Author Topic: Inheriting FI(RE)  (Read 9936 times)

briandougherty

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Inheriting FI(RE)
« on: July 15, 2014, 04:43:00 PM »
I'm FI, more or less, or I could be if I wanted.  I'm a decent saver (70+%) with a decent household income ($100,000).  We haven't worked for too long but we have about $200,000 in assets split evenly between home equity and retirement.  Then we have about $800,000 in assets  ($100,000 home equity, $700,000 investments and rental property) that came from family.

A million dollars is my FI number since it allows me to live off of $25,000 with decent margin.  If I had worked and saved that much I'd consider myself FI and at the very least look to cut back my hours.  Yet, since the vast majority of this money is not something I earned, I don't feel like I'm particularly close to FI.  I don't feel right basically inheriting FI.

I think this is an interesting broader mustachian question.  On the one hand we as a community have ideas like "The Incomparable Advantage of Having to Work for what you Get" and on the other we ask people why they are trying to save so much when they could easily already be FI.

I'm curious about your thoughts and what you'd do?

penguin456

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Re: Inheriting FI(RE)
« Reply #1 on: July 15, 2014, 04:58:58 PM »
When I think about inheritances I take into account what the giver would have wanted. Do you think that the people who left you this money would be happy to know you are using it to cut back your hours at your age or would they have viewed that negatively?  It is of course your money now to do as you wish, but if they would have viewed FIRE negatively I might set the money aside in mind to use toward things they would have appreciated. If you think they would like the idea of FIRE then I would use it for that purpose.

penguin456

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Re: Inheriting FI(RE)
« Reply #2 on: July 15, 2014, 05:02:34 PM »
As for me, my parents would see a really early FIRE with their money as lazy, so i would not use it for that. I would set aside money for college and grad school for my kids, use some for travel, and put the rest away to access later in retirement. I know they would be supportive of those uses.

RyanAtTanagra

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Re: Inheriting FI(RE)
« Reply #3 on: July 15, 2014, 05:03:54 PM »
It's a good question and one I don't have an answer to.  For instance, when talking about the 'what if you won the lottery question' with people, I can answer easily that I would keep enough to get me and my fiance to our number, then set up a charity trust for the rest, or donate it to some existing ones I like.  But the part that always trips me up is I feel like I wouldn't enjoy FI as much, like I don't deserve it, if I won it like that and didn't work my ass off to get there, and then I start wondering if I'd be happier just setting up a charity with 100% of the winnings, and just continuing on my journey as I have been.  Which is of course ridiculous and doubtful I would actually do that.

But in your case, since that's where you are, I would maybe suggest you use the opportunity to do something that's meaningful to you with complete disregard for the income you'd get, since the income doesn't matter anymore.  You say you don't feel right inheriting FI, but what if you used this chance to do good?  Go work for a non-profit that does something you believe in, etc.

ch12

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Re: Inheriting FI(RE)
« Reply #4 on: July 15, 2014, 05:15:11 PM »
it allows me to live off of $25,000 with decent margin.  If I had worked and saved that much I'd consider myself FI and at the very least look to cut back my hours.  Yet, since the vast majority of this money is not something I earned, I don't feel like I'm particularly close to FI.  I don't feel right basically inheriting FI.

Do what feels right. Go with your intuition. I will say that $25,000 at the 4% withdrawal rate requires a 'stash of $625,000. Consider the money you inherited (800k) as safety margin on top of that. If you want to earn your own FI, then you still have $425,000 to go (including net worth gains from your entire 'stash-that's earned by figuring out allocation). If ever you are in a bad, high stress, ridiculous working hours situation, you can always bail with your safety net.

Bruinguy

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Re: Inheriting FI(RE)
« Reply #5 on: July 15, 2014, 05:34:43 PM »
I think that most people fear that their kids will waste an inheritance instead of using it to provide for them for their entire lives.  With a 70% savings rate, I'd say that you have probably learned what you need to know about hard work and personal finances. 

If it were me, I would absolutely change my behavior based on my aggregate wealth, including any inheritance.  I'd hope that my parents would be happy with my decisions if they make me happy.  I can't imagine that they'd want me to work 80 hour weeks at the expense of time with my family or doing other fulfilling things to prove that I could earn my own FIRE. 



Exflyboy

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Re: Inheriting FI(RE)
« Reply #6 on: July 15, 2014, 05:53:33 PM »
What a "terrible" problem to have..:)

If it were me I think I could clear my conscience pretty easily and FIRE myself.

Congratulations..:)

Frank

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Re: Inheriting FI(RE)
« Reply #7 on: July 15, 2014, 05:56:11 PM »
Maybe part of it depends on the amount of money involved. I doubt I'd have much of a problem if I was already most of the way to FI on my own and an inheritance pushed me over the edge, but I would probably have similar misgivings to the OP if an inheritance made up the bulk of my stash.

Fatmouse

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Re: Inheriting FI(RE)
« Reply #8 on: July 15, 2014, 07:32:41 PM »
IMHO, using FIRE to do good in the world is the optimal approach.  Time is more valuable than money because time is more stubbornly finite.  So many people and organizations could benefit from reliable, consistent commitment of time from a smart and skilled individual.

Good luck, whatever you choose to do.  And no matter what you do for now, you can always change your mind and take a radically different course.  Whether you choose to work or not, you ARE free now, like it of not!  :)

avongil

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Re: Inheriting FI(RE)
« Reply #9 on: July 15, 2014, 07:50:35 PM »
I would not feel bad about using that money to spend more time with my kids and focus on the aspects of my career I enjoy rather than having to go to work when I am told to. 

Congrats dude, you can work on what you want when you want to.  When you have children this will be very important.  I would not feel bad one bit.  Money making money by its self is the gift that keeps on giving!!!


defenestrate

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Re: Inheriting FI(RE)
« Reply #10 on: July 15, 2014, 09:45:43 PM »
I think that FIRE is a state of mind more than it is a goal. The money should permit you to pursue whatever activities you believe would make the greatest impact in the world, be best for your family, and ensure the ongoing happiness of your loved ones. The inheritance should be viewed as a tool to assist you in doing this. Yes, think about those that gave this too you--I am certain they did not give it to you simply for you to feel unworthy of using it to live a life of meaning--so ask youself if money was no objective, where would you spend your time, and then do it.

sol

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Re: Inheriting FI(RE)
« Reply #11 on: July 15, 2014, 09:56:36 PM »
Money is fungible.  Whether you sweat and slave for 20 years to earn it the hard way, or win the genetic lottery and are born wealthy makes absolutely no difference in how those dollars can be spent.

Your hesitation to retire because you "haven't earned it" feels misplaced, to me.  Nobody earns retirement, you can either afford it or you can't, but you cannot earn it in the moral sense your statement seems to imply, because money has no morals.  Sitting in a cubicle typing TPS reports for 40 years creates no value for society, why does that person seem to earn it more than someone who inherits? 

If you want to work, then work and forget about the money for now.  If you want to retire and watch tv all day, then do that and know you're wasting less oxygen than some other rich person out there who is watching tv while doing cocaine out of an endangered tiger's dried penis.  Try to make your decisions about how to spend your life based on your personal values, not other people's expectations and certainly not on any lingering sense of Pilgrim guilt.

mikefixac

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Re: Inheriting FI(RE)
« Reply #12 on: July 16, 2014, 12:22:08 AM »
So now you know about FIRE, and have enough money to FIRE, but because you did not earn it, you would not be following wishes of giver.

If I gave money to someone and they now could live a life that they've dreamed, I would think my money well used.

Living your life on your terms is what Maslow's hierarchy of needs is all about.
« Last Edit: July 16, 2014, 12:28:40 AM by mikefixac »

pom

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Re: Inheriting FI(RE)
« Reply #13 on: July 16, 2014, 03:14:42 AM »
Using it to generate income so you can reduce your hours seems much better to me than what most people would do with such money. Most people would buy a big car and a mega-mansion ... is that more acceptable?


aj_yooper

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Re: Inheriting FI(RE)
« Reply #14 on: July 16, 2014, 04:17:40 AM »
frankh and sol nailed it.  Money is not a moral commodity; it is a means of exchange, that's all. 

If this were to happen to my wife and I, my wife would quit work as soon as possible to assist in planning out our new life and making the transition year as smooth as possible.  I would probably work for a year or until our retirement plans were established. 

Live well and prosper!




Khan

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Re: Inheriting FI(RE)
« Reply #15 on: July 16, 2014, 04:57:42 AM »
I agree with FrankH, Sol, and AJ Yooper.

There is no medal for "earning it" vs. being born into it. Your feelings on the matter is something you yourself will have to square away, but the world will move on. The world won't care whether you "earned" your life or swindled it.

The world could drop a car on you tomorrow. The world will give exactly 0 ****'s what your financial or employment status is when it does so. If working gives you meaning, then that is good. If you can't get past your feelings on your financial status, then do whatever feels best, because at the end of the day, the only person you have to answer to is yourself in the mirror(and maybe your mate).

But the Walton's, the Hilton's of this world have no such moral problems.

boarder42

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Re: Inheriting FI(RE)
« Reply #16 on: July 16, 2014, 05:07:27 AM »
If I ever do inherit earlier than expected I will just store the money and use it as my buffer. I will still be working to the ripe old fire age of 35 either way

avongil

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Re: Inheriting FI(RE)
« Reply #17 on: July 16, 2014, 06:10:15 AM »
Sitting in a cubicle typing TPS reports for 40 years creates no value for society,
+1

If I was in your situation I would do what I do best for a great cause...
example:  help develp devices like this for little or no pay:
https://www.youtube.com/watch?v=WoZ2BgPVtA0&feature=kp

brings a tear to my eye every time I watch it.

dude

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Re: Inheriting FI(RE)
« Reply #18 on: July 16, 2014, 09:06:54 AM »
What a "terrible" problem to have..:)

If it were me I think I could clear my conscience pretty easily and FIRE myself.

Congratulations..:)

Frank

THIS.  Lose the guilt, man! (or woman!)  Being FIRE'd means living life the way YOU want to live it, i.e., being HAPPY.  Every parent wants their children to be happy!  They gave you this amazing gift, so put it to use.

neo von retorch

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Re: Inheriting FI(RE)
« Reply #19 on: July 16, 2014, 09:36:36 AM »
What do you want to DO with your life? Are you using your unique strengths and talents (in a passionate way) right now? Maybe there's something more you could do with yourself given the freedom?

I know if I was financially independent right now, I would be using my time differently, regardless of where the money came from. I personally wouldn't be off on vacation. I'd be building something I'm passionate about building, because I believe in it.

lackofstache

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Re: Inheriting FI(RE)
« Reply #20 on: July 16, 2014, 09:37:00 AM »
Money is fungible.  Whether you sweat and slave for 20 years to earn it the hard way, or win the genetic lottery and are born wealthy makes absolutely no difference in how those dollars can be spent.

Your hesitation to retire because you "haven't earned it" feels misplaced, to me.  Nobody earns retirement, you can either afford it or you can't, but you cannot earn it in the moral sense your statement seems to imply, because money has no morals.  Sitting in a cubicle typing TPS reports for 40 years creates no value for society, why does that person seem to earn it more than someone who inherits? 

If you want to work, then work and forget about the money for now.  If you want to retire and watch tv all day, then do that and know you're wasting less oxygen than some other rich person out there who is watching tv while doing cocaine out of an endangered tiger's dried penis.  Try to make your decisions about how to spend your life based on your personal values, not other people's expectations and certainly not on any lingering sense of Pilgrim guilt.

+1. Pretty perfect, really. Do what you want. If you'd like to keep working where you are because it's fulfilling, do it. If you'd rather work somewhere else, now you have that choice. If you don't want to work or do anything at all, you have that choice as well. Good luck in whatever you do.

jo552006

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Re: Inheriting FI(RE)
« Reply #21 on: July 16, 2014, 09:53:11 AM »
I second the FIre to do good in the world.  I have actually contemplated this a lot myself.  I know either my parents or my in-laws would both feel deeply dissappointed if I used inheritance to lounge and do nothing for the rest of my life, however I would love to stop the daily grind.  I hope to be FI long before I have to worry about what anybody would want.  I'd like to think that I know exactly what I'd do in your situation, though would need to make sure my wife was onboard 100%.  This is actually my plan for when I reach FI anyway, it'd just start sooner.

1. Stop working for other people.  Time is too valuable of an asset to wast toiling.
2. Use the inheritance to set myself up in a living situation where my essentials were maintained with little-no effort.  This would include big things like moving to a paid for house that would have low overhead costs, and is up to date (probably built new) as well as small things like ensuring that the organization and design of the home is best suited for easy maintenance (like making sure lawn design is EASY to mow).  Purpose of this is to free up time, and be free from worries.
3. Use time/skills that I have to make a REAL impact on the world.  Start small, volunteering, teaching, etc. and work up to big things like starting charity foundations.  I have a charity/volunteer list already going.  I would front time and effort, NOT money, unless it was a short term thing, or I had a charity category in my budget that it came from.  My time is too valuable to force myself into a position to go back to working for others.

I try to keep in mind that things that I am able to do may be things that may be hard/expensive/overlooked for others.  I think most people who attain FI have valuable skills that helped them reach FI (even if it's just being good with money.)  In my case I try to pick up new skills as they are required.

Leaky faucet at the homeless shelter?  My time/labor is free, ideally get parts donated by local business.  Food bank always needs donations?  Again, my time/labor is free.  Try to get a farmer to donate/lease (free) 1 acre of farm land on a continuing basis and start a high school community service farm?  Most high schools have a community service requirement anyway.  Once set up I can move to other things, or can do the same thing in a neighboring city/town.

Trudie

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Re: Inheriting FI(RE)
« Reply #22 on: July 16, 2014, 09:56:43 AM »
I can relate and have asked myself similar questions.  I agree with those who say that the fact that you are here and have already established good habits means that you have a healthy relationship with money.  So enjoy that it buys you your freedom and don't get over burdened.

My husband and I have saved "as if" we'd never get a dime.  (But we are almost assured of a life-changing windfall.)  I think this is healthy.  We don't have a sense of entitlement.  We don't have expensive tastes to feed, and I think when we do get the money we will do decent things with it.  I say this - we will be prepared either way.  This just speeds up the timetable.

Use it to buy time to spend with others and to focus on your health.  In our case, it will be used to buy a small residence (with cash) in the town we want to live out our days, which is closer to surviving family.  During our time there we will contribute to the community (financially and otherwise) that my husband grew up in.  The one "spendy" thing we are going to do is buy season tickets to our favorite college sports team -- the college my in-laws worked for and are very loyal to.  We enjoy this and it's also a way for us to connect with the past.

Trudie

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Re: Inheriting FI(RE)
« Reply #23 on: July 16, 2014, 09:58:40 AM »
I second the FIre to do good in the world.  I have actually contemplated this a lot myself.  I know either my parents or my in-laws would both feel deeply dissappointed if I used inheritance to lounge and do nothing for the rest of my life, however I would love to stop the daily grind.  I hope to be FI long before I have to worry about what anybody would want.  I'd like to think that I know exactly what I'd do in your situation, though would need to make sure my wife was onboard 100%.  This is actually my plan for when I reach FI anyway, it'd just start sooner.

1. Stop working for other people.  Time is too valuable of an asset to wast toiling.
2. Use the inheritance to set myself up in a living situation where my essentials were maintained with little-no effort.  This would include big things like moving to a paid for house that would have low overhead costs, and is up to date (probably built new) as well as small things like ensuring that the organization and design of the home is best suited for easy maintenance (like making sure lawn design is EASY to mow).  Purpose of this is to free up time, and be free from worries.
3. Use time/skills that I have to make a REAL impact on the world.  Start small, volunteering, teaching, etc. and work up to big things like starting charity foundations.  I have a charity/volunteer list already going.  I would front time and effort, NOT money, unless it was a short term thing, or I had a charity category in my budget that it came from.  My time is too valuable to force myself into a position to go back to working for others.

I try to keep in mind that things that I am able to do may be things that may be hard/expensive/overlooked for others.  I think most people who attain FI have valuable skills that helped them reach FI (even if it's just being good with money.)  In my case I try to pick up new skills as they are required.

Leaky faucet at the homeless shelter?  My time/labor is free, ideally get parts donated by local business.  Food bank always needs donations?  Again, my time/labor is free.  Try to get a farmer to donate/lease (free) 1 acre of farm land on a continuing basis and start a high school community service farm?  Most high schools have a community service requirement anyway.  Once set up I can move to other things, or can do the same thing in a neighboring city/town.

Wow... we sound very similar.  These are the kinds of things I'd like to do.  I've also started a list of charities I want to work for.  I hope to get involved in community gardening and gardening education projects.

norabird

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Re: Inheriting FI(RE)
« Reply #24 on: July 16, 2014, 10:11:00 AM »
I just started reading The Millionaire Next Door and I would say you're probably right that the attitude of working for it is most FI; it makes sense the inherited assets don't seem to count. But unless you start to spend lavishly and keep your savings rate, that's the most important thing, right--the mentality is almost more important than the money.

As others are saying, what do you want to do with yourself? If the $100k job is one you like, stay in it and keep moving to a time when you 'feel' more FI; if you would be happier doing something else, think about switching.

briandougherty

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Re: Inheriting FI(RE)
« Reply #25 on: July 16, 2014, 04:06:27 PM »
Interesting. I was a bit surprised at how most everyone agreed it was fine to inherit FI. 

I think my biggest hang up is related to the fact that it wasn't a simple inheritance of parents die, I get it.  I had access to some money for school and a down payment.  I am walking a line where I want to raise children more motivated and entrepreneurial than myself but I don't want to deny them some of the benefits I've had.  I guess I like the idea that the FI is mine but then unrelated to it I have to navigate what benefits children should be given and make sure I have money for that.

I also was worried that my getting it too easily might be a problem with kids.  But the wonders of mustachian FI are that you can do it in 10 years with an okay job if you don't start in the hole.  It's a lot more reasonable to tell a kid, "I worked for 5 years and then inherited FI now you can do it in 10" than to say "I worked for 5 years now you go work for 40".

Thanks for all the good advice!

sol

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Re: Inheriting FI(RE)
« Reply #26 on: July 16, 2014, 08:15:43 PM »
Every parent wants their children to be happy!  They gave you this amazing gift, so put it to use.

If I left my kids a million dollars and they decided to continue working at jobs they hated, I would feel like I had screwed up the parenting gig somewhere along the line.  The whole point of that gift was to make their lives better, not force then to continue suffering out of guilt.

lifejoy

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Re: Inheriting FI(RE)
« Reply #27 on: July 18, 2014, 01:20:56 AM »

Sitting in a cubicle typing TPS reports for 40 years creates no value for society,
+1

If I was in your situation I would do what I do best for a great cause...
example:  help develp devices like this for little or no pay:
https://www.youtube.com/watch?v=WoZ2BgPVtA0&feature=kp

brings a tear to my eye every time I watch it.

+1 teary eyes!!! Wow. Thanks for sharing.


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lifejoy

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Re: Inheriting FI(RE)
« Reply #28 on: July 18, 2014, 01:25:53 AM »
I'm re-reading Your Money or Your Life. The chapter about how work doesn't have to equal paycheque might be helpful for you. The gist is that even if you're FIRE, you can work. It just won't matter to you if you get paid. But you will get fulfillment and learn skills etc. The book explains it best. Anyways, don't let FIRE = idle hedonism, and I think you'll be just fine. Don't waste time feeling guilty.


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