I’m 46, single and live paycheck to paycheck — but I’m about to inherit $650K. Where should I start investing?

[Pelican Press 0]

This is the hidden content, please

• Sign In
• or
• Sign Up

I’m 46, single and live paycheck to paycheck — but I’m about to inherit $650K. Where should I start investing?

I’m 46, single and live paycheck to paycheck — but I’m about to inherit $650K. Where should I start investing?

If you’re living paycheck to paycheck, a sudden inheritance can feel like winning the lottery, especially if it’s more than you expected. After all, these days, an

This is the hidden content, please

• Sign In
• or
• Sign Up

isn’t guaranteed.

Only about one in five U.S. households had received an inheritance at some point in their lives, according to a Washington Post

This is the hidden content, please

• Sign In
• or
• Sign Up

of the Federal Reserve’s 2022 Survey of Consumer Finances. And the average inheritance usually isn’t that groundbreaking — it’s about $58,000. But what happens if you do inherit a windfall?

Don’t miss

Car insurance premiums in America are through the roof — and only getting worse. But 5 minutes could have you

This is the hidden content, please

• Sign In
• or
• Sign Up

Commercial real estate has beaten the stock market for 25 years — but only the super rich could buy in. Here’s how even ordinary investors can

This is the hidden content, please

• Sign In
• or
• Sign Up

These 5 magic money moves will boost you up America’s net worth ladder in 2024 — and you can complete each step within minutes.

This is the hidden content, please

• Sign In
• or
• Sign Up

Say, for example, a single 46-year-old woman is struggling to get by financially. But when her mom passes away, she receives a $650K inheritance. How can she invest that money to build meaningful wealth without squandering her mom’s life savings?

Before investing your inheritance

A 46-year-old still has several working years left before retirement. Say, for example, she wants to retire at her full retirement age of 67 so she can receive 100% of her Social Security benefit. That means she’s planning to work another 20 years — and she still has some time to leverage the power of

This is the hidden content, please

• Sign In
• or
• Sign Up

.

First, however, she’ll have to consider any potential tax liabilities. There’s no federal inheritance tax, but six states have imposed one, including Iowa, Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania (though Iowa is phasing it out in 2025).

Inheritance tax is separate from estate tax, which is based on the total value of the deceased’s money and property. Inheritance tax is paid by the heir, while estate tax is paid by the estate of the deceased.

If she also

This is the hidden content, please

• Sign In
• or
• Sign Up

from her mom, as a non-spousal beneficiary she’ll have to

This is the hidden content, please

• Sign In
• or
• Sign Up

based on whether the IRA owner passed before or after their required beginning date which is when their required minimum distributions (RMDs) would have started.

These RMDs will be taxed as income. If the traditional IRA has a high balance, she could end up paying a big chunk of tax. With

This is the hidden content, please

• Sign In
• or
• Sign Up

, she’ll also have to consider the tax implications of capital gains, dividends and interest payments.

Story continues

Before she invests anything, she may want to use some of the inheritance to pay off any outstanding debts, like a student loan or credit card debt. She may also want to build an emergency fund with three to six months’ worth of living expenses in an easily accessible

This is the hidden content, please

• Sign In
• or
• Sign Up

. If she has a mortgage, it’s her call whether she wants to

This is the hidden content, please

• Sign In
• or
• Sign Up

or pay it down. Some people would prefer to get rid of their mortgage debt, while others may prefer to

This is the hidden content, please

• Sign In
• or
• Sign Up

for a higher return.

Read more: Rich, young Americans are ditching the stormy stock market —

This is the hidden content, please

• Sign In
• or
• Sign Up

Options for investing your inheritance

Once she’s paid off any taxes and debts, she may want to start investing that money in stocks, bonds, ETFs and alternative investments, either through a financial planner or a brokerage account. If she’s planning to invest a large amount of money, she may want to invest over a ******* of time using

This is the hidden content, please

• Sign In
• or
• Sign Up

. She may also want to look at ways to diversify her portfolio with different investments and different levels of risk.

If she has a high risk tolerance, she could consider some higher-risk strategies, like

This is the hidden content, please

• Sign In
• or
• Sign Up

— which is essentially like ******** against a stock.

If she decides she wants to retire earlier than planned, then she might want to opt for lower-risk investments. Otherwise, if they lose value to the whims of the market, her portfolio won’t have as much time to recover.

If she inherits other retirement accounts from her mom, she can’t roll those over into her own retirement accounts (technically, it isn’t ‘earned’ income). However, if she was already putting aside a portion of her paycheck into an employer-sponsored 401(k), she may be able to increase that amount once she’s reduced spending in other areas, like paying off her debts.

All of this can be overwhelming for someone grieving the ****** of a family member — so it may not be the best time to start making life-altering financial decisions. In the meantime, she could park her inheritance in more than one federally insured bank or credit unit, which insures accounts up to $250,000 per depositor (so she’ll want to spread her money around). And she may want to seek advice from a

This is the hidden content, please

• Sign In
• or
• Sign Up

to help her navigate her options with this newfound wealth.

What to read next

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

This is the hidden content, please

• Sign In
• or
• Sign Up

#single #live #paycheck #paycheck #inherit #650K #start #investing

This is the hidden content, please

• Sign In
• or
• Sign Up

This is the hidden content, please

• Sign In
• or
• Sign Up