Inheritance

I am counting on my inheritance for my retirement. How much will I need?

by Jane Bryant Quinn

Your inheritance may be your last, best hope of living well when you retire. What to do with your luck depends on the size of the windfall and how well fixed you were before.

Assuming that the money is important, here are some thoughts:

• A modest inheritance: up to $75,000 or so. Invest for retirement and your children's education. Your life won't change, but you'll feel more relaxed.
• A moderate inheritance: up to $500,000. You can afford some big vacations and new living room furniture, while still padding your retirement and education funds. But don't quit your job unless you have a lot of money of your own.
• A major inheritance: up to $2 million. You might be able to flee the office, depending on your age. Or you might change careers or do nonprofit work.
• A mega-inheritance: $2 million or more. Money like this often comes with a team of advisers to help you make decisions. If not, get your own. You can live larger than you do now, or work less. But $2 million ain't what it used to be.

To make sure your inheritance lasts for life, an heir in middle age should spend no more than 4 percent of the money the first year, then increase the draw by no more than the amount of inflation each year after that. On $2 million, that's $80,000 plus annual inflation increases. Nice, but not a Bentley budget.

Excerpted from Making the Most of Your Money Now by Jane Bryant Quinn

Copyright 1991, 1997, 2009, by Berrybrook Publishing, Inc. Reprinted by permission of Simon & Schuster, Inc

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