Real Answers for Life’s Money Challenges
My wife and I are middle class or maybe upper middle class.
I make pretty good money.
She is a social worker and only makes enough to cover her personal needs and spending money.
We also have some real estate holdings, which will fund our retirement when liquidated in 15 years.
We are in our early 40s.
She inherited about $60,000 from her grandfather.
She asked me what I thought she should do with it.
I told her that she should do whatever she wants with it.
But I told her my advice is to come up with a plan.
She should figure out how much she would want to save.
She had mentioned putting some in our sons college fund and some travel.
My advice was not to waste it and to have a budget and stick to it.
Knowing her grandfather well, that is not how he would have wanted her to spend the money.
This all happened this calendar year.
-S.
Dear S.,
Is this really about what Grandpa would have wanted?
Or are you saying that youre disappointed that your wife isnt spending herinheritanceon fun stuff?
Regardless, it sounds like your wife followed your advice.
She didnt let the money go to waste.
Investing money when you dont have a pressing need for it sounds like a solid plan.
And to be clear, this is her decision, not yours.
Since your wife put $40,000 into an IRA, Im guessing this is an inherited IRA.
The rules for withdrawing money from inherited IRAs are a lot different from the rules for regular IRAs.
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you’re able to withdraw this money at any time, either all at once or in increments.
You wont pay a 10% early withdrawal penalty.
But unless the inherited account was a Roth IRA, youd owe ordinary income taxes on any withdrawals.
And shell only have 10 years to withdraw that money, even though she wont have reached retirement age.
If youre on track for your financial goals, its fine to indulge a bit.
My guess is youll still want fun money a decade or two from now.
And you could have a lot more of it thanks to your wifes decisions.
Robin Hartill is a certified financial planner and a senior writer atThe Penny Hoarder.
Send your tricky money questions to[email protected].
