Windfall Lump Sum

[savory]

"I have one word for you - plastics" Sorry, I couldn't resist.

[Blue65]

Pay off my house, buy another boat, work less.

In your situation, I would figure out how I could create a business that my kids could turn to that generates enough income that THEY would never worry about money for the rest of their lives either. I think the younger generation is in for a rough ride.


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[pb4uski]

Quote:

Originally Posted by Chuckanut I'd do something like that guy who is giving away donuts. Find a worthy cause or group, especially one that isn't a legal tax deductible donation, and help them out.

When I have more than I need I have always thought it would be fun to go around towns at Christmas time and hand out $100 bills to those who could use it like we commonly see as a human interest feature that time of year.

[FIREd]

I'd do what we've always done with windfall lump sums: invest it.

[springnr]

12%, rejoice that the odds of being able to wait on SS until 70 improved.

[Turboslacker]

Help others spontaneously and meaningfully


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[luckydude]

Quote:

Originally Posted by AnIntentionalRoad Today we received a windfall lump sum of approx. 650k. This represents a roughly 12% boost to our investible assets. We've been retired 2 years and are currently 45 and 44. Our current WR before the lump sum is about 3.25% and this provides enough for our lifestyle. We're wondering if we should just plow it into our portfolio or if we should do something special with it. So my question to all of you is, what would you do with a windfall that represented 12% of YOUR portfolio (not necessarily what should we do with ours though that is welcome too!)?

This happened to me last year with the passing of my dad. The size of the bequest was unexpectedly large and had a multiplier effect on my overall net worth.

I haven't done anything drastically different with the bequest and have largely kept the same investments; they've worked out over the years so I don't see a reason to change. I don't anticipate ever needing this money so the plan is to pass it down to the next generation, and to that end I have set up a trust for the kids. Lifestyle-wise, it really hasn't affected me much other than that I travel a bit more now than before. Oh, and I also finally got basic cable for the first time .

The funny thing is that due to a quirk in family situation, I am in line to inherit a similar sum in the future. Maybe I'll think about ordering some premium cable channels when that happens.

Lucky Dude

[savory]

You have received similar thoughts from others. I would select a non-profit and provide them a guaranteed stream of funds, $15k+ per year , for 3 to 5 years which you will generate in a very low risk investment. Select a non-profit program that is meaningful to you. And, take the time to not only to provide the funds but invest your time, supporting the use of the funds. Capital type investments allow you to clearly see your funds at work. Paying for programs also works as long as the money goes to programs vs. overhead. Your personal involvement will help direct the program funds.

[2B]

Quote:

Originally Posted by Cheesehead I don't understand. If you have this much money why are you even messing around on this forum? How could you ever run out of money? Just askin...

If all of the millionaires on this forum departed, you'd hear nothing but echos and questions going unanswered effectively from all the millionaire wannabees.

To the OP --

Do whatever you want to do with it. You obviously believe you have enough already and this is just increasing your surplus. If you have any desires that you just can't think you can afford, now you probably can. Personally, I'd pay off the mortgages but then your lifestyle can be supported with a much lower withdrawl rate. That takes me back to the beginning of this paragraph. Do what ever you want to do with it.

[Jay_Gatsby]

Quote:

Originally Posted by davef You have received similar thoughts from others. I would select a non-profit and provide them a guaranteed stream of funds, $15k+ per year , for 3 to 5 years which you will generate in a very low risk investment. Select a non-profit program that is meaningful to you. And, take the time to not only to provide the funds but invest your time, supporting the use of the funds. Capital type investments allow you to clearly see your funds at work. Paying for programs also works as long as the money goes to programs vs. overhead. Your personal involvement will help direct the program funds.

I don't want to derail the thread, but I have always had concerns about providing an income stream to charities. Even the most well-intentioned ones have a tendency to waste the money. If you want to go the charity route, a one time purchase of a large item might be a good idea. For example, if a charity needs a new transport van for delivering meals or shuttling handicapped people, consider buying it. New or reconditioned wheelchairs are also a good idea. Just don't buy anything that some self-dealing jerk could use to tow his jet skis on the weekend, or worse, sell it and pocket the cash.


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[Bestwifeever]

If the windfall would push my estate into taxable territory, I would probably get rid of it to what I felt was a deserving person(s) or cause.

[panacea]

Currently I'm w*rking, so I'd add it to the portfolio and keep accumulating until achieving financial security. If I was already financially secure, with a low WD rate, I'd probably take 1/3 and buy a small cottage on a lake and add the other 2/3 to my portfolio to improve the cushion and leave more for our children... and help support all the things that go wrong with the small cottage on the lake.

[RockyMtn]

1. Allocate some to my DAF to minimize taxes and give back to those who need it.
2. Set aside what is needed for taxes.
3. Buy something nice.
4. Invest the rest or pay off the primary mortgage.

[braumeister]

Two things come to mind right away.

First, I would never again fly less than business class. That's a big deal in my book.

Second, I have a few friends with small businesses who would be very grateful for small investments to help their cash flow situation. I think that would be the best possible use for the money, since it would undoubtedly create a few jobs.

Other than that, there are several good charities I would like to help more than I presently do.

[2B]

Quote:

Originally Posted by Bestwifeever If the windfall would push my estate into taxable territory, I would probably get rid of it to what I felt was a deserving person(s) or cause.

The OP indicated they were likely to trigger the AMT which would hit their ability to take a fully tax deductible deduction on his Sch D/AMT form.

I've become very cynical about a number of charities I used to have a high opinion of. An even cursory look at their finances can show a high percentage of their budget going to fund raising and administration fees. People hear "non-profit" and just naturally think of dedicated people working to further their mission. Unfortunately, that's not the case in many situations.

[Andre1969]

In my case, I'm still working, and a 12% boost to my investible assets, while nice, wouldn't be anything earth-shattering. In my case, it comes out to about $120K. My HELOC is about to convert to a 20 year mortgage, so I might use part of the money to pay that down, and invest the rest, perhaps dollar-cost averaging in over the course of a year.

Now, if I was in the OP's position, where I'm already set, I think I'd live it up some.

[2B]

Quote:

Originally Posted by braumeister First, I would never again fly less than business class. That's a big deal in my book.

I'm debating with this same thought right now. It goes against my nature to pay that much extra for a slightly more comfortable seat and better food. On the other hand, it wouldn't change anything else in my lifestyle. My grandkids just inherit a little less.

[Andre1969]

Quote:

Originally Posted by 2B I'm debating with this same thought right now. It goes against my nature to pay that much extra for a slightly more comfortable seat and better food. On the other hand, it wouldn't change anything else in my lifestyle. My grandkids just inherit a little less.

I only fly once a year (well, twice, if you count the return trip ) so to me, simply flying is kind of a luxury! Although last year, when we flew Spirit Airlines to Aruba, it was miserable. They had us packed in there like a can of mixed nuts, and the seat cushioning was paper thin.

I forget who we booked with this year, but we decided to go a bit more luxurious, with a direct flight, rather than one with a stopover.

[Bestwifeever]

Quote:

Originally Posted by 2B The OP indicated they were likely to trigger the AMT which would hit their ability to take a fully tax deductible deduction on his Sch D/AMT form. I've become very cynical about a number of charities I used to have a high opinion of. An even cursory look at their finances can show a high percentage of their budget going to fund raising and administration fees. People hear "non-profit" and just naturally think of dedicated people working to further their mission. Unfortunately, that's not the case in many situations.

I was actually talking about estate taxes--the federal (and possibly state) taxes that might be due in the portion of the estate after the OP's eventual demise that exceeds the what, $5 million to $6 million threshhold these days.

There are causes and individuals that some of us choose to support directly, nowhere near the level of the OP's windfall haha. I don't believe I mentioned "not-for-profit" or "charities." I think we are all a little cynical about those--we donate a small sum in someone's memory to one of them for the first and only time, and pretty soon we are getting mailings from three other outfits. Grrr.

[luckydude]

One thing I noticed about getting a windfall is how quickly one gets used to the new "number". It's similar to getting a raise---you might be happy for a few weeks, but before long you mentally adjust to that new number and that becomes the baseline.

It's the same thing with getting a windfall. It took me about a year to get used to the idea of having the extra money, but once I mentally adjusted to the new "baseline" number, I became much more reluctant to do much of the planned spending that I thought I would do with this extra money. In other words, the LBYM mentality kicks in.

So my recommendation to OP is if you're going to have some fun with the money or give it away, it's better to do it earlier rather than later, because once you get used to see that bigger number on the spreadsheet, you will be reluctant to see the number go down.