tips to make the most of your loved one’s hard work.

Don’t blow it. Think carefully about how you can best use the money to further your financial goals. Your inheritance could also be impactful for your family: college for your children, an early retirement, a larger nest egg, or a legacy for your loved ones. That’s not to say you can’t spend any of an inheritance, but it’s very important to act in a careful and considerate way.

Take a step back. Inheritances come in all shapes and sizes, and they can mean different things to your lifestyle and long-term financial picture. Take time to think about your situation and consider all of your options. If you share an inheritance with others, don’t rush into decisions based on someone else’s timeline.

Speak to a professional. A financial professional who understands your personal situation can help you understand your options and show you how you can use your inheritance effectively. When multiple family members are involved, a neutral expert can help keep discussions on track and find solutions to benefit all parties.

Remember rules about inherited Individual Retirement Accounts. Special rules apply when you inherit an IRA. If you inherit a Traditional or Roth IRA, speak to a qualified professional who can help you understand your options and obligations.

Don’t count your eggs before they hatch. While you might be expecting an inheritance, there’s no guarantee it will arrive. Most people receive inheritances upon the death of their parent or grandparent. With today’s elders living well into their 80s and 90s, they may end up spending down more of their assets than you anticipate. Rather than count on an inheritance to finance your lifestyle, make sure you’re saving enough to thrive regardless.

Inheritances can be a wonderful opportunity to use a loved one’s legacy to improve your life. Some of our clients have used inheritances to shore up their retirement nest egg. Others have chosen to use the money to support their family’s values, remembering their loves ones through a family vacation fund, or a second home for their family. The important thing is: they made decisions that were best for their situations.

Please let us know if you have any questions about inheritances, or want to discuss your personal financial situation. We would be more than happy to help find answers that work best for you.



Footnotes, disclosures, and sources:

These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named representative, Broker dealer or Investment Advisor, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer or Investment Advisor gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

We have not independently verified the information available through the following links. The links are provided to you as a matter of interest. We make no claim as to their accuracy or reliability.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

Past performance does not guarantee future results.

Consult your financial professional before making any investment decision.


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