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For all of us, there exists some amount of money, $X, that if inherited, is a life-changing event. ...
Quote:
Originally Posted by id77
What's the life-changing case of someone who inherits that money and just throws it in a taxable brokerage with other piles of money? Whether it's $1 or $1 million, it didn't change any day-to-day patterns for the individual, ...
If the Magical Finance Fairy (MFF) were to touch me with her wand, taking away Jeff Bezos' fortune and bestowing it entirely onto me, then my life really wouldn't change. I'd scurry to deal with account-balances, moving money around, tax issues, legal issues, passwords and logins and so forth. But I'd take all $120B or whatever it is, and throw it into a mix of equity index funds, bond index funds, and maybe some REITs, commodity funds, Treasuries and the like. The Amazon stock I'd either retain or partially sell and invest elsewhere, depending on, among other things, tax consequences.
But I would not go into space. I would not start managing Amazon. I would not buy a house, a car, or even a gym membership.
Maybe I'd order pizza more often. Maybe not.
There would be no substantive lifestyle changes because who I am, how I behave and what animates me, is more contingent on my insecurities and on - to use the now-hackneyed term - "existential angst" - than on how many zeroes are appended to the back of positive integers behind a dollar-sign, associated with my name.
In other words, the money - large or small - is purely theoretical. It's just numbers. Sure, I'd thank the MFF. But her magic touch wouldn't magically change my life... at all.
Think of what an extra $1M (or even 600K) would do for you. It would be an extra 30K or 40K in income for you (or 18K to 24K with the lower amount). Wouldn't that be life changing, or at least life enhancing?
I know it would take me to a whole new level. I'm contemplating retiring early at age 51, but with the assets I have now, it would definitely be considered "Lean FIRE" in the financial independence community. An extra $1M would take me from "lean FIRE" to standard FIRE or as far as I'm concerned I'd be borderline "Fat FIRE". An extra 600K would still put me solidly in standard FIRE.
I always say if we doubled our income we would just make that the new level and our standards and expectations would just elevate
We did inherit - not a million - and we have a pension and one of us has already claimed Social Security. A healthy portfolio because I was terrified of not having enough taking nothing for granted and shoveling it for at least the last 18 years of my career.
HOWEVER - we are living on the very same income my salary generated. In a more expensive state.
Why? You never know what can happen to you down the road…… what if one of us becomes sick and needs to be in long term care? What if there’s a natural disaster and we lose everything?
I am uncomfortable living outside the comfort zone of our aforementioned means. And will always be.
My father in law received an inheritance that changed his trajectory. According to my wife he received a few hundred thousand from an aunt about 20 years ago. Prior to that he had no investment outside of work pension. That was enough to get him investing and helped send his children to college without debt. She said they did spend some on enjoyment, but mostly they were able to invest the money and now they live a comfortable retirement with social security, a military pension and retirement accounts. They have no debt with a fully paid off home and 2 paid off cars
My wife and I recently realized that we have made the 1 million dollar club of investment assets. I'm 40 and not taking off my foot from the pedal. Instead going to hit early retirement by continuing to heavily invest. Our house has 75k left on the mortgage and that's our only debt.
The big difference is whether the million is descretiondry or not. An inheritance over and above living expenses which can be used to pay off cars or a mortgage is very different then being non discretionary and needed to generate income to pay those living expenses
I was curious the average cost of housing in your area and read the median is 274K. I understand why a million in your opinion can go much further compared to someone living in Seattle.
Having no kids myself a million is definitely worth a lot more to me than to my peers who have a few. There is a lot of disconnect about people's lifestyle and different COL in cities. I can't help think the majority here who think a million is a lot are childless and don't know the associated costs of raising kids. Or they are much older and haven't realized how more expensive everything has gotten.
Or they've raised their kids already and don't live in a major metro area with a high COL.
I'm "older" (59). I live in the same economy as many other Americans of many other ages and situations. My kids are grown thankfully so I don't have to raise them again. But I do have a cell phone, I pay taxes, I put gas in my car - I HAVE a car - I go to the grocery store and out to eat and all that good stuff. My point is that most "older" people are fully aware of what things cost - since we're still living and we're still consumers.
Most people know in the back of their minds that inheriting $10 million is not within the realm of possibility for them.
But $1 million just might happen if they're lucky or maybe it's just out of reach.
I know with near certainty that I'll never inherit a single penny - and the only reason I don't say complete certainty is hypothetically a stranger might leave me $0.01.
The big difference is whether the million is descretiondry or not. An inheritance over and above living expenses which can be used to pay off cars or a mortgage is very different then being non discretionary and needed to generate income to pay those living expenses
But even then, it's a question of attitude. If I were to inherit $1M, the sentiment would be, that a wise and fastidious person shepherded the money, taking care to manage spending and it invest carefully. Would it not be then incumbent on me, to honor that person's legacy, by continuing his behavior?
If I were to spend that money on a summer-cottage, or on prostitutes and cocaine, there would be a galling feeling of impropriety... not because I'm somehow morally upstanding (far from it!), but because such louche behavior violates some natural order of things. It would incur guilt. So, the inheritance would pass as a theoretical sum (digits stored in a computer at Fidelity, in the former owner's name) to another theoretical sum (new digits in a new account at Fidelity, now in my name).
But even then, it's a question of attitude. If I were to inherit $1M, the sentiment would be, that a wise and fastidious person shepherded the money, taking care to manage spending and it invest carefully. Would it not be then incumbent on me, to honor that person's legacy, by continuing his behavior?
If I were to spend that money on a summer-cottage, or on prostitutes and cocaine, there would be a galling feeling of impropriety... not because I'm somehow morally upstanding (far from it!), but because such louche behavior violates some natural order of things. It would incur guilt. So, the inheritance would pass as a theoretical sum (digits stored in a computer at Fidelity, in the former owner's name) to another theoretical sum (new digits in a new account at Fidelity, now in my name).
Those are individual mental issues not financial ones …the doctor Phil forum is down the hall
All our kids should be millionaires by inheritance one day , hopefully
I expect the same will be true for our kids also - how much will depend on the market.
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