Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions.
Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers.
Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information.
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey.
Bankrate follows a strict editorial policy, so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers.
We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money.
Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service.
You’re just shy of age 60 when the retirement fairy hits and you get a windfall — a buyout at work, an inheritance, or you sell an investment for far more than you anticipated.
The money probably won’t turn you into Warren Buffett overnight, but it certainly could make retirement much more comfortable.
What do you do first?
Certified Financial Planner professional Shomari Hearn, vice president with Palisades Hudson Financial Group in Fort Lauderdale, Florida, offers this list of steps every new millionaire (or almost millionaire) should take:
- Understand taxes. Most of the time, you can expect Uncle Sam to take his share. Even if there was withholding at work, it may not be enough to cover everything you owe. “People don’t think enough about this. When the accountant tells them that they owe money, but they have already spent it, then they have other problems,” says Hearn.
- Consider wiping out debt. Paying off debt is a good use of a windfall, “especially, if it’s what I call bad debt — personal loans, credit card debt, high interest rate loans. Get rid of debt you don’t want to have when you retire,” Hearn says.
- Feather your nest. Having cash will give you alternatives, especially if you plan to sell the home you live in now and buy something more suitable for retirement, Hearn says. “Selling the oversize family home and buying something smaller, especially in a tax-friendly state, could free up even more cash that you can incorporate in your retirement and tax planning.”
- Invest for growth. Even if you feel like you have a comfortable cushion for retirement, low interest rates and rising health care costs can eat away at even a big nest egg. Smart investing can mitigate that risk.
- Have some fun. Buy that Porsche you always wanted or take the around-the-world cruise, but before you spend more than about 10%, consider the overall impact on your retirement planning. “Identifying any percentage oversimplifes things,” Hearn says. “The trick is to make trade-offs before you go wild.”
The bottom line, Hearn says, is to get expert advice. Everybody who knows you’ve come into a little cash will be happy to give you their thoughts on how to spend it. But the smart thing to do is to get someone to help who can guide you away from shaky investment decisions and greedy tax collectors.
Here are 8 smart ways to spend a windfall.
Share