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I value it at 50% of it's current value. I am fully invested in stocks partially because my 87 year old mother's money is conservatively invested. I also figure a 6% withdraw rate (my average return over the last 20 years is acceptable.
That's fine about your investments. It's your money. As a CPA I've been asked about inheritance's a lot. As others have stated the future is not set in stone. To work into a financial plan monies you currently have no legal right to is poor a planning technique. Inheritance's are windfalls and should be treated as such, not like some future determined annuity payout.
My parents are 87 and 85 and are dealing with health issues. I have them set up with 24/7 at home care. At the current burn rate, they could outlive their money (my inheritance in 4-5 years, at which time I would have to reverse mortgage their house to keep cash flow coming in to pay for them to stay at home (their wishes). I could use money right now. I hope I don't get any inheritance, which means my parents hung around for a while longer.
No. I don't count any inheritance in my finances. If someone leaves me something I'm grateful. It meant I did something or they thought I impacted their lives somehow.
I place some value on it only because all 3 potential streams of inheritance have pensions with COLAs attached to them. My mom, my dad, and my wife's parents all have a decent chunk of money and pensions. So as of now I am factoring in the potential for one of those 3 to pan out at their current value. The only thing I am doing differently is considering a slightly larger SWR, so when I plan my FI goal and my FIRE goal I plan with a 4.5% SWR as I would expect when we get closer to our mid 60s to late 70s we will have about 1/3rd of our planned FIRE goal coming our way (if one of the 3 pans out).
I assume a 30% amount for inheritance based on total estate value. That of course could change in either direction based on any number of variables.
HOWEVER, and importantly, I don't factor it in when determining things like when I could hit F.I. (financial independence), taking future social security payouts or anything like that. I only track and count my own monies and investments because that's what I have today and anything else beyond that is not mine. So in all the various tools like firecalc and other retirement analysis tools, I work with what I personally own, for inputs in calculations.
As far as I'm concerned, my parents can spend all their money they earned/saved enjoying their retirement. I'm not entitled to any of it. I have my own money
While this is a big distasteful for some I don't consider it "goolish" The OP asked a valid question. What if he/she is 60 with elderly parents, one of only 2 children, and they know they will inherit a sizable estate? Why would you not factor that into your planning?
As far as I'm concerned, my parents can spend all their money they earned/saved enjoying their retirement. I'm not entitled to any of it. I have my own money
I do completely agree with this statement though taking into the context of my post above. The only reason I am even partially planning for some is because all 3 have already talked to us about making sure they leave us money. My wife and I have both told them to spend it, it's theirs they earned it, but it's pretty clear they still plan to leave us a chunk of their investments and their properties.
As far as I'm concerned, my parents can spend all their money they earned/saved enjoying their retirement. I'm not entitled to any of it. I have my own money
This is how I feel.
Quote:
Originally Posted by DaveinMtAiry
While this is a big distasteful for some I don't consider it "goolish" The OP asked a valid question. What if he/she is 60 with elderly parents, one of only 2 children, and they know they will inherit a sizable estate? Why would you not factor that into your planning?
I personally am not saying it is distasteful. But as a CPA I would be doing my clients a disservice if they asked this question and I did some sort of financial plan incorporating an inheritance into it. IMO it's more volatile than having your money in the market. I have witnessed so many nightmare stories with families and inheritances that planning for them before they are in hand is just bad financial planning in my humble opinion. Once it's in hand, then adjust your current plan.
There is always the possibility they could outlive you
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