In the coming years, baby boomers stand to inherit as estimated
$7.2 trillion according to the Social Welfare Research Institute
figures for 2003.
In the coming years, baby boomers stand to inherit as estimated $7.2 trillion according to the Social Welfare Research Institute figures for 2003. An inheritance, whether expected or not, can present a significant financial opportunity for you and your family, but deciding how best to use the money can be difficult.
Of course, no single solution is right for everyone, but there are a few options you may want to consider.
1) Get rid of high-interest debt.
Perhaps the biggest favor you can do for yourself is to pay down credit cards and other high-interest loans. Here’s why: If an individual spent the next 10 years paying off $28,000 in credit card debt that grew at 12-percent interest, her payments would total $48,000 by the time the loan was repaid. If instead she were able to invest those payments in an account earning 5 percent, she would have $62,372 at the end of 10 years.
2) Pay down your mortgage.
Owning you home outright can provide a powerful sense of financial freedom – not to mention relief from monthly mortgage payments. Money you currently allocate to your mortgage could be invested for retirement or used to meet other goals.
3) Save for retirement.
If you have worried about your ability to fund a comfortable retirement, an inheritance can help. A number of retirement savings vehicles currently on the market enable you to accumulate assets tax deferred-possibly enhancing the long-term growth potential or your money.
For many people, spending an inheritance wisely is one way to honor a beloved benefactor.
Before you decide how to use an inheritance, you may want to consult with your financial advisor about the most appropriate course of action for your portfolio.
Dan Newquist is a registered representative with Linsco/Private Ledger. His office is in Morgan Hill.
