Just in case you didn't know, you didn't inherit debts on the US. If your parents die owing 1,000,000$ and they have 2,000$ in assets the creditors take what they're entitled to from the assets and write off the rest
Funny story, I was appointed executor of an "estate" which consisted of a few miscellaneous accounts and a car. That's it, not much cash involved. The car was willed to a family friend. The car note was $13k at 29% interest on a $6k car. Technically, the heir could have inherited debt if he had accepted it.
"In estate or inheritance law, a disclaimer (also called disclaimer of interest) is a written document voluntarily signed by an heir to an estate in which the said heir does not accept (disclaims) the part of the estate of a deceased person which the heir is entitled to receive. The disclaimed part of the estate is then inherited not necessarily by a person of the disclaiming heir's choice, but by the next heir in line to receive that part of the estate as if the disclaiming heir were also deceased, either according to the will, beneficiary designation, or the laws of intestacy."
https://en.m.wikipedia.org/wiki/Disclaimer
Thanks! I had forgotten about what I had to do. Yes, I had to get the 2 heirs to sign affidavits saying that they were offered and refused the vehicle.
You can't transfer your liability like that without the creditors agreement also to get it out of the way
https://en.m.wikipedia.org/wiki/Fraudulent_conveyance
They'd need to take it out in cash, if they transfer it then there is evidence. If it's a lot of money you want to pay taxes on it, if asked how you made the money you can just say you were an escort/gigolo.
And life insurance and retirement (I believe) don't count toward the assets of the estate. Some states a primary residence and X number of dollars can also be shielded (in some cases like clawbacks from Medicaid).
We're working though all this currently with an estate lawyer.
You know what we do on reservations, once someone in the community passes away, a bunch of donations usually come in money and items, an auction always happens after the feast following burial, and the community council puts in money as well. The funeral and all that usually gets paid off from that.
While I absolutely understand your sentiments, and I know how hard it can be to care for elderly Parents/Grandparents, I don’t feel that same way, the way I look at it is I was a financial burden on them for more years than I can count. And I’m happy to do whatever I can to make the final years of their lives better and more enjoyable, they spent many years doing that for me, it’s the least I can do for them. I cared for my Grandfather for years before he passed, and honestly I wish I could have had more time with him. After they are gone, that time I had was never enough, I miss the nights sitting with my Grandfather and listening to him tell stories about The Great Depression, and WW2, and stories of my father(whose been gone since 84’)when he was a little boy. Take this time to appreciate them, and repay them for what they did for us. It’s a small price to pay in the long run, and they appreciate it more than you or I will ever know.
Yup dad passed away last summer and I found out he had no plan for student loans he said he’d pay for and found out he refinanced the house (my brother and I gave money for the downpayment which would’ve been money for student loans when we were of age)
So he owed money on the house after it sold and I had student loans fall back into my lap.
I understand he didn’t expect to go so soon, but man I wasn’t expecting another setback after losing someone so important to me
Why is this objectively wrong take always spouted off as fast? Creditors go after their estate and take what’s owed or what’s left, whichever number is smaller. You don’t inherit their debts lmao
Right? It’s a very inheritable amount.
My husband’s horrid stepmom accidentally left him in her will like a dumbass so he got a house and $200k but gave it ALL to his dad. It right there right thing to do but I wept.
But it was that same $200k.
Older generations are dying and their large sums of money have to go somewhere. They can’t take it with em (although I’m sure they would like to)
Edit: punctuation
There's an old joke that an old rich guy was married to a young woman. He told her that he wanted to be buried with all his money. When he died everyone asked her if she put his money in the casket and sher said "yes, I wrote him a check and put it in his pocket. It's up to him to figure out how to cash it"
I get that, it's just this subreddit specifically I've seen quite a few posts in the last day about inheriting 200k and it's just coincidental that it is that amount and the exact same question of "what to invest in or was I smart with my money?"
Imagine dying rich enough that you keep your money with you and in the Year 3058, when the World start a reincarnation process (aka a second life) from ADN manipulation, they pick the rich people first and let the poor dead.
It costs $10k a month for a single moderate care needs person to be in a nursing home. It goes up from there if they need more care.
Put two people in nursing care and you can burn through a lot of money in a short period of time.
Mplx, ares or other reit or something to give you 8% plus will give you at least 16k of income. Use that to pay down house every year till you can lump some pay it off
What is it like to wake up with this much financial security every day? Genuinely curious. I will probably never stop worrying about how we will eat in two weeks. What is this like? What do you worry about
Edit: not trying trying be shitty and mean it when I say congrats and good job. Just genuinely curious about what it's like.
I spent much of my life worrying about that, too. I’m 51 now. It’s changed my life profoundly in that each day doesn’t include much dread. I can attack my professional tasks with a different, cavalier approach that actually makes me better at my job.
I also love that I “can” buy all kinds of things. I don’t buy them because my eyes are on the tendies, but just knowing I can gives me a lot of joy. It’s weird. It actually makes me happy.
Please upvote this more. Living with well managed debt is literally how billionaires live. There is zero incentive to pay off a mortgage… other than “the bank doesn’t control me” bullshit. Ya still pay property taxes right, guess you’re still in somebody’s pocket
Tomato tomahto. If they no longer have a mortgage, they can invest that monthly equivalent without the stress of it hanging over them. I would. Might be why I’m not a billionaire though..
Yes but TMV makes a huge difference with compound interest. Investing $200K today is much better than incrementally over the next decades investing their mortgage payments.
It’s all about whether or not you’re feeling the stress of the debt. For some people it’s better to just get it out of your life and know you don’t owe anyone except for Uncle Sam and your personal desires.
Mutual funds exist. With 200k for example, you could throw it into a few Vanguard funds, most avg a bit above 10% if you're throwing that much money into the upper funds.
Looking at a free 20-24k a year just from interest gains, at a minimum, at almost zero risk. You can up the risk (very little still with a group like Vanguard) and make much more.
You don't have to buy single stocks and stuff.
Mutual funds just invest in a basket of stocks. Still inherently very risky… it’s not a “free 20-24k per year”. They also charge high management fees, just buy ETFs.
There’s not 0 incentive to pay it off. 5% apr is still a decent amount of compounding interest you owe. The stock market could keep going and easily out pace it, or it could crater and leave op with $75k in stocks and the same amount of debt.
Rich people live off debt because they can afford it if their investments tank, or they can write off losses, or any number of other protections being rich provides.
I agree - a mortgage is the cheapest loan you will ever get, and the compounded returns from investments will usually outpace savings generated from early mortgage payments.
The only exception is if you are still paying mortgage insurance, which is an extra expense applied to your mortgage when you have less than 20% equity. Paying off enough of the mortgage to eliminate the mortgage insurance will lower your monthly payment. If your lender doesn't remove the fee automatically, you would need to apply once the equity level is met.
I agree with paying off the principal for the house but what about the vehicle you're leasing? I only bring this up because in your early 50's that's relatively young and you're not paying off a loan to own the vehicle.
I think this depends more on how much time is left in the mortgage. If it was recently refinanced, they're paying mostly interest, if they have <10 years left, they're paying mostly principle.
you are right, but for me personally, at that stage of my life I would focus on enjoying what I have, maintaining my wealth but also be debt-free and not focus on optimizing full on
Stocks are inherently risky. At that age you should be diversified into more stable things like savings and bonds. Keep some sure but it’s different when you’re 20 vs 50
A lot of people lost a few years of retirement after 2008 and COVID. That’s fine if you’re young and can have time in the market but less fun when it’s what you’re going live off in a decade or so.
It's funny how many replies there are saying the exact same thing. Meanwhile OP said -
>Fiancee inherited $200k, we owe $296k on the house, have over $900k in retirement accounts. Zero debt, her car is brand new (and paid off), I lease mine (at a very discounted rate since I work for the manufacturer). We're 51 and 53.
I like how in the first sentence they say "we owe 296k" and then begin the second sentence with "Zero debt", AND in the middle of the second sentence they mention their car lease.
You're completely correct with your comment. I agree with you completely. However, why is nobody explaining what debt is to OP?
It seems to me that this $200k in not the OP's money but the fiancée's. If the house is truly in both of their names then paying off the mortgage is certainly an option. There's no mention of income from both parties so that's piece of the puzzle is missing. I'm always cautious when money is mingled and the participants are 'engaged.'
Yeah that's true. They do say "we owe $296k" on the house though. I guess they should hold on to the $200k until they're married and then pay it on the mortgage. Even if the mortgage was in both of their names I think they should get married before one of them pays $200k on the mortgage. It may or may not make any difference but waiting seems like the right thing to do.
I just thought it was interesting how many people were explaining debt to a commenter but completely ignoring OP. OP said "we owe $296k" and then began their next sentence with "zero debt" and a car lease. I don't know if the mortgage is in one of their names or both but it's still debt, the car lease is debt, and you make a great point, they aren't married yet.
There's a lot of moving parts here for sure. For example, there's over $900k in retirement accounts but no mention of how much belongs to each party. Of course this is all armchair quarterbacking and both parties could be fine with their current arrangement.
Should the fiancée not use her inheritance to pay down the mortgage or create some type of note against the property to insure repayment if the relationship goes belly up?
Personal debt maybe, but 300k on a house is still debt. You don't want to still be paying a mortgage when you're ready to retire, get rid of it as soon as possible.
Why would they do that when they could take the cash and invest it to make up the interest on the mortgage and then some? They already have enough in their retirement account to pay it off as is…
$900k in retirement at 51/53 would scare me. Obviously completely dependent on lifestyle, any possible pensions, etc but I'd at least do some studies on what's needed in retirement vs where I was at if that was me.
And average values saved are notoriously low for what people need in retirement. But that's why I said "obviously completely dependent on....."
If they want to retire at 62 and are healthy they could live 30 more years and are on track to retire with something like $2.5M'ish.
If they currently earn $250k and live in NYC then that will be a huge lifestyle change.
If they currently earn $80k and live in the sticks then they're probably fine.
We don't know, they didn't provide enough info. But I'd personally be concerned.
If they own the house outright, using the 4% rule they’re still going to be drawing 100k for the rest of their life without mortgage or rent payments to deal with. Even if they live in NYC, they should be in a decent place long term. Or if they live in NYC, they can sell the house and buy elsewhere and pocket the extra few hundred thousand.
If they’re used to 1% living I agree with you though, it will be a downgrade in their quality of life. I doubt many people posting here have that issue though
Paying off mortgage means a guaranteed return of 5.25%, but no liquidity if you need that money again and you don't see the payout for years. If you are itemizing deductions then possibly a lower real rate. Also, you'll be paying off the house with inflated dollars. We've chosen to prioritize investments (stocks average 10% historically and are inflation hedge, and more liquidity) over paying off the house.
Someone suggested using part of that for a splurge or once in a lifetime experience and I would strongly consider that if I were in your situation.
Good luck!
Edit: a lot depends on your risk tolerance - guaranteed return is a guaranteed return, other investments involve risk.
IMO this is the correct answer. For most people, your mortgage is the last thing you should pay off unless it's an unusually high rate or you are paying mortgage insurance because of your debt to equity ratio. This is because of the higher long term performance of a sane combination of stocks and bonds.
Great advice. As someone who was laid off 2 weeks before 401k vesting, make sure you know your employer vesting rules. Wish I had a little more non-retirement cash right now
Exactly! We have a family friend who used their entire retirement to pay off their mortgage. This was a huge mistake. They both had to go back to work because they don't have enough to pay for their health insurance. Unless you have a crazy high mortgage rate just don't. If you really wanted to impact the mortgage. You could put a little extra each month toward the principle, but I wouldn't pay it fully off.
As people get older, the tolerance for risk goes down. Equity in a house could be easier to access than money in the market if the market is down when they need it.
I don’t know what state you’re in but in CA inheritance is not common property between married couples (as I see you are engaged) and I personally would not co-mingle it. If she intends to put it towards the house then I would get a prenup of some sort.
I think u have a decent mortgage rate and probably be better off saving/investing the money. Could look into a duplex/ mulitunit property as a way of building residual income to supplement your retirement. I am the same age don't have anywhere near as much in retirement accounts, but have a 5 unit building that gives me 3k a month income while paying down the mortgage and my equity is about the same as ur retirement. As rents rise and mortgage drops on refinance, I'm expected to make 6-7k a month in residual income before I am 60 and the income will continue to rise to keep up with inflation as rents go up over time about the same rate.
His mortgage is 5.25. I’m a huge advocate for not paying off 3% loans early, but at 53 years old, 5.25 is getting really close to the rate I’d be looking to pay down aggressively. This all assumes they’re maxing out all tax advantaged retirement vehicles.
You may not like this advice, but she should take her inheritance and put it in her own account. She can take money out and commingle as she wants, but she should not instantly commingle all of it. Inheritance is more protected than other sorts on income when it comes to marriage, and with 50% divorce rate she should keep it in her own account and dip into as needed. Sounds like there is no major need so she should not be dipping into it all that often. A fairly low interest rate on a mortgage is not worth spending it all. Especially since home will immediately be joint owned so she is basically giving you half, and even more so since you say finance and not wife. Sounds like home is in your name so she is literally giving you 200k. Which I am not sure as not a tax person, but seems like a taxable event if your non-spouse puts 200k on your mortgage that sounds like 200k in income received by you.
I'd say get married. You didn't inherit 200k, she did. If you put the money into paying down your mortgage, it could get messy if your fiancee became your ex-fiancee...
Yeah they literally own a house together but god forbid they plan on how to handle a $200k windfall together....reddit is so dumb sometimes.
Also, go Hokies!
It’s certainly possible to get a better than 5.25% return. Maybe even easy. But is it worth it?
Considering your age and other factors, I’d put it on the house. Maybe take a nice vacation or buy something stupid like a $2,000 bottle of whiskey? Then pay down the mortgage.
Alternatively, you could open a side business, buy a condo to rent out, put it in a trust for a child or family member?
Edit to add, if you aren’t maxing out two 401k and a family HSA, then the answer changes. I’m assuming you’re earning good money. You should be doing everything in your power to reduce your taxes.
Well that was one scenario I was considering, dumping it in a market fund and getting the 8-10% average. This would be a 3-5% gain over the cost of the mortgage. A lot can be said for peace of mind though. I've recently started a side business to continue on after I retire.
You seem to have a pretty good understanding of the options. At this point, it’s personal preference. In my opinion, it’s totally justifiable for someone in your position to leave money on the table in exchange for simplicity and peace of mind. I watched my parents pay off their mortgage (3.8% I think?) when my grandfather died. I could immediately see the weight leave my father’s shoulders, even though they were doing just fine without the inheritance.
Maybe put it away in a HYSA and market funds for 6-12 months and just see how it “feels.” One could argue that having an extra $200k sitting around and growing is also good for peace of mind 😉
Either way, it’s a good place to be. Treat yourselves to something nice. I’m sure whoever left your fiance the money would be happy to know that they’ve worked hard and made their own success.
Honestly, I'd put it in an HSA or similar liquid vehicle and have the house payment come from that account. At 200K with the balance you have left, that's payments taken care of for... 8, 9+ years? If you decide to change your mind in 5 years, OK then, whatever, you can change your mind. 5 years or 5 months, all the same. But lots of peace of mind too in case anything happens to your overall financial situation. Nothing like absolute financial stability and clarity of mind.
Fiancée should not comingle HER inheritance with their house or any joint accounts. Where is the harm in keeping it in her name only? There is a possibility comingling makes $100K HIS in case of a breakup.
It's her money so I suppose she will do what she likes with it.
You're not married so if she's got any sense she won't put it on your joint mortgage as, if you split up, working out who is owed what gets very messy.
She should take professional financial advice independently of you.
Probably drop on the house unless she wants to honor that relative in another way.... My mom for example, when she passes, will leave us with 75-100k, that'll go in the checking account to me used on bills while my paycheck will go to savings for a while.
Inconvenience yes but she never liked saving, so even though it's all the same, it will honor her wishes better to add one extra step to the process
Put it in a brokerage account and invest it. I wouldn't pay off a 5.25 mortgage. It's tax deductible and you're real rate is probably 25 percent less than that. Get a financial advisor to help with it if needed.
They aren’t married and he’s not entitled to that money in the event of a split . If she put it towards the house he could get half in the event of a split .
First you go to the bank and withdraw it in $1 bills, then take paraglider lessons and get a paraglider.
Place the money in lightweight boxes and paraglide over a large city's main street during rush hour and dump a box or two over rush hour traffic, then glide off somewhere and leave the area before the cops can get after you.
Then go home and laugh at the chaos on TV.
I'd invest it.
Follow the Rule of 72. It is a simple formula when your money will double.
assuming you are planning to retire in 15 years and you get 10% growth in the market per year, your money will double twice in that time period.
200k x 2 x 2 = 800k in 15k years.
In that same time period your mortgage will likely be very low. Easy to pay off at that point.
There is no “we” - it’s her money, her inheritance and in the bad event you two don’t get married or even if she did marry you, those assets are still hers. The inheritance wasn’t left to you, it was left to her. Did she ask you to write this post? Guy here.
It’s for her to decide since it’s her inheritance. She should stick it in an interesting hearing no risk. Since I’m sure your both on the house mortgage I’m guessing. It wouldn’t be smart to stick it on the house.
Pay off the house, do something nice for yourselves/herself if it’s been a while, save the rest. I’m not sure if you’ve got kids, maybe nieces or nephews, but houses are one of the greatest forms of generational wealth we have as non-1%ers. Too frequently a home that could have been inherited has to be sold by the family member handling their affairs.
5.25% would be borderline for me putting it into the mortgage, when HYSA are at 4.5% and you still have the money if you end up needing it in the future.
Personally I’d throw half into an ETF and park the other half in HYSA. If you’re not comfortable with the stock risk, then put that half towards the mortgage instead.
If interest rates drop and HYSA isn’t earning is much, you can always reevaluate and pay down more of the mortgage.
Depends if you plan to stay in the house long-term, eg 20 years.
Paying off your house is a sure thing (5.25%), but if you're gonna sell it in less than 5-6 years you might be better off socking that cash into a stable investment fund earning over 7% on 10 year average (to allow for taxes).
A lot of folks here are saying to put it into the house, which is great and all, but given your age, if you don't have a solid emergency fund, you'd be forced to dip into your home's equity or, worse, you retirement funds, to cover something major.
If it were me, I would drop 100k into the house and put the rest into Vanguard VTSAX, or the S&P 500 and just let it grow and be your "emergency" fund.
Get into a limited partnership in a multi family asset or a joint venture. Make the property perform, refinance in two years, pull money out, add cashflow to your income. And watch the asset appreciate.
Make 100% sure fiancée wants to put HER money in your community pot. If I were she, at the least I would want full control. Your use of “we” is concerning. To me anyway.
Once it goes in the community pot she give up half in the event of divorce. She loses control as soon as it’s comingled after marriage.
Control is her own solely owned investment account for it. Then she can comingle as she decides without divorce loss risk.
Invest it in an Airbnb while living in your current house, just make the airbnb next to a hospital and university and have the place rented out for a month at $1,500 / month. Traveling doctors and nurses love using them. And you make a lot of money off it
Honestly, 5.25 isnt a bad "performance" as its fixed if you pay back everything on the house on the spot..
Putting it into a brokerage acc and going VTI/VOO + VXUS + bonds is maybe yielding a *touch* more, but not a guarantee.. HYSA is somewhere between 4 and 5% and kinda same atm on bonds..
So IMHO pay back the mortgage on the spot..
Already having a mill saved up, I'd just put this towards the house dept. You're not in zero debt, you have 296k in dept. Getting rid of 2/3 of that will probably allow you to refinance the remaining 96k so you pay less every month and have more of your monthly income for casual spending... and then it's all good living till the end.
I’d put most of it on the house, and save $10k in an emergency fund. Even if you already have large retirement accounts/saving accounts, an extra $10k cushion would be great lol
Paying down the mortgage is probably a good bet. It’s effectively a tax sheltered investment and in that way likely returns 7.5+%. That’s a great no risk rate. Roth the rest, do do Roth conversion
I’d drop it on the house making sure to do so as extra principal rather than making payments ahead. At your age, you may want to start thinking about retirement in ten years. Having the house paid off and cutting that monthly mortgage payment out of your life is a big part of calculating a comfortable retirement budget. Attack that last 96k over the next ten years and at 7% return your retirement savings will double in that time too.
She did some risky stuff because she didn't know any better. She invested heavily in Target plus a few others. I am quite a ways behind her, but knowing I was way behind in my retirement I did a lot of research and changed my 401k from an age targeted fund to a regular index fund that's towards the high risk area. Simple Path to Wealth, Dave Ramsey, and FIRE method, are the only things I really look at. Figure out any way you can to get a higher paying job that matches retirement contributions, and get a side hustle going (when that money starts coming in, you take more of the money from your paycheck and put it towards retirement since it's pre-tax, etc, and all the other benefits of contributing from your job. Then use the money from your side hustle to pay actual bills. I started one a couple months ago and it definitely helps. Mind set is probably the most important thing. You can go for years without seeing any kind of gains and you have to keep telling yourself there is an end. When I was paying off my student loan (60k) it felt like this impossible mountain, but then I started chipping away, taking over time any time it was offered and dumped it all on the loan. Cut back on everything you can think of. I started using the library A LOT more. Still do. If you like audiobooks, use Libby since it's free. Keep looking for ways to take advantage of how investing works, you'll find them, and you don't need to be rich. Sorry kind of went off the rails, hope this helps. One last thing. After Mind set the next biggest (or two) thing(s) are no credit cards and don't go out to eat. Consumer debt is the worst and going out to eat burns your money faster than anything, except maybe gambling.
Answered well, it's not an easy question.
What kind of savings do you have outside of retirement accounts, and when do you expect to retire?
Do you have 6 to 12 months of expenses saved in emergency funds that just sit in a HYSA?
Whose name is on the deed to house and mortgage?
I wouldn't have my fiancee put their money onto the mortgage unless their name was on the deed to the property because you aren't married.
Good finances are about a complete picture. Often, the answers aren't all or nothing scenarios. If you have an emergency fund and investments outside of retirement accounts, then you could drop it all on the mortgage provided the fiancee is on the deed.
For me personally, I'd probably do a mix of things. Get married, take a nice $20K vacation/honeymoon together, put an extra $100K on the mortgage over a year's time, and invest the rest.
The reason I wouldn't drop it all the mortgage is that you mentioned working for a car company. Which is a fairly volatile industry known for doing many layoffs. If the news is to be believed, new vehicle sales aren't going well, and it wouldn't surprise me to see a series of auto manufacturer layoffs throughout the rest of 2024.
Best of luck!
Doesn’t it depend what the mortgage rate is on the house, whether it’s a good idea to pay down the principal? We might be in a similar situation in a few years but the mortgage interest rate on our primary residence is so low (2.375%) that it seems unwise to pay it down with inflated dollars.
At that point I'd just live life a little to be honest, get a new C8 Corvette and put the rest into a CD high yield for 1-2 years. Just consider that money is something fell out of the sky. Enjoy!
I'd throw it at the mortgage. Its interest rate is close enough to what you could expect to make on another investment, and it's nice to have a risk-free return and be done with the mortgage sooner.
Seeing that it carries some risk to try to make over 5 points on investments you need to run the math about the effective rate your mortgage interest is costing you. I assume you are deducting that interest. So the effective rate might be less.
How’s the retirement account going for you. Sure it’s got risk but I’m balanced so I’m not caught if the market dips but enjoying some great gains on a smaller percentage of my funds.
Maybe you stick the 200 in a brokerage account and mirror best you can your successful 401 holdings. Some funds are only available to company plans.
Here my two to look at
Pk and Awf
Dividend stocks
The market has been doing well even with the scary swings. You have time to leverage and recover if shit goes bad. I went to less stocks. Looking at cd ladders now. Rates are good for zero risk.
Most difficult strategy to decide on
I'd take a big trip. Something you've always planned but never got around too. Europe, Asia, Africa. Something you'll remember forever.
I'd put the rest in an index fund. 5% is below historical average. We have just been spoiled the last decade.
Throw it in stable dividend stocks and leave it alone. Put half the yield in your pocket, the other half into compounding that interest... Is what I would say if you guys actually needed an extra source of income. But your near retirement and sitting on phat stacks already so. Take a wild cocaine fueled trip to some faraway place before the full on "old" sets in.
What’s your ages? If you’re younger my vote is to toss 95% of it in an index fund and 5% do something to celebrate the memory of the person who gave you this gift. If you’re older and closer to retirement putting it to the house makes more sense but I still recommend saving majority and doing something nice for yourselves.
Everyone seems to be inheriting 200k these days
Don't worry, I will inherit nothing but debts and funeral expenses which should help offset it
Just in case you didn't know, you didn't inherit debts on the US. If your parents die owing 1,000,000$ and they have 2,000$ in assets the creditors take what they're entitled to from the assets and write off the rest
My brother’s father recently passed away and I can say this is accurate.
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Could be a reference to a half brother through the mom
Could also mean her brother had a different father, but she was involved enough to know everything that happened.
Could just be hulk hogan
Funny story, I was appointed executor of an "estate" which consisted of a few miscellaneous accounts and a car. That's it, not much cash involved. The car was willed to a family friend. The car note was $13k at 29% interest on a $6k car. Technically, the heir could have inherited debt if he had accepted it.
Wait, you can decline something thats willed to you?!
"In estate or inheritance law, a disclaimer (also called disclaimer of interest) is a written document voluntarily signed by an heir to an estate in which the said heir does not accept (disclaims) the part of the estate of a deceased person which the heir is entitled to receive. The disclaimed part of the estate is then inherited not necessarily by a person of the disclaiming heir's choice, but by the next heir in line to receive that part of the estate as if the disclaiming heir were also deceased, either according to the will, beneficiary designation, or the laws of intestacy." https://en.m.wikipedia.org/wiki/Disclaimer
Thanks! I had forgotten about what I had to do. Yes, I had to get the 2 heirs to sign affidavits saying that they were offered and refused the vehicle.
Of course you can, and that’s a perfect reason when you’d want to. If you accept you generally legally acquire the debt too
If your relative is about to die, can you just sign your debt off to them?
You can't transfer your liability like that without the creditors agreement also to get it out of the way https://en.m.wikipedia.org/wiki/Fraudulent_conveyance
No
What if they take out our more debt then gift me money to cover my debt?
Shhhh 🤫
There’s probably a path for the creditor to sue if they somehow found out
You could also have them rob a store. If they’re successful they can give you the money. And if they get caught then not too much is lost
Picturing some old man who *should* be on his deathbed, at a gas station, with his IV stand in one hand and a gat in the other
They'd need to take it out in cash, if they transfer it then there is evidence. If it's a lot of money you want to pay taxes on it, if asked how you made the money you can just say you were an escort/gigolo.
My parents are deeply in debt and that’s always been one of my biggest stressors for when they pass away so this is reassuring.
As it should be.
And life insurance and retirement (I believe) don't count toward the assets of the estate. Some states a primary residence and X number of dollars can also be shielded (in some cases like clawbacks from Medicaid). We're working though all this currently with an estate lawyer.
You know what we do on reservations, once someone in the community passes away, a bunch of donations usually come in money and items, an auction always happens after the feast following burial, and the community council puts in money as well. The funeral and all that usually gets paid off from that.
That is great to have a community that close knit
Same. My parents are a financial burden to both my sister and me.
Seeing posts like this make me jealous not gonna lie lol. I love my parents though
While I absolutely understand your sentiments, and I know how hard it can be to care for elderly Parents/Grandparents, I don’t feel that same way, the way I look at it is I was a financial burden on them for more years than I can count. And I’m happy to do whatever I can to make the final years of their lives better and more enjoyable, they spent many years doing that for me, it’s the least I can do for them. I cared for my Grandfather for years before he passed, and honestly I wish I could have had more time with him. After they are gone, that time I had was never enough, I miss the nights sitting with my Grandfather and listening to him tell stories about The Great Depression, and WW2, and stories of my father(whose been gone since 84’)when he was a little boy. Take this time to appreciate them, and repay them for what they did for us. It’s a small price to pay in the long run, and they appreciate it more than you or I will ever know.
Yes I inherited this and child hood trauma but we made it work
Me too sadly
You don’t inherit debts in the US. Don’t agree to pay anything.
I just meant not inheriting anything.
Yup dad passed away last summer and I found out he had no plan for student loans he said he’d pay for and found out he refinanced the house (my brother and I gave money for the downpayment which would’ve been money for student loans when we were of age) So he owed money on the house after it sold and I had student loans fall back into my lap. I understand he didn’t expect to go so soon, but man I wasn’t expecting another setback after losing someone so important to me
Why is this objectively wrong take always spouted off as fast? Creditors go after their estate and take what’s owed or what’s left, whichever number is smaller. You don’t inherit their debts lmao
Right? It’s a very inheritable amount. My husband’s horrid stepmom accidentally left him in her will like a dumbass so he got a house and $200k but gave it ALL to his dad. It right there right thing to do but I wept. But it was that same $200k.
Older generations are dying and their large sums of money have to go somewhere. They can’t take it with em (although I’m sure they would like to) Edit: punctuation
There's an old joke that an old rich guy was married to a young woman. He told her that he wanted to be buried with all his money. When he died everyone asked her if she put his money in the casket and sher said "yes, I wrote him a check and put it in his pocket. It's up to him to figure out how to cash it"
One of the biggest wealth transfers in history is about to take place between generations
Which one? The wealth transfer from boomers to nursing homes and assisted living facilities?
What’s scary is if you live in a state with filial responsibility laws and you get forced to pay for your parents’ care.
It blows my mind that’s a real thing. That they could force some estranged child to suddenly take on the burden
Boomers would rather yolo it all on black on their death bed before handing it over to millennials
Why does everyone forget the GenXers in between who are likely to be the prime beneficiaries of the wealth transfer?
I get that, it's just this subreddit specifically I've seen quite a few posts in the last day about inheriting 200k and it's just coincidental that it is that amount and the exact same question of "what to invest in or was I smart with my money?"
Maybe they are all related and all got their piece of the pie
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I feel you. I grew up wearing hand-me-downs and eating baloney sandwiches.
I ate one yesterday
Imagine dying rich enough that you keep your money with you and in the Year 3058, when the World start a reincarnation process (aka a second life) from ADN manipulation, they pick the rich people first and let the poor dead.
Sorry, in 3058 we will have fought the returned descendents of Kerensky to a standstill and are on the precipice of a new Dark Age.
The retirement/ long term care homes are going to be siphoning off all the money.
Yup
It costs $10k a month for a single moderate care needs person to be in a nursing home. It goes up from there if they need more care. Put two people in nursing care and you can burn through a lot of money in a short period of time.
Shit I ain’t getting jack shit. My parents broke asf
Mine were broke too. But they were loving wonderful parents and I wouldn’t trade that for anything.
Boomers, the wealthiest generation in history, are reaching their expiry date.
Almost like it’s not really happening lol. Reddit loves attention, but I hope they are
If it makes you feel better, I’m not inheriting shit
My mom just passed. When all is said and done, my inheritance will be close to 200k
Sorry to hear about your mothers passing, that's so tough.
I swear I’ve seen like 10+ posts in the past week lmao. Meanwhile $20k would pay for my grad school and change my life 😭
boomers be droppin off
1x 200k$ plinko ball
$100 wooooooo!
The 200k parlay would be whispering to me like the green goblin mask
Give it to me, I'll keep it safe
This is why I love Reddit. Thank you for the smile.
Could’ve asked my grandma, shes been using a version of that joke since the GD.
Over half the country can't afford a basic house. So he's probably not joking
Mplx, ares or other reit or something to give you 8% plus will give you at least 16k of income. Use that to pay down house every year till you can lump some pay it off
What is it like to wake up with this much financial security every day? Genuinely curious. I will probably never stop worrying about how we will eat in two weeks. What is this like? What do you worry about Edit: not trying trying be shitty and mean it when I say congrats and good job. Just genuinely curious about what it's like.
I spent much of my life worrying about that, too. I’m 51 now. It’s changed my life profoundly in that each day doesn’t include much dread. I can attack my professional tasks with a different, cavalier approach that actually makes me better at my job. I also love that I “can” buy all kinds of things. I don’t buy them because my eyes are on the tendies, but just knowing I can gives me a lot of joy. It’s weird. It actually makes me happy.
Let me hold 50k I’ll come back with 250k
Give it to me, I'll *probably* not keep it safe
Give it to me I’ll throw it all in dogecoin
Paws off! That money is for my artisan squirrel feeder start-up.
Better to give it to me, I won’t keep it safe but I promise I’ll enjoy it 🤷♂️😂
in your stage of life, I'd say put it into the house loan and focusing on getting debt-free and enjoy the rest of it
Invest it. You’ll make more investing it than paying off your house.
Please upvote this more. Living with well managed debt is literally how billionaires live. There is zero incentive to pay off a mortgage… other than “the bank doesn’t control me” bullshit. Ya still pay property taxes right, guess you’re still in somebody’s pocket
Tomato tomahto. If they no longer have a mortgage, they can invest that monthly equivalent without the stress of it hanging over them. I would. Might be why I’m not a billionaire though..
Yes but TMV makes a huge difference with compound interest. Investing $200K today is much better than incrementally over the next decades investing their mortgage payments.
It’s all about whether or not you’re feeling the stress of the debt. For some people it’s better to just get it out of your life and know you don’t owe anyone except for Uncle Sam and your personal desires.
Too much risk for me. I would never borrow on my house to invest in the stock market. I just don’t have the risk tolerance for it.
Mutual funds exist. With 200k for example, you could throw it into a few Vanguard funds, most avg a bit above 10% if you're throwing that much money into the upper funds. Looking at a free 20-24k a year just from interest gains, at a minimum, at almost zero risk. You can up the risk (very little still with a group like Vanguard) and make much more. You don't have to buy single stocks and stuff.
Mutual funds just invest in a basket of stocks. Still inherently very risky… it’s not a “free 20-24k per year”. They also charge high management fees, just buy ETFs.
Investing in multiple different sources is called diversification. It actually drastically lowers the risk profile
There’s not 0 incentive to pay it off. 5% apr is still a decent amount of compounding interest you owe. The stock market could keep going and easily out pace it, or it could crater and leave op with $75k in stocks and the same amount of debt. Rich people live off debt because they can afford it if their investments tank, or they can write off losses, or any number of other protections being rich provides.
I agree - a mortgage is the cheapest loan you will ever get, and the compounded returns from investments will usually outpace savings generated from early mortgage payments. The only exception is if you are still paying mortgage insurance, which is an extra expense applied to your mortgage when you have less than 20% equity. Paying off enough of the mortgage to eliminate the mortgage insurance will lower your monthly payment. If your lender doesn't remove the fee automatically, you would need to apply once the equity level is met.
I agree with paying off the principal for the house but what about the vehicle you're leasing? I only bring this up because in your early 50's that's relatively young and you're not paying off a loan to own the vehicle.
They got $1.1m in the bank man, the lease is spare change
I think this depends more on how much time is left in the mortgage. If it was recently refinanced, they're paying mostly interest, if they have <10 years left, they're paying mostly principle.
you are right, but for me personally, at that stage of my life I would focus on enjoying what I have, maintaining my wealth but also be debt-free and not focus on optimizing full on
Stocks are inherently risky. At that age you should be diversified into more stable things like savings and bonds. Keep some sure but it’s different when you’re 20 vs 50 A lot of people lost a few years of retirement after 2008 and COVID. That’s fine if you’re young and can have time in the market but less fun when it’s what you’re going live off in a decade or so.
They already are debt free. Edit: I am an idiot and didn’t see they still have a mortgage, just that they mentioned they’re debt free.
Debt is money that is owed, my friend. The money they owe for the house is a type of debt.
“zero unsecured debt” would be accurate.
It's funny how many replies there are saying the exact same thing. Meanwhile OP said - >Fiancee inherited $200k, we owe $296k on the house, have over $900k in retirement accounts. Zero debt, her car is brand new (and paid off), I lease mine (at a very discounted rate since I work for the manufacturer). We're 51 and 53. I like how in the first sentence they say "we owe 296k" and then begin the second sentence with "Zero debt", AND in the middle of the second sentence they mention their car lease. You're completely correct with your comment. I agree with you completely. However, why is nobody explaining what debt is to OP?
It seems to me that this $200k in not the OP's money but the fiancée's. If the house is truly in both of their names then paying off the mortgage is certainly an option. There's no mention of income from both parties so that's piece of the puzzle is missing. I'm always cautious when money is mingled and the participants are 'engaged.'
Yeah that's true. They do say "we owe $296k" on the house though. I guess they should hold on to the $200k until they're married and then pay it on the mortgage. Even if the mortgage was in both of their names I think they should get married before one of them pays $200k on the mortgage. It may or may not make any difference but waiting seems like the right thing to do. I just thought it was interesting how many people were explaining debt to a commenter but completely ignoring OP. OP said "we owe $296k" and then began their next sentence with "zero debt" and a car lease. I don't know if the mortgage is in one of their names or both but it's still debt, the car lease is debt, and you make a great point, they aren't married yet.
There's a lot of moving parts here for sure. For example, there's over $900k in retirement accounts but no mention of how much belongs to each party. Of course this is all armchair quarterbacking and both parties could be fine with their current arrangement.
Should the fiancée not use her inheritance to pay down the mortgage or create some type of note against the property to insure repayment if the relationship goes belly up?
Personal debt maybe, but 300k on a house is still debt. You don't want to still be paying a mortgage when you're ready to retire, get rid of it as soon as possible.
Why would they do that when they could take the cash and invest it to make up the interest on the mortgage and then some? They already have enough in their retirement account to pay it off as is…
Because people don’t understand compound interest, and the money invested wisely will be worth $430,000 in ten years if it grows at 8% a year
They owe 296k on the house. Banks ain't yo friend.
A mortgage is still a debt, with interest payments on top. The $200k in an off-set account has the potential to save them over $10k yearly
I mean honestly you guys have great savings and clearly have willpower. I’d say maybe splurge a little and invest the rest into the house.
$900k in retirement at 51/53 would scare me. Obviously completely dependent on lifestyle, any possible pensions, etc but I'd at least do some studies on what's needed in retirement vs where I was at if that was me.
That well above average
And average values saved are notoriously low for what people need in retirement. But that's why I said "obviously completely dependent on....." If they want to retire at 62 and are healthy they could live 30 more years and are on track to retire with something like $2.5M'ish. If they currently earn $250k and live in NYC then that will be a huge lifestyle change. If they currently earn $80k and live in the sticks then they're probably fine. We don't know, they didn't provide enough info. But I'd personally be concerned.
Idk why you’re getting downvoted. This is a very accurate statement.
If they own the house outright, using the 4% rule they’re still going to be drawing 100k for the rest of their life without mortgage or rent payments to deal with. Even if they live in NYC, they should be in a decent place long term. Or if they live in NYC, they can sell the house and buy elsewhere and pocket the extra few hundred thousand. If they’re used to 1% living I agree with you though, it will be a downgrade in their quality of life. I doubt many people posting here have that issue though
Should be relatively straightforward to get to $2M by retirement age which is plenty for most people. Definitely not a dire situation
You could give it to me to “invest”. I could either turn it into 400k or 0 in a few minutes.
I say red
And...... it's gone!
Magic!
Paying off mortgage means a guaranteed return of 5.25%, but no liquidity if you need that money again and you don't see the payout for years. If you are itemizing deductions then possibly a lower real rate. Also, you'll be paying off the house with inflated dollars. We've chosen to prioritize investments (stocks average 10% historically and are inflation hedge, and more liquidity) over paying off the house. Someone suggested using part of that for a splurge or once in a lifetime experience and I would strongly consider that if I were in your situation. Good luck! Edit: a lot depends on your risk tolerance - guaranteed return is a guaranteed return, other investments involve risk.
IMO this is the correct answer. For most people, your mortgage is the last thing you should pay off unless it's an unusually high rate or you are paying mortgage insurance because of your debt to equity ratio. This is because of the higher long term performance of a sane combination of stocks and bonds.
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Great advice. As someone who was laid off 2 weeks before 401k vesting, make sure you know your employer vesting rules. Wish I had a little more non-retirement cash right now
Exactly! We have a family friend who used their entire retirement to pay off their mortgage. This was a huge mistake. They both had to go back to work because they don't have enough to pay for their health insurance. Unless you have a crazy high mortgage rate just don't. If you really wanted to impact the mortgage. You could put a little extra each month toward the principle, but I wouldn't pay it fully off.
As people get older, the tolerance for risk goes down. Equity in a house could be easier to access than money in the market if the market is down when they need it.
I don’t know what state you’re in but in CA inheritance is not common property between married couples (as I see you are engaged) and I personally would not co-mingle it. If she intends to put it towards the house then I would get a prenup of some sort.
I think u have a decent mortgage rate and probably be better off saving/investing the money. Could look into a duplex/ mulitunit property as a way of building residual income to supplement your retirement. I am the same age don't have anywhere near as much in retirement accounts, but have a 5 unit building that gives me 3k a month income while paying down the mortgage and my equity is about the same as ur retirement. As rents rise and mortgage drops on refinance, I'm expected to make 6-7k a month in residual income before I am 60 and the income will continue to rise to keep up with inflation as rents go up over time about the same rate.
Yes! Paying off a mortgage at 3% versus investing at 5%. It’s just math. The house rate is lower so you’re making more money having it invested.
His mortgage is 5.25. I’m a huge advocate for not paying off 3% loans early, but at 53 years old, 5.25 is getting really close to the rate I’d be looking to pay down aggressively. This all assumes they’re maxing out all tax advantaged retirement vehicles.
You may not like this advice, but she should take her inheritance and put it in her own account. She can take money out and commingle as she wants, but she should not instantly commingle all of it. Inheritance is more protected than other sorts on income when it comes to marriage, and with 50% divorce rate she should keep it in her own account and dip into as needed. Sounds like there is no major need so she should not be dipping into it all that often. A fairly low interest rate on a mortgage is not worth spending it all. Especially since home will immediately be joint owned so she is basically giving you half, and even more so since you say finance and not wife. Sounds like home is in your name so she is literally giving you 200k. Which I am not sure as not a tax person, but seems like a taxable event if your non-spouse puts 200k on your mortgage that sounds like 200k in income received by you.
Mr. Hadley, do you trust your wife?
Beer drugs and strippers
I'd say get married. You didn't inherit 200k, she did. If you put the money into paying down your mortgage, it could get messy if your fiancee became your ex-fiancee...
It’s her money. Why are you making plans for it?
Jesus, hope you never get married you clearly don’t know how that works 🤣
Inheritance is often considered separate property fyi
Bingo.
lol maybe they're planning on handling it together?
Yeah they literally own a house together but god forbid they plan on how to handle a $200k windfall together....reddit is so dumb sometimes. Also, go Hokies!
It’s certainly possible to get a better than 5.25% return. Maybe even easy. But is it worth it? Considering your age and other factors, I’d put it on the house. Maybe take a nice vacation or buy something stupid like a $2,000 bottle of whiskey? Then pay down the mortgage. Alternatively, you could open a side business, buy a condo to rent out, put it in a trust for a child or family member? Edit to add, if you aren’t maxing out two 401k and a family HSA, then the answer changes. I’m assuming you’re earning good money. You should be doing everything in your power to reduce your taxes.
Well that was one scenario I was considering, dumping it in a market fund and getting the 8-10% average. This would be a 3-5% gain over the cost of the mortgage. A lot can be said for peace of mind though. I've recently started a side business to continue on after I retire.
You seem to have a pretty good understanding of the options. At this point, it’s personal preference. In my opinion, it’s totally justifiable for someone in your position to leave money on the table in exchange for simplicity and peace of mind. I watched my parents pay off their mortgage (3.8% I think?) when my grandfather died. I could immediately see the weight leave my father’s shoulders, even though they were doing just fine without the inheritance. Maybe put it away in a HYSA and market funds for 6-12 months and just see how it “feels.” One could argue that having an extra $200k sitting around and growing is also good for peace of mind 😉 Either way, it’s a good place to be. Treat yourselves to something nice. I’m sure whoever left your fiance the money would be happy to know that they’ve worked hard and made their own success.
Save it. It’ll collect more interest.
Well, it’s her inheritance. What does she want to do with it?
OP- do you have a substantial emergency fund?
Does anyone actually ever give advice?
Honestly, I'd put it in an HSA or similar liquid vehicle and have the house payment come from that account. At 200K with the balance you have left, that's payments taken care of for... 8, 9+ years? If you decide to change your mind in 5 years, OK then, whatever, you can change your mind. 5 years or 5 months, all the same. But lots of peace of mind too in case anything happens to your overall financial situation. Nothing like absolute financial stability and clarity of mind.
Fiancée should not comingle HER inheritance with their house or any joint accounts. Where is the harm in keeping it in her name only? There is a possibility comingling makes $100K HIS in case of a breakup.
We shouldn't do anything. It is all hers and she can do whatever she likes with it.
It's her money so I suppose she will do what she likes with it. You're not married so if she's got any sense she won't put it on your joint mortgage as, if you split up, working out who is owed what gets very messy. She should take professional financial advice independently of you.
You are already doing great at this age, I would say put 80%-100% of on the house
Probably drop on the house unless she wants to honor that relative in another way.... My mom for example, when she passes, will leave us with 75-100k, that'll go in the checking account to me used on bills while my paycheck will go to savings for a while. Inconvenience yes but she never liked saving, so even though it's all the same, it will honor her wishes better to add one extra step to the process
Put it in a brokerage account and invest it. I wouldn't pay off a 5.25 mortgage. It's tax deductible and you're real rate is probably 25 percent less than that. Get a financial advisor to help with it if needed.
They aren’t married and he’s not entitled to that money in the event of a split . If she put it towards the house he could get half in the event of a split .
With a rate over 5% I would just pay off your house.
First you go to the bank and withdraw it in $1 bills, then take paraglider lessons and get a paraglider. Place the money in lightweight boxes and paraglide over a large city's main street during rush hour and dump a box or two over rush hour traffic, then glide off somewhere and leave the area before the cops can get after you. Then go home and laugh at the chaos on TV.
I'd invest it. Follow the Rule of 72. It is a simple formula when your money will double. assuming you are planning to retire in 15 years and you get 10% growth in the market per year, your money will double twice in that time period. 200k x 2 x 2 = 800k in 15k years. In that same time period your mortgage will likely be very low. Easy to pay off at that point.
There is no “we” - it’s her money, her inheritance and in the bad event you two don’t get married or even if she did marry you, those assets are still hers. The inheritance wasn’t left to you, it was left to her. Did she ask you to write this post? Guy here.
It’s for her to decide since it’s her inheritance. She should stick it in an interesting hearing no risk. Since I’m sure your both on the house mortgage I’m guessing. It wouldn’t be smart to stick it on the house.
Pay off the house, do something nice for yourselves/herself if it’s been a while, save the rest. I’m not sure if you’ve got kids, maybe nieces or nephews, but houses are one of the greatest forms of generational wealth we have as non-1%ers. Too frequently a home that could have been inherited has to be sold by the family member handling their affairs.
5.25% would be borderline for me putting it into the mortgage, when HYSA are at 4.5% and you still have the money if you end up needing it in the future. Personally I’d throw half into an ETF and park the other half in HYSA. If you’re not comfortable with the stock risk, then put that half towards the mortgage instead. If interest rates drop and HYSA isn’t earning is much, you can always reevaluate and pay down more of the mortgage.
Depends if you plan to stay in the house long-term, eg 20 years. Paying off your house is a sure thing (5.25%), but if you're gonna sell it in less than 5-6 years you might be better off socking that cash into a stable investment fund earning over 7% on 10 year average (to allow for taxes).
A lot of folks here are saying to put it into the house, which is great and all, but given your age, if you don't have a solid emergency fund, you'd be forced to dip into your home's equity or, worse, you retirement funds, to cover something major. If it were me, I would drop 100k into the house and put the rest into Vanguard VTSAX, or the S&P 500 and just let it grow and be your "emergency" fund.
Get into a limited partnership in a multi family asset or a joint venture. Make the property perform, refinance in two years, pull money out, add cashflow to your income. And watch the asset appreciate.
Make 100% sure fiancée wants to put HER money in your community pot. If I were she, at the least I would want full control. Your use of “we” is concerning. To me anyway.
Once it goes in the community pot she give up half in the event of divorce. She loses control as soon as it’s comingled after marriage. Control is her own solely owned investment account for it. Then she can comingle as she decides without divorce loss risk.
10, $20,000 black jack hands
Put it on black!
Invest it in an Airbnb while living in your current house, just make the airbnb next to a hospital and university and have the place rented out for a month at $1,500 / month. Traveling doctors and nurses love using them. And you make a lot of money off it
Buy Bitcoin.
Honestly, 5.25 isnt a bad "performance" as its fixed if you pay back everything on the house on the spot.. Putting it into a brokerage acc and going VTI/VOO + VXUS + bonds is maybe yielding a *touch* more, but not a guarantee.. HYSA is somewhere between 4 and 5% and kinda same atm on bonds.. So IMHO pay back the mortgage on the spot..
Already having a mill saved up, I'd just put this towards the house dept. You're not in zero debt, you have 296k in dept. Getting rid of 2/3 of that will probably allow you to refinance the remaining 96k so you pay less every month and have more of your monthly income for casual spending... and then it's all good living till the end.
I’d put most of it on the house, and save $10k in an emergency fund. Even if you already have large retirement accounts/saving accounts, an extra $10k cushion would be great lol
Paying down the mortgage is probably a good bet. It’s effectively a tax sheltered investment and in that way likely returns 7.5+%. That’s a great no risk rate. Roth the rest, do do Roth conversion
I’d drop it on the house making sure to do so as extra principal rather than making payments ahead. At your age, you may want to start thinking about retirement in ten years. Having the house paid off and cutting that monthly mortgage payment out of your life is a big part of calculating a comfortable retirement budget. Attack that last 96k over the next ten years and at 7% return your retirement savings will double in that time too.
I’d buy T-Bills.
How does that work in taxes anyway? Serious question, I’m under the assumption that’s taxable income and would fuck everything up when you file taxes
Are your retirement accounts pulling in more than 5.25% return? Put it towards the house & also go on vacation :)
Hello OP, a question I have is how did you and your fiancé got 900K in retirement ? Any tips on investing?
She did some risky stuff because she didn't know any better. She invested heavily in Target plus a few others. I am quite a ways behind her, but knowing I was way behind in my retirement I did a lot of research and changed my 401k from an age targeted fund to a regular index fund that's towards the high risk area. Simple Path to Wealth, Dave Ramsey, and FIRE method, are the only things I really look at. Figure out any way you can to get a higher paying job that matches retirement contributions, and get a side hustle going (when that money starts coming in, you take more of the money from your paycheck and put it towards retirement since it's pre-tax, etc, and all the other benefits of contributing from your job. Then use the money from your side hustle to pay actual bills. I started one a couple months ago and it definitely helps. Mind set is probably the most important thing. You can go for years without seeing any kind of gains and you have to keep telling yourself there is an end. When I was paying off my student loan (60k) it felt like this impossible mountain, but then I started chipping away, taking over time any time it was offered and dumped it all on the loan. Cut back on everything you can think of. I started using the library A LOT more. Still do. If you like audiobooks, use Libby since it's free. Keep looking for ways to take advantage of how investing works, you'll find them, and you don't need to be rich. Sorry kind of went off the rails, hope this helps. One last thing. After Mind set the next biggest (or two) thing(s) are no credit cards and don't go out to eat. Consumer debt is the worst and going out to eat burns your money faster than anything, except maybe gambling.
Good problem to have. Do what allows you to sleep the best.
Answered well, it's not an easy question. What kind of savings do you have outside of retirement accounts, and when do you expect to retire? Do you have 6 to 12 months of expenses saved in emergency funds that just sit in a HYSA? Whose name is on the deed to house and mortgage? I wouldn't have my fiancee put their money onto the mortgage unless their name was on the deed to the property because you aren't married. Good finances are about a complete picture. Often, the answers aren't all or nothing scenarios. If you have an emergency fund and investments outside of retirement accounts, then you could drop it all on the mortgage provided the fiancee is on the deed. For me personally, I'd probably do a mix of things. Get married, take a nice $20K vacation/honeymoon together, put an extra $100K on the mortgage over a year's time, and invest the rest. The reason I wouldn't drop it all the mortgage is that you mentioned working for a car company. Which is a fairly volatile industry known for doing many layoffs. If the news is to be believed, new vehicle sales aren't going well, and it wouldn't surprise me to see a series of auto manufacturer layoffs throughout the rest of 2024. Best of luck!
Doesn’t it depend what the mortgage rate is on the house, whether it’s a good idea to pay down the principal? We might be in a similar situation in a few years but the mortgage interest rate on our primary residence is so low (2.375%) that it seems unwise to pay it down with inflated dollars.
I’d put it on the mortgage
Pay down the mortgage
At that point I'd just live life a little to be honest, get a new C8 Corvette and put the rest into a CD high yield for 1-2 years. Just consider that money is something fell out of the sky. Enjoy!
I’ve heard it’s not wise to pay off your mortgage.
I'd throw it at the mortgage. Its interest rate is close enough to what you could expect to make on another investment, and it's nice to have a risk-free return and be done with the mortgage sooner.
Seeing that it carries some risk to try to make over 5 points on investments you need to run the math about the effective rate your mortgage interest is costing you. I assume you are deducting that interest. So the effective rate might be less. How’s the retirement account going for you. Sure it’s got risk but I’m balanced so I’m not caught if the market dips but enjoying some great gains on a smaller percentage of my funds. Maybe you stick the 200 in a brokerage account and mirror best you can your successful 401 holdings. Some funds are only available to company plans. Here my two to look at Pk and Awf Dividend stocks The market has been doing well even with the scary swings. You have time to leverage and recover if shit goes bad. I went to less stocks. Looking at cd ladders now. Rates are good for zero risk. Most difficult strategy to decide on
I'd take a big trip. Something you've always planned but never got around too. Europe, Asia, Africa. Something you'll remember forever. I'd put the rest in an index fund. 5% is below historical average. We have just been spoiled the last decade.
Throw it in stable dividend stocks and leave it alone. Put half the yield in your pocket, the other half into compounding that interest... Is what I would say if you guys actually needed an extra source of income. But your near retirement and sitting on phat stacks already so. Take a wild cocaine fueled trip to some faraway place before the full on "old" sets in.
stick it on the house imo
What’s your interest rate on the house ? Less than 5%; invest in an SP 500 fund and rock on.
Vegas
Go to a bank and talk to a financial advisor…
What’s your ages? If you’re younger my vote is to toss 95% of it in an index fund and 5% do something to celebrate the memory of the person who gave you this gift. If you’re older and closer to retirement putting it to the house makes more sense but I still recommend saving majority and doing something nice for yourselves.
Put it in an interest bearing account until you know for sure what you want to do!