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The Moneyist: I received a $130,000 inheritance from my mother. My husband says it’s mine to spend. What should I do with it — and why do I feel so guilty?

Dear Quentin, 

My dilemma involves a small inheritance that I have recently received upon my mother’s passing. It’s about $130,000. I need advice about what to do with it. 

A little background: My husband has been very diligent about our retirement savings over the years, and although we might not be considered wealthy, we are comfortable and have a secure future. This is due to his military career and years of government service, which will result in two annuities; and this is before Social Security, which neither of us plan on taking until age 67. He also has a 401(k), a Roth IRA, and participates in the government Thrift Savings Plan plan. 

The bottom line is that our retirement is quite secure, and the addition of this inheritance will not make or break it. However, it could do something wonderful for me, which would allow me to quit working. I have traveled the world supporting his military and government career, and because of that I have had to reinvent myself for whatever job I was able to get at each station. 

“‘I now believe I can quit office work because of this windfall. My husband assures me that we do not need the inheritance for retirement.’”

I’ve been a willing participant, but this hasn’t really been my choice. I now believe I can quit office work because of this windfall. My husband assures me that we do not need the inheritance for retirement. However, our current monthly expenses do necessitate me contributing $1,000 a month until his military retirement kicks in at age 591/2, which is in two years. 

In the meantime, I can use the funds to continue contributing to the household; plus, save some for our daughter’s wedding, a nice vacation for our family, and keep some aside for emergencies very easily. Without having to do office work, I can free myself for volunteering and creative pursuits that I have denied for so many years. I believe my mother would be pleased with this use of her money. 

My husband is on board. Why is it that I feel so guilty about making this change? 


It’s a Conundrum

Dear Conundrum,

When you have spent your life being a good mother and a good wife, and a good daughter, and a good person overall, and have cooperated and acquiesced and supported others, it’s a change of perspective to have the means and freedom to turn all of that energy on yourself. It may feel strange and your sense of guilt could be that you don’t feel like you deserve this. But I am here to tell you, as your husband has done, that you do deserve it. You always have.

You are now using a different muscle. It’s the “I have one life to live and my family is grown and our household is secure, and my options are limitless” muscle. Millions of women at your age are faced with this new role, and not all have the $130,000 in extra savings to enter this new chapter. All of your energies have gone into making sure other people are well and happy. Now you have the opportunity to turn that energy—and creativity and financial support—on yourself. 

You are young, assuming you too are in your 50s. Keep at least six months of expenses in an emergency fund. That will be easy, given your financial stability and how you have both diligently saved for retirement. Perhaps consider buying bonds with the U.S. Treasury that are currently inflation adjusted; the minimum holding period is five years. Invest a portion in a three- or six-month CD or high-yield interest bearing account, and the rest in a brokerage or other investment account to earn more over time.

Larry Pon, a financial planner based in Redwood City, Calif.,  suggests that you and your husband each purchase $10,000 in I-Bonds from the U.S. Treasury.  “They are currently paying 9.62%, risk free, and no tax is due until they are cashed in.” He also suggests setting aside part of the $130,000 for a vacation or long-awaited home improvements, maxing out your retirement-plan contributions.” But he also urges caution. “It is very easy to spend $130,000,” Pon says.

Put the monthly contributions for that two-year period in a separate account with a standing order to transfer $1,000 a month to your household account. By your 50s, this Government Accountability Office analysis says you should have saved four or five times your annual salary, although most Americans in their 50s have savings of closer to $117,000. Not everyone can afford to look forward to a secure retirement, and the joy for you will be in the planning process.

“You and your husband should review his retirement plans’ total balances, how they are invested, and confirm your husband and you are comfortable with the related investment-asset balances, and asset-class allocations in the plans.,” says Timothy Speiss, partner at Eisner Advisory Group. “Further, as you are both under age 67, based on the facts you cite, it appears neither of you are required to presently take annual required minimum distributions from the plans.”

Use this windfall as an opportunity to review your existing living arrangements. Have you paid off your home? Do you need to live in a home this size? Are you happy there, and does this allow you to stay in a larger home where you have created so many memories? What expenses can you cut down on to anticipate your husband’s retirement? Would you like to go to college and take a course, or even a degree? What brought you joy as a child? Art, drama, reading and/or working in the community? What places would you like to visit?

This is your time. I hope you enjoy every minute of it. 

Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

The Moneyist regrets he cannot reply to questions individually.

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Also read:

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‘It’s a real source of stress’: My friend, 67, asked a trustworthy nephew to be his executor, but he has not made time for him in 2 years — even to sign papers

‘What are the chances? I retire and the stock market crashes. All my plans are upside down.’ I want to draw on my 401(k) to renovate my new home. What options do I have?

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