Author Topic: FIRE by getting an inheritance  (Read 5587 times)

force majeure

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FIRE by getting an inheritance
« on: May 23, 2019, 02:48:35 PM »
Anyone on here do FIRE because of an inheritance?
I know its a touchy subject, given the sacrifices a lot of people make in pursing the FIRE dream.

Just wondering, is anyone factoring in significant gains from this, and adjusting planned working life accordingly?
I could do it myself, but nothing is guaranteed, especially with death and taxes.

CNM

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Re: FIRE by getting an inheritance
« Reply #1 on: May 23, 2019, 02:54:27 PM »
No.  I am not counting on an inheritance when doing the FIRE calculations.  If one of my parents lives a very long time- which is definitely possible given the longevity of my grandparents - then I will be in my 60s.  I'd like to retire before that.  Also, medical expenses, long term care expenses and so on might take a big chunk out of what would otherwise be an inheritance, particularly given the longevity issue.  It's too difficult to predict.

cangelosibrown

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Re: FIRE by getting an inheritance
« Reply #2 on: May 23, 2019, 03:21:41 PM »
I got a medium sized inheritance when I was  young (low 6 figures before I was 18). I actually have no idea what % of my current net worth derives from that, but it's what got me started on my FI journey. Started asking questions like "what kind of life could I live off that money?" "How much more would I need to retire forever?"

CheapScholar

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Re: FIRE by getting an inheritance
« Reply #3 on: May 23, 2019, 03:23:43 PM »
I think this topic has been done before.  As mentioned, itís too hard to predict given that a long term illness can deplete oneís savings/equity and thus eat your entire inheritance. 

I donít factor in inheritance with my FIRE numbers.  Still, itís hard NOT to think about.  Iím an only child and my parents are divorced.  Itís hard to imagine I wonít get something significant.  But, my parents are in their mid 60s.  They could easily live another 20 years and I hope they do.  I plan on being retired long before that. 

use2betrix

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Re: FIRE by getting an inheritance
« Reply #4 on: May 23, 2019, 07:18:23 PM »
Iím sure plenty of people in well off situations must consider it. Hopefully people that consider itís impact are smart about it as nothing is ďtrulyĒ a guarantee.

I am surprised how many posts I see around here that are like, ďIím 26, my spouse is 24. We both graduated college at 22. I make 55k and she makes 65k. Our net worth is $550k.Ē

I usually assume that it was probably some type of inheritance or gift type situation. If I was certainly in that position and it was due to my own hard work or smart choices, I would likely allude to that.

Bloop Bloop

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Re: FIRE by getting an inheritance
« Reply #5 on: May 23, 2019, 07:26:45 PM »
I hope to god that my parents live long and healthy lives. Even if they "only" live to the average life expectancy of about 80, I'll still be in my early 50s before that happens - that's 20 years away and I definitely want to be retired by then. So I've never thought about it, nor accounted for it.

My parents have done pretty well now, so I'm not sure what I'll do with the inheritance - maybe lock it away in a perpetual family trust, if any such thing can be created.

secondcor521

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Re: FIRE by getting an inheritance
« Reply #6 on: May 23, 2019, 10:09:08 PM »
Of course the standard answer is to never rely on an inheritance.  Maybe not even after you receive it.  ;-)

Statistically it is probably pretty rare.  Most affluent people tend to live to a reasonably old age because wealth and longevity are positively correlated.  Higher education also is positively correlated with wealth and longevity.

So even if an affluent person's wealth isn't depleted by health issues or taxes or whatever, the kids are likely to be in their late 40's to late 50's when the parent passes.  By that time, the kid is probably already FIREd on their own.

I FIREd three years ago at 46 on my own finances.  My Mom died three months later and I received some life insurance proceeds from that.  My Dad is 83 and healthy and could live another ten or fifteen years.

ysette9

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Re: FIRE by getting an inheritance
« Reply #7 on: May 23, 2019, 10:33:46 PM »
We are certainly planning on achieving FI by ourselves. However Iíll admit that the possibility of future inheritance does come to mind when I dig I to safe withdrawal rates and our strategy and modeling situations in cFIREsim. I feel like there are layers of the onion in terms of safety factors, such as my tiny future pension, SS, the ability to do some part-time work that will likely be the slow temp down path to true FIRE, the bond tent strategy for our portfolio, and as a third order safety measure, the fact that we are likely to get some inheritance from two separate households. So no, it doesnít factor into calculations, but it plays a small part in helping determine our risk posture with respect to deciding on a safe withdrawal rate.

BookLoverL

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Re: FIRE by getting an inheritance
« Reply #8 on: May 24, 2019, 01:42:04 AM »
If you've already got said inheritance, it makes much more sense to use it to become FIRE than to spend it on some random frivolous thing. BUT you absolutely cannot count on your relatives dying at a certain age (what if they live to 105?), and you also cannot count on them not having spent all their money by then. So if you haven't received the inheritance yet, make your plans based on never receiving a penny, and then if/when you do receive an inheritance, you'll perceive it as a pleasant bonus that accelerates your FIRE plans.

Malkynn

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Re: FIRE by getting an inheritance
« Reply #9 on: May 24, 2019, 03:28:50 AM »
I don't understand the question.

You will either get an inheritance or you won't. You can't really "plan" on it because you have virtually no say over the matter.

So no, I don't plan to FIRE by getting an inheritance. My FIRE plans could possibly be impacted in the future by some possible inheritance, but that has nothing to do with my plans.

So yeah, I literally don't understand your question.

What are you even asking???

never give up

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Re: FIRE by getting an inheritance
« Reply #10 on: May 24, 2019, 04:14:26 AM »
Are you coming from the perspective of still wanting to achieve FI on your own but perhaps because you have a Ďreasonableí chance of inheriting something you may go a different way about it than you would otherwise?

E.g. if someone wants a 3.25% WR they may FIRE at 4% as they have a Ďreasonableí chance of inheriting something. The inheritance would provide them with some buffer and this has saved the person from working the years to save the difference between the two withdrawal rates.

Or someone could go part time earlier than they would have done without knowing that they have a Ďreasonableí chance of inheriting something.

I think that sort of approach is ok in that you are still achieving FI on your own and in the event of no inheritance could easily take steps to buffer in more safety e.g. stay working part time for longer, take in a lodger etc.

As others have mentioned even if a relative has openly expressed inheritance plans with you there are still many factors that mean no inheritance arises and the timing is of course an unknown. What is a Ďreasonableí chance?

Itís definitely best to have a plan to achieve FI on your own but perhaps once someone is around the 20-25 X expenses mark I could see how someone could adapt what they do work wise from that point on.


ixtap

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Re: FIRE by getting an inheritance
« Reply #11 on: May 24, 2019, 04:16:47 AM »
DH parents are wealthier than we ever plan too be, but they also have relatives in their late 90s. Even if they still have money left, we will be of traditional retirement age by then.

Moreover, between DH and I, 3 out of 4 siblings are financially irresponsible to the point of receiving economic out patient support into their 50s, although one is about to pay off a parental loan. Any inheritance we do get will likely go to making sure they don't get eaten by their cats, or feel obligated to eat their cats, if things are really dire.

Hula Hoop

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Re: FIRE by getting an inheritance
« Reply #12 on: May 24, 2019, 05:03:23 AM »
I have an aunt who was terrible with money and planned to use a small inheritance from my grandmother to cover retirement.  Only problem was that my grandma lived to be over 100 so my poor aunt had to wait a long time.  Aunt is now in her 70s, though, and living a comfortable existance in a LCOL area thanks to the inheritance.  However, if my grandmother had needed extensive nursing home care then it would have eaten up a lot of the money for the inheritance.

BeanCounter

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Re: FIRE by getting an inheritance
« Reply #13 on: May 24, 2019, 05:23:39 AM »
Itís complicated. We were working toward FIRE long before my mothers cancer diagnosis. I knew it was highly likely I would inherit low seven figures because my mother had shared that information with me. But I mostly ignored it. She died right after we turned forty and passed the seven figure mark on our own. So in a month we doubled our net worth. That took some getting used to.
I also found out I was the beneficiary of a trust from my grandparents. My grandfather is still living though. This we have been considering in ourvplanning because if/when it were to happen it would leave us with what I would consider more money than we could need. Itís very awkward.

PhilB

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Re: FIRE by getting an inheritance
« Reply #14 on: May 24, 2019, 05:37:28 AM »
We FIREd on our own without factoring any possible inheritance into our own plans, but the likelihood that we will inherit something definitely helped offset the desire to work longer so as to be able to give our own kids more financial help in the future.  We've planned for a reasonable amount of support with Uni and house deposits (UK house prices are crazy anywhere with work), but anything over and above that would be down to inheritance from their grandparents.

ericrugiero

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Re: FIRE by getting an inheritance
« Reply #15 on: May 24, 2019, 06:26:04 AM »
I'm likely to receive some inheritance from both my father and an uncle with no wife or children.  But, it's not something that I can count on.  If they live to their 90's, I could easily be normal retirement age before I get anything from either of them.  That's a bit unfortunate in terms of timing but there is also something to be said for achieving financial independence on your own vs having it given to you.  Plus, I wouldn't want to speed things up by losing anyone sooner.  My internal conclusion has been that if it happens I will be sad to lose a family member but thankful for any gift I get.  Meanwhile, I'll pursue FI on my own with no regard for any potential inheritance.   

StarBright

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Re: FIRE by getting an inheritance
« Reply #16 on: May 24, 2019, 07:32:38 AM »
We are certainly planning on achieving FI by ourselves. However Iíll admit that the possibility of future inheritance does come to mind when I dig I to safe withdrawal rates and our strategy and modeling situations in cFIREsim. I feel like there are layers of the onion in terms of safety factors, such as my tiny future pension, SS, the ability to do some part-time work that will likely be the slow temp down path to true FIRE, the bond tent strategy for our portfolio, and as a third order safety measure, the fact that we are likely to get some inheritance from two separate households. So no, it doesnít factor into calculations, but it plays a small part in helping determine our risk posture with respect to deciding on a safe withdrawal rate.

^ this. We aren't factoring in inheriting anything when it comes to planning our own savings. But we also know that we are very likely to have decent inheritances from both sets of parents (who are actively working to towards the goal of leaving inheritances). Sometimes we aren't quite sure how to factor it in, other than it makes us more comfortable with withdrawal rate and/or helping to start our kids with large stache's as they enter the working world.

We'll be absolutely 100% fine without inheritances, but it lives in the back of our brains. Especially because both sets of parents are very open with us about their finances and plans. 
« Last Edit: May 24, 2019, 09:34:07 AM by StarBright »

wenchsenior

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Re: FIRE by getting an inheritance
« Reply #17 on: May 24, 2019, 08:30:13 AM »
Unless we're talking multiple millions of dollars, I would never plan on inheritance helping achieve FIRE. 

The only one of our parents with any kind of assets was my dad, and the past few years have halved his former assets to less than 1 million. And that is before the possibility of long term care costs kick in (all 3 of my 4 grandparents who lived past 60 were in long term care for >5 years each. Two used up all their assets and went on Medicaid, and the third burned through almost all of a large estate).  If my dad were to follow that pattern, his estate would be gone in a few years.

And even if there was any money left, there are three of us to inherit and I would likely be in my late 50s or early 60s by that point. Maybe it would be substantively helpful to my youngest sister.  If I received anything, I'd likely earmark it as helpful as a hedge against MY OWN eventual long-term care costs LOL.

I definitely don't expect anything of significance.

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Re: FIRE by getting an inheritance
« Reply #18 on: May 24, 2019, 08:54:46 AM »
My 89 y.o. Dad is in a memory care unit, and my brother and I take care of his finances, and he has Ltc insurance. While he is in frail but decent shape physically, he is very unlikely to live more than a few more years. We take very good care of him, and I travel to see him regularly, and I am ďplanningĒ on the eventual inheritance in my thoughts, as it will put us over the FI line, or close to it. He was 40 when he had me, so Iím no spring chicken, but will likely still qualify as early. While I donít advertise this fact, I also donít hide from it. Itís just a fact, and doesnít alter my love for or relationship with my dad, beyond being grateful that he worked hard and always wanted to take care of us. It has meant that Iíve slowed my first-career work, not really to work less, but to focus on family and work on a transition to my FI career in a very different field. I might not feel secure enough to do that now if I didnít know these facts. Mom (divorced long ago)  is healthy and likely to live 20 more years, but is very frugal and will likely leave a significantly larger sum - just a distant potential safety net.

BeanCounter

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Re: FIRE by getting an inheritance
« Reply #19 on: May 24, 2019, 08:57:57 AM »

The only one of our parents with any kind of assets was my dad, and the past few years have halved his former assets to less than 1 million. And that is before the possibility of long term care costs kick in

How did this happen? The market has been pretty good. If not for paying for long term care, what "halved his former assets to less than 1 million"?

HBFIRE

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Re: FIRE by getting an inheritance
« Reply #20 on: May 24, 2019, 09:16:08 AM »
I find it fascinating how many people are responding on here that the OP did not address.

Kris

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Re: FIRE by getting an inheritance
« Reply #21 on: May 24, 2019, 09:18:13 AM »
I would never factor in an inheritance that hasn't occurred. Far too much can happen, especially as parents age and need more care and medical help.

That said, of course an actual inheritance in hand should be well invested and looked at as part of the FIRE equation.

wenchsenior

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Re: FIRE by getting an inheritance
« Reply #22 on: May 24, 2019, 09:29:05 AM »

The only one of our parents with any kind of assets was my dad, and the past few years have halved his former assets to less than 1 million. And that is before the possibility of long term care costs kick in

How did this happen? The market has been pretty good. If not for paying for long term care, what "halved his former assets to less than 1 million"?

Medical issues and legal separation.

OtherJen

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Re: FIRE by getting an inheritance
« Reply #23 on: May 24, 2019, 09:37:08 AM »
I don't understand the question.

You will either get an inheritance or you won't. You can't really "plan" on it because you have virtually no say over the matter.

So no, I don't plan to FIRE by getting an inheritance. My FIRE plans could possibly be impacted in the future by some possible inheritance, but that has nothing to do with my plans.

So yeah, I literally don't understand your question.

What are you even asking???

This.

Iím an only child, my parents are relatively frugal, and my mom still works full time at age 67. Still, I know how quickly medical/long-term care expenses will deplete even a good nest egg in this country. I donít expect any type of inheritance.

cangelosibrown

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Re: FIRE by getting an inheritance
« Reply #24 on: May 24, 2019, 10:53:38 AM »
People seem to be interpreting "plan" as "count on." Which is not what it means. There are lots of uncertain things we plan based on. It's Literally my job. And all of us are making plans based on things we can't control or know. "The future stock market returns will look vaguely like past returns" being the biggest one that comes to mind.

From a risk assessment perspective, planning around an inheritance is very reasonable. To use a simplified, made up example: your current spending is 5% of assets, if you retire now you retire with that  withdrawal rate, you'd have. 90% chance of not out living your assets. You decide that you want a 95% chance, so you'll work a few more years til you can have a 4% withdrawal rate. Seems reasonable, right? 
But what if you think there's a 50% chance you'll get a large inheritance at some point in the next 30 years? That possiblity means your chance of success with the 5% withdrawal rate is now 95%. Should you quit now? Should you wait until 4% WR, which now has a 97.5% chance of success? Why should the one 95% number be different than the other?

To be clear, all those success % numbers are made up.

OTOH, the real pertinent point to me, is that I don't want to put myself in the position of hoping, on any level, for someone to die.

ChpBstrd

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Re: FIRE by getting an inheritance
« Reply #25 on: May 24, 2019, 11:41:53 AM »
My parents are from the baby boomer generation, so I plan on receiving nothing.

In fact, I anticipate a future where I have to consider going back to work to help fund care for one or both of them. Their retirement activities include driving the F150 crew cab to Hardeeís for fast food and my dad is starting to resemble a tick, so it is currently hard to tell if they will die or go broke first.

My inheritance is a big liability, like a mortgage or student loan I canít see on my balance sheet. Iíll still FIRE but it wonít be secure no matter how much I have. After experiencing parenthood myself, it would be a lot harder to abandon them to their own consequences.

BeanCounter

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Re: FIRE by getting an inheritance
« Reply #26 on: May 24, 2019, 11:51:45 AM »
People seem to be interpreting "plan" as "count on." Which is not what it means. There are lots of uncertain things we plan based on. It's Literally my job. And all of us are making plans based on things we can't control or know. "The future stock market returns will look vaguely like past returns" being the biggest one that comes to mind.

From a risk assessment perspective, planning around an inheritance is very reasonable. To use a simplified, made up example: your current spending is 5% of assets, if you retire now you retire with that  withdrawal rate, you'd have. 90% chance of not out living your assets. You decide that you want a 95% chance, so you'll work a few more years til you can have a 4% withdrawal rate. Seems reasonable, right? 
But what if you think there's a 50% chance you'll get a large inheritance at some point in the next 30 years? That possiblity means your chance of success with the 5% withdrawal rate is now 95%. Should you quit now? Should you wait until 4% WR, which now has a 97.5% chance of success? Why should the one 95% number be different than the other?

To be clear, all those success % numbers are made up.

OTOH, the real pertinent point to me, is that I don't want to put myself in the position of hoping, on any level, for someone to die.
well said on both points.

Malkynn

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Re: FIRE by getting an inheritance
« Reply #27 on: May 24, 2019, 12:39:01 PM »
People seem to be interpreting "plan" as "count on." Which is not what it means. There are lots of uncertain things we plan based on. It's Literally my job. And all of us are making plans based on things we can't control or know. "The future stock market returns will look vaguely like past returns" being the biggest one that comes to mind.

From a risk assessment perspective, planning around an inheritance is very reasonable. To use a simplified, made up example: your current spending is 5% of assets, if you retire now you retire with that  withdrawal rate, you'd have. 90% chance of not out living your assets. You decide that you want a 95% chance, so you'll work a few more years til you can have a 4% withdrawal rate. Seems reasonable, right? 
But what if you think there's a 50% chance you'll get a large inheritance at some point in the next 30 years? That possiblity means your chance of success with the 5% withdrawal rate is now 95%. Should you quit now? Should you wait until 4% WR, which now has a 97.5% chance of success? Why should the one 95% number be different than the other?

To be clear, all those success % numbers are made up.

OTOH, the real pertinent point to me, is that I don't want to put myself in the position of hoping, on any level, for someone to die.

That's why I asked OP to clarify. "Plan" may mean something to you, but to many others, "to plan on" means to expect.

Is OP asking about counting on an inheritance, or factoring a possible inheritance into retirement plans. It's totally unclear from their OP.

redhead84

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Re: FIRE by getting an inheritance
« Reply #28 on: May 24, 2019, 01:32:40 PM »
We will likely receive a substantial inheritance when my in-laws pass. We have the problem that people will assume we can FIRE because of this money. My husband's brother FIRED in his early 40's and his parent's assume that this brother is counting down the days until he gets his hands on their money. I don't think this is true, but it has already caused drama.

I think this is the primary cause of my husband's hesitation about FIRE.

cangelosibrown

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Re: FIRE by getting an inheritance
« Reply #29 on: May 24, 2019, 04:07:41 PM »
We will likely receive a substantial inheritance when my in-laws pass. We have the problem that people will assume we can FIRE because of this money. My husband's brother FIRED in his early 40's and his parent's assume that this brother is counting down the days until he gets his hands on their money. I don't think this is true, but it has already caused drama.

I think this is the primary cause of my husband's hesitation about FIRE.

This is a really interesting wrinkle that I hadn't considered. Do you think it makes his parents reconsider their will at all?  It'd be quite the not give someone money in your will because you thought they were counting on it...

This makes me very glad my father and I are open with each other about money. Though I guess that's only because my dad sees me as the one who doesn't have his hand out for anything from him.

SwordGuy

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Re: FIRE by getting an inheritance
« Reply #30 on: May 24, 2019, 06:28:26 PM »
We knew that both our sets of parents had some money but never planned on any of it for FIRE.   

We both felt it would be foolish to plan on it.   We would be putting our future at the whim of fate and circumstances beyond our control.  There's enough of that in the world without volunteering for more!

Inherited money has made our FIRE more secure but it's nothing we counted on.   

MrThatsDifferent

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Re: FIRE by getting an inheritance
« Reply #31 on: May 25, 2019, 02:28:53 AM »
Nope, not getting a thing from anyone

Omy

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Re: FIRE by getting an inheritance
« Reply #32 on: May 25, 2019, 02:59:07 AM »
I received two small inheritances 15 years ago totaling $50k. It was nice to know that my grandparents on both sides were doing well enough that they still had some money left over late in life, but I would rather have them here than have received the money. There is a reasonable chance that we will inherit $100kish from Dad and $20kish from MIL, but I'd rather they stay healthy and happy for years to come and that they spend all of their money.

I don't plan on inheritance money (as I don't plan on Social Security). Those things just add to the future "safety net" and help give me confidence that I have enough to FIRE.

Money Badger

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Re: FIRE by getting an inheritance
« Reply #33 on: May 26, 2019, 06:03:42 AM »
Great thread to read through!   Dave Ramseyís firm did a lot of research and a book on how more 10,000 millionaires made it...  And inheritance was a single-digit % of the total.   We created our first Mil through the habits my Dadís parents and my Mom taught by my early 40s.   Iíd watched my parents burn through smaller (4-digit) gifts from the family as we were growing up.  Then Dad/Uncle burned through their inheritances from my grandparents in less than 3 years.   Hell, my highly educated, yet-a-large-dumbass uncle burned through almost $200K in ONE friggin year!  :(     Then my Dad passed after looong illness in my mid-40s and I received about $125k from that estate which is earning dividends now (except $4K spent to purchase a car that my daughter now drives to college so I call that $4K ďhigher earningsĒ ;))   And Iím blessed to have another similar chunk to come in a year or so which will put the cherry on top of my FIRE plan.   But Iíd far rather have my Grandparents back than their money.   God will always provide to those who look after His gifts.   But have mercy on the souls who donít know how to look after them.

mathlete

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Re: FIRE by getting an inheritance
« Reply #34 on: May 26, 2019, 06:19:26 AM »
I find it fascinating how many people are responding on here that the OP did not address.

Yes! How dare the unmonied, non gentry class dare to float an opinion? Just kidding.

Really though, I think you'll be hard pressed to find someone who will cop to FIREing off of an inheritance in a community that puts so much emphasis on the puritan work ethic. I think they probably exist, but are less likely to speak up in places like these, or more likely to downplay the significance of their inheritance.

Malkynn

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Re: FIRE by getting an inheritance
« Reply #35 on: May 26, 2019, 07:11:31 AM »
I find it fascinating how many people are responding on here that the OP did not address.

Yes! How dare the unmonied, non gentry class dare to float an opinion? Just kidding.

Really though, I think you'll be hard pressed to find someone who will cop to FIREing off of an inheritance in a community that puts so much emphasis on the puritan work ethic. I think they probably exist, but are less likely to speak up in places like these, or more likely to downplay the significance of their inheritance.

Well...there's also a difference between getting an inheritance and planning on getting an inheritance.

I've actually seen plenty of people talk about how an inheritance played a role in their retirement plans, I don't think it's something people are afraid to discuss.

That's different from making life plans based on an expected inheritance, which can seriously backfire.

I may get an inheritance, I may not. I'm the executor of my parents will, so I know exactly what's in it, but that can also change.

I know three men, early 40s, who always expected to inherit very substantial sums until one parent died and the other remarried. Oops.

Another woman's parents decided not to leave much to her because her brother had a severely special needs child, so they put it all in a trust for the kid because the kid will need 24hr lifelong care well after the parents die.

It's the same way that there's a huge difference between making a fortune on your house due gentrification vs anticipating gentrification and a rise in home values.

force majeure

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Re: FIRE by getting an inheritance
« Reply #36 on: May 26, 2019, 02:08:50 PM »
OP here again,

To clarify my original statement....

I think its logical to plan on getting some amount of inheritance, but in my case, I am not depending on it.
It would be silly to deny your inheritance, if its coming to you.
Therefore, it should form part of one's long term financial plan.

Aelias

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Re: FIRE by getting an inheritance
« Reply #37 on: May 28, 2019, 12:58:03 PM »
I'll echo the sentiment of the crowd here -- I'm aware of it, but it's too uncertain to really plan on.

I have a possibility of two significant inheritances, one from my parents and another from a close, childless relative.  I suppose if I were less risk averse, I could lower my FIRE number with the expectation of at least one of these providing a significant amount of money.  But that seems both wrong and foolish.  Wrong because I don't want to be anxiously waiting for their deaths and foolish because, as so many people have pointed out, both the amount and the timing are extremely uncertain.




TVRodriguez

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Re: FIRE by getting an inheritance
« Reply #38 on: May 28, 2019, 01:37:25 PM »
OP here again,

To clarify my original statement....

I think its logical to plan on getting some amount of inheritance, but in my case, I am not depending on it.
It would be silly to deny your inheritance, if its coming to you.
Therefore, it should form part of one's long term financial plan.

I disagree with the bolded statement in a general way.  I think it's only logical to plan on getting some amount of inheritance if you have been assured by the testator in a concrete way that he is planning to leave you some amount of inheritance, and even then, it's a bad idea to plan on it.

I base this on my experience as an estate planning attorney.  I've seen too much in twenty years of practice.

marion10

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Re: FIRE by getting an inheritance
« Reply #39 on: May 28, 2019, 02:19:16 PM »
Inheritance from my inlaws- $1000 given to us before their deaths. All of my MIL's estate was spent on 8 years of long term care. Don't begrudge them a penny of it. I had a inheritance (in trust) from my grandfather and never got it because the trustee stole it.  I expect very little from my mother- I want her to spend her money on herself and not worry about her kids.

Fishindude

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Re: FIRE by getting an inheritance
« Reply #40 on: May 28, 2019, 02:38:44 PM »
Good friend of mine did.   His brother was single and did very well for himself, had no kids and parents didn't need it so he left it to his brother (my friend), approx. $2 mil.
My friend got it all invested and quit working at year end at 57 years old.   He would have probably been okay without it, but after seeing his brother die rather young, he cut the cords and retired and is having fun.

zolotiyeruki

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Re: FIRE by getting an inheritance
« Reply #41 on: May 29, 2019, 03:54:32 PM »
I think you can break it down into a few cases:
1) you're already FI (and maybe RE).  If you're already RE, you can change your spending.  Or not.  If you're still working, you still have the option of retiring.  Or not.  So there's not much impact there.
2) you're not FI, and the inheritance makes you FI.  In this case, you now have new options opened to you.  Do you retire, or keep working?
3) the inheritance gets you closer to FI, but you're not there yet.  You keep working, but can now re-cast your retirement date based on your target NW.  So there's not much impact there.

It's really only case #2 where an inheritance makes a difference.  And the standard advice for any windfall applies:  don't make any changes for several months, then rationally think it out.

JoJo

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Re: FIRE by getting an inheritance
« Reply #42 on: June 11, 2019, 02:02:28 PM »
Unless something bad happens, like extended LTC stays, I will probably get a sizable inheritance.  I am on the verges of or exceeding FI without it so I don't currently factor it in on my future withdrawal schedules.  But if it does come, I will probably splurge more (mostly travelling). 

PoutineLover

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Re: FIRE by getting an inheritance
« Reply #43 on: June 11, 2019, 02:47:36 PM »
I don't factor it into my plans. I have received a couple thousand from grandparents who passed away, which was appreciated and then invested along with the rest of my money. My parents are still young and healthy and assuming they live to a decent age, they won't have much to pass on to me or my sister. Hoping for an inheritance feels too much like hoping they will die, so I'm not going to factor it in. If somehow I do get something, I will use it to pursue my ongoing goals like I would any other windfall.

Kepler

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Re: FIRE by getting an inheritance
« Reply #44 on: June 11, 2019, 08:55:05 PM »
This is not really a standard inheritance story, but for what it's worth... I ended up being an heir to a completely unexpected inheritance - ironically, from a close family member who stole my entire savings, which I had set aside to cover university costs...  There is another potential heir - a beneficiary of the theft, and at least a post facto party to it (I'm unclear whether they knew exactly what was happening at the time) - who is currently engaging in legal actions that are burning through the estate.  If that person suffers from a sudden and unprecedented attack of rationality, I will potentially end up inheriting a meaningful sum, as would they.  If the legal stoush continues, both of us would potentially inherit nothing - which is simply status quo for me, but would likely render them destitute: this inheritance was their sole financial plan.  In other circumstances, I might have more sympathy. In this case, not so much...

I am extremely happy that I am not in a situation where this is money I "need" - or even money that would make a difference in our plans.  I am very happy that I can just hand things over to the lawyers, and really not have to care how things turn out.  These people have, at earlier stages of my life, done enough damage: not this time, and that's a really good feeling.

I do loosely have some ideas what I might do with the money - but those ideas are deliberately ringfenced from our FIRE plans.  This is partially rational - due to the uncertainty - but it's also partially due to idiosyncratic emotional motives: I worked extremely hard to get where I am, in spite of these people, and I don't want any uncertainty over whether I could have gotten here without their help.  I'm particularly happy that we have enough for a thin FIRE now (we're secure enough that we downshifted this year - I took a substantial pay cut to move to a much more pleasant working environment, in the location we want to retire - and, in one of those ironies that often happens in the FIRE community, we've found that we're actually saving slightly more than we were last year, even after the drastic drop in pay, because of the extra amenities in our new location and the extra time freed up by the new role...).

While my situation is weird, I suspect there will be others who might feel a bit of a letdown if something happened suddenly to bring them to their FIRE target.  I'm not saying people /should/ feel disappointed: all of us capable of FIRE benefit from luck on many levels, and inheritances can be well or badly managed, just like all other kinds of luck.  But it wouldn't surprise me if some people who had really worked hard to optimise their lives for FIRE, were a bit ambivalent about a sudden inheritance.

habaneroNorway

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Re: FIRE by getting an inheritance
« Reply #45 on: June 12, 2019, 04:35:01 AM »
As my parents are quite old I'm likely to inherit some money at some point in the future. I don't factor it in as the timing is very uncertain and the size somewhat uncertain. My parents 'stash isn't very large and they can do with it as they see fit, but under local law I'm entitled to some minimum of approx ~US$ 125.000 (as in my parents can do whatever they want with their money, but me and my sister has the right to some of it).


Linea_Norway

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Re: FIRE by getting an inheritance
« Reply #46 on: June 12, 2019, 05:43:16 AM »
My parents and parents in law both had a longest living testsment, so I didn't receive anything from my inheriance after my my father who died more than 20 years ago. My DH probably won't receive anything now from his mother who recently passed away. When we will receive our theorerical inheritances is very unsure and we hope our remaining parents stay in good health for the remainder of their time. They are also by law allowed to spend our inheritances, as the longest living patner of their marriage. But both my mother and FIL are not big spenders. We don't know what happens though, if they need long term care in old age. Will the state take their money, including that part that we on paper already inherited?

We do think that when they eventually pass away, we might receive up to 50% of the FIRE stash that we saved up ourselves. It would come in handy I think, because we won't FAT FIRE. But we could also survive without it. We would not have been able to FIRE if we only had received those inheritances.

I did by the way notice that a friend of mine, with a very wealthy father, now has a substantial amount of money on his name (40 mil NOK (> 4 mil $), so I think his parents let them inherited early, during the current benefitial tax rules. For a Mustachian family that would be enough to FIRE. I don't think he has FIREd yet. I also think that he would want to keep the capital in the family, letting it grow. It's been some time that I met this friend and I would like to talk to him or his spouse about it. But it would be a bit awkward telling them that you know their assets. (it is only because it was published openly by a local newspaper). I would really like to tell them about Mustanchiamism and the 4% rule and what their options are. His spouse doesn't enjoy the lawyer job she has, I know that much.

Roots&Wings

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Re: FIRE by getting an inheritance
« Reply #47 on: June 12, 2019, 06:19:23 AM »
Unless something bad happens, like extended LTC stays, I will probably get a sizable inheritance.  I am on the verges of or exceeding FI without it so I don't currently factor it in on my future withdrawal schedules.  But if it does come, I will probably splurge more (mostly travelling).

A sizable inheritance can completely change tax brackets, strategies to optimize investment holdings, Roth conversions, healthcare costs, etc. Bogleheads might be a better site for these kinds of questions and optimal planning strategies for anyone with a likelihood of getting a sizable inheritance.

Just Joe

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Re: FIRE by getting an inheritance
« Reply #48 on: June 13, 2019, 08:14:15 AM »
The Comedy section of this forum taught me that people's behavior - even family (especially family) can be very unpredictable.

https://forum.mrmoneymustache.com/antimustachian-wall-of-shame-and-comedy/inheritance-drama-you-got-any-stories-wanted/

DaMa

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Re: FIRE by getting an inheritance
« Reply #49 on: June 15, 2019, 03:10:30 PM »
My thought is that it would take only something like Alzheimer's in an otherwise healthy person to eliminate "planned" inheritance.  I would never include it in my projections.