I think there are a couple of steps.
1) Be ok with waiting to decide what to do, if this comes from the death of someone you loved. Hard to make decisions quickly.
2) Double check that the amount you will get will be $250k. Will there be any taxes? Was this a primary residence for the previous person? Sales fees / maintenance or HOA fees to pay while you wait for the sale?
Next, realize that you will have $90k x 16 years = $1.44 Million dollars in income coming your way, at an average to lower than average tax rate. THAT is your windfall. :-) It's you! YOU ARE YOUR OWN WINDFALL.
My two cents is to put it into a savings / conserative investment account in your own name, don't blend with the household finances.* If you are not used to investing, just put it into a Tangerine fund or into a Vanguard fund like VCONS for now.
Pay off your student loans using this fund, normal rate of pay off.
Don't touch it until you are ready to retire, then retire (don't need a job), move and buy a small place out of town with it, in an area that you will love at that time.
In the meantime, pay your normal day to day expenses, rent and max out your TFSA's with your income. Building an emergency fund of 6 months value instead of taking vacations (if you take vacations), etc. from your current income.
--- Pension for your wife is vested after 2 years. If she leaves the job, she will get her own contributions, plus the employer contributions. So no worries there. After 5years, she will get the "commuted value" of 5 years of pension contributions. If she works there 20 years, she gets 20 years commuted value, etc.
Greetings! What would do in the following situation of inheriting $250,000 CDN?
Here's the facts:
- Canadian
- Inheriting $250,000 CDN from sale of condo we co-inherited. We must sell.
- $50,000 RRSP
- $10,000 savings
- $6000 student loan
- No other assets. No home (renters)
- Married couple, no kids. 49 years old
- Household income of $90,000
- Live in crazy real-estate bubble market of Vancouver, Canada
- Can't borrow money from earlier personal bankruptcy
- Ideally want to retire at 65 (in 16 years)
- Wife could get small government-employee pension if we continued to live in Vancouver or maybe Victoria
This will be the only windfall of our lives, so we want to make the most of this opportunity.
We could move to a cheaper/smaller city and buy a condo. Our monthly expenses of owning a paid-off condo would be cheaper than rent. An alternative to this is to invest the inheritance, and rent for the rest of our lives, including elderly years.
Other alternatives might include investing to wait for market correction and cheaper real estate prices. In this case we could invest in a tax-fee savings account (TFSA) rather than an RRSP so our investments are liquid without tax penalty (we have combined TFSA contribution room of $125,000). But, no one knows when a real estate market correction might occur.
More radical alternatives might include living overseas, which we have done in the past, but this would involve my wife losing small government-employee pension.
I am excited to hear what you would do in our situation. Thanks so much for helping out! :)