How to Make the Most of Your Recent Inheritance

Inheriting a large sum of money can be a double-edged sword. While it can create new opportunities and provide financial stability, it can also come with the challenges of managing new assets.
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One way you can use your newfound funds is to put them toward your retirement. Doing this can help you have a comfortable retirement and let you live out your golden years the way you want. Below are a couple of ways you can make the most of your inheritance:

Know your risk tolerance.

Deciding how to allocate your new assets is greatly dependent on your risk tolerance. And most people look at this decision through the lens of their emotions. For instance, you may feel like you can be a little more bold given that you’ve received funds you didn’t have before. Alternatively, these new assets may come with sentimental feelings that could make you more conservative with your decisions.

It might be helpful, however, to make your decisions based on the context of your tolerance for risk. Consider working with a financial professional who can help you determine the appropriate risk profile based on your goals, needs and time horizon.

Know your options.

Inheritances are not all the same. For example, it might come in the form of physical assets like a house, land, jewelry or some other type of asset. If that’s the case, you might have to liquidate those items at their sale price before you can put them to work for you.

You might also receive your inheritance in the form of a trust. These assets will be distributed according to the terms of the trust, which means you’ll want to know those terms so you can take advantage of the funds.

IRAs and 401(k) plans are another type of asset you may inherit. They usually have beneficiary designations and offer a variety of ways in which you can receive the funds. You may be able to take the money as a lump sum or as a stream of income over a certain period of time. Your selection could have tax ramifications, so it’s important to fully analyze each option.

Don’t rush it.

Perhaps one of the biggest mistakes is rushing into a decision. Being too hasty with your inheritance can lead to poor decision-making, such as using the funds to make big-ticket purchases. It might be a good idea to hold off on making decisions until after your emotions have calmed down.

It may feel like you’ve won the lottery, and it may be tempting to act like it, but if you enact careful planning, you might be able to leverage your new assets to help you for years to come.

Need help figuring out how to use your inheritance? Let’s talk about it. Contact us today at Carstens Financial Group for more information. We can help you examine your needs and goals, and then develop a strategy. Let’s connect soon and start the conversation.

This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

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