I SAT IN THE LAWYER’S office in Erie, Pennsylvania, in the summer of 2011. He was handling the high six-figure inheritance I was about to receive. I should have been overjoyed, but I was exhausted.
In fall 2004, my mother, a 70-year-old former elementary school teacher, had suffered a massive stroke and developed vascular dementia. My father, a 76-year-old former elementary school principal, had tried to take care of her by himself. He fell ill in summer 2006 and died that fall. In July of that year, I assumed guardianship of both my parents and their estate. At the time, I was working on my PhD.
In the years between 2006 and 2011, I sold my parents’ house, dealt with court reports, managed my mother’s nursing home care, buried both parents and rode shotgun on the estate. I had worked with my parents’ financial advisor to set up annuities. In conjunction with my mother’s pension, half of my father’s pension and her Social Security, the annuities covered the monthly nursing home expenses for five years, with a lump sum then returned to me in the form of a death benefit.
By then, I had finished my PhD. But because I had gone back to school in my 30s and because I’d emerged from graduate school into the Great Recession, I found myself both underemployed and underfunded for retirement.
As the lawyer was reviewing the estate, he looked up and said, “This is a lot of money. It’s either going to last you 18 months or the rest of your life. I wonder which you’ll be.”
I looked at him incredulously. “Someone could work through this much money in 18 months?”
“Oh, you would be surprised,” he replied. “People who get seasick decide to buy an expensive boat.”
The average U.S. inheritance is some $46,000. The amount I received from my Greatest Generation teacher parents was much, much larger, about $730,000. One article notes that, in wealthy families, 70% who inherit squander the money they receive. According to Cerulli Associates, baby boomers will leave more than $53 trillion to their heirs. A lot of that money will likely be spent on really dumb things.
My suggestion: Take a values-based approach to managing an inheritance. If you do that, you’re far more likely to be among the 30% for whom an inheritance lasts not 18 months, but for the rest of their life.
To be sure, I’ve made some investment mistakes handling the inheritance I received. But I never made the fatal error: leading with my desires rather than with my values and my core needs. I’ve used the inheritance for purposes that fit with my values and, along the way, seen the money grow into a seven-figure retirement nest egg.
Just because you can do something doesn’t mean you should, especially if the action isn’t in line with your pre-inheritance values. I lived in a cheap apartment before the inheritance. I still live in a cheap apartment. When I retire, I’ll buy a condo, so I don’t have to worry about rent increases. But I was never a fan of homeownership, and I’m still not.
In my 20s and 30s, I lived in cities with public transportation, so I never owned a car. Because I’ve lived in places with very little public transportation during the past 10 years, I used a bit of the money to buy a Ford Fiesta. It now has 125,000 miles on it. I hope to get it to 200,000.
There have been no boats or trips to the Riviera. But I have spent money on my career, medical and dental expenses, taking care of an old cat who has been a friend, and continuing to prepare for retirement, the timing of which has not changed just because my circumstances have. When I started graduate school in my early 30s, I intended to work fulltime until age 70 and part-time until 75. That goal hasn’t changed.
I’ve given a few gifts to organizations whose work I believe in. More important, these are organizations that I’ve known well and done volunteer work for. The groups engage in work that I’ve had longstanding commitments to.
The inheritance has also allowed me the luxury of engaging in impact investing. I purchase Calvert Community Investment Notes each month. That means some of my money is going toward affordable housing, education and microfinance. I receive a smaller return so I can support my values.
When I get closer to retirement, I’ll collect and invest in rare books. That again reflects my values. I’m an English professor. I’ve been a volunteer literacy tutor, and I’ve worked for two major publishing companies, including the publisher of a favorite childhood book series, Curious George.
I began publishing short fiction and scholarly articles in graduate school, and I come from a family of educators, so I’ve spent a bit on writing workshops. I’m also earning a third graduate degree, in instructional design. My employer covers half the cost of the degree and I cover the other half. Eventually, to keep myself intellectually engaged, I’ll probably do a second PhD devoted to the history of education.
While I don’t lead a particularly lavish life, I plan to do some travel that’s in line with my values. I did my junior year abroad at the University of Edinburgh, where I read medieval history. I’d like to spend six months traveling and living in Scotland again. In addition, I’ve loved museums since I was a child. I want to do some museum-oriented travel in the U.S. and Europe.
All these goals are in line with my pre-inheritance values. Something else I care about: autonomy. I’ll have the money in retirement to hire home-health care workers if I need them, so I can avoid being in a nursing home. I consider that to be a precious privilege.
Douglas W. Texter is an associate professor of English at Johnson County Community College in Overland Park, Kansas. Doug teaches a composition I course that focuses on personal finance. His essays and fiction have appeared in venues such as the Chronicle of Higher Education, Utopian Studies, New English Review and The Writers of the Future Anthology.