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Windfall Lump Sum
Old 08-21-2014, 05:34 PM   #1
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Windfall Lump Sum

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!)?
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Old 08-21-2014, 05:37 PM   #2
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OK, you have a solid upper-7-figure portfolio and you are asking us what to do?

Easy answer: Yes, plow it into your portfolio. That's what I would do. On second thought, you should just give it to the first responder to your thread. Eh-hem. Where is that smiley with the hand held out?
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Old 08-21-2014, 05:38 PM   #3
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I would take some percentage (to be discussed with DW) probably on the order of between 10-25% and spend it on the here and now, and the rest into investment, then up the lifestyle by what it generated.

Or something along those lines.
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Old 08-21-2014, 05:44 PM   #4
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I think I would splurge on some things that we have in the back of our minds to do but don't because we are frugal - update our vehicles, snow machine, get a little convertible roadster for summer fun, etc - but in total it would be less than $100k.

Perhaps might consider a second home but more likely would just rent as desired and perhaps travel some.

Then the rest would go into the portfolio.

Is this a taxable event?
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Old 08-21-2014, 05:55 PM   #5
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I would take an expensive trip to one of the places that I have been dreaming about for some time and plow the rest into investments. I would probably loosen the purse strings on the money that comes in monthly.
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Old 08-21-2014, 05:59 PM   #6
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I would set up a scholarship or endowment with the money to leave a legacy. You probably have enough and you can't take it with you....
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Old 08-21-2014, 06:18 PM   #7
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OK, you have a solid upper-7-figure portfolio and you are asking us what to do?

Easy answer: Yes, plow it into your portfolio. That's what I would do. On second thought, you should just give it to the first responder to your thread. Eh-hem. Where is that smiley with the hand held out?
But what would YOU do? :-)
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Old 08-21-2014, 06:19 PM   #8
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Is this a taxable event?
Yes capital gains and likely AMT.
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Old 08-21-2014, 06:21 PM   #9
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Originally Posted by AnIntentionalRoad View Post
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!)?
I forgot to mention our debt consists of our two mortgages. About 375k on our primary and 270k on our rental.
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Old 08-21-2014, 06:23 PM   #10
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I would put it immediately into our existing investments (or something similar). I like the idea of money paying me year after year. DW and I live on about 2.5% withdrawal. With an additional $650k (about 20% adder for us) we could withdraw an additional $21k per year. That would go a long way toward travel, volunteering, philanthropy, etc.

Just sayin'....
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Old 08-21-2014, 06:30 PM   #11
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My initial thoughts - based strictly on what *I* would do.

- we have a planned trip to Europe next summer. It's on a frugal budget - 4 people, total budget is $25k for 9 weeks. I'd double that by adding 25k to the budget. That would cover business class and some nicer vacation rentals than the ones that fit our frugal budget. That's my splurge.

The rest I'd divide in half after paying taxes on it. I'd use one half to reduce debt, the other half to boost portfolio.
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Old 08-21-2014, 06:31 PM   #12
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Honestly, if i was confident in my swr like you are, i would plan to spend the new sum down to zero over the next 5-10 years, taking advantage of the money during the years of your life when you can enjoy it the most and have the best memories.





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Old 08-21-2014, 06:47 PM   #13
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I'd go to Vegas and put everything down on RED. I have close to 50% chance of doubling it. If not, I will distribute it across my portfolio.
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Old 08-21-2014, 06:54 PM   #14
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Nice windfall!

I thought about this using your number and using 12% of my own investable assets (a lower number). The tax liability is a gotcha! This would make me wary of overspending. Around here, $650K, after taxes, would not buy a dream home, though it would certainly buy a decent boat and some other goodies.

First, I would eliminate the mortgages I have on rental properties. Next, I would set aside whatever is required to pay the extra taxes and put that in a safe investment (eg a CD) until tax time next year. I am assuming that approximately 50% of the windfall would be left at this point. I would probably allocate an extra $10,000 to my travel budget over the next year, and then I would invest the remainder using my regular asset allocation.

Boring, I know! But in the past, I did receive a large windfall, and I invested all but a tiny fraction of it.
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Old 08-21-2014, 06:56 PM   #15
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I would probably frustrate DW by buying the pipe organ that I just saw on Craigslist for $3000.

Other than that, straight into investments until I had some time to think things through.
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Old 08-21-2014, 07:00 PM   #16
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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...
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Old 08-21-2014, 08:00 PM   #17
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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...
Why wouldn't he or she be here? There are a lot more issues to ER than "how do I get enough money to ER?" and even people with enough want to minimize taxes, optimize withdrawals, figure out health care insurance, etc.
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Old 08-21-2014, 08:01 PM   #18
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I would buy one of the new Indian motorcycles for me, a Can-Am Spyder for my wife and then go for a nice long ride around the country. That would probably take care of $100k. The rest would be invested until I could think of what to do with it.

Cheers!
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Old 08-21-2014, 08:12 PM   #19
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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.
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Old 08-21-2014, 08:18 PM   #20
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With 12% of my portfolio (a lot less than 650k) I would probably do some small splurge and buy something I wouldn't otherwise. Don't know what though as nothing comes to mind. Maybe some nice shoes. Then I would put the rest in my portfolio and the big thing I would do would be shift my thinking from I will "probably" retire in 1 year to I will "definitely" retire in 1 year.
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