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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.
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Why no marriage? No kids? What purpose does the double degree education serve? You could establish small scholarships for college kids to buy textbooks
Why does anybody do anything? On a deeper level, it’s just a personal decision. As for the second PhD in retirement: I want to do some very late in career writing about the history of education, and it’s also proven that the longer you stay intellectually active, the easier it is to stave off cognitive decline.
Douglas, thanks for an enjoyable article. You appear to have practiced a somewhat different lifestyle than most commonly written about here, and that made your article particularly interesting. No mention of wife or kids, no desire for a house, a car as a last resort rather than a major life component, and way more education than most of us can even imagine.
As has been said many times, one of the great attributes of HD is the contributions from writers with such diverse backgrounds and viewpoints. Thanks for adding to that.
I am unmarried and child-free by choice. Some people are. As for the car and the house, those are interesting comments. To the extent that I aspire to any grand housing, my dream has always been an apartment in a high rise. I personally think the modern suburban house is really destructive. It’s too big and sucks resources. I grew up happily in an 1100 square foot house in Erie. As for the car, I grew up driving in the burbs. But I went to college in Philadelphia. I worked there and in Boston, and then I did my PhD in Minneapolis. I taught there as an adjunct for about 3 years. I never needed a car in those places. If I had found work in Chicago or New York or Philly, I would have never bought a car, happily. They are money pits. I stayed out of debt in my 20s and 30s because I didn’t have to make car payments, pay insurance, or pay for repairs. When I retire, I look forward to ditching a car and moving back to a city where I don’t need one.
Sounds like a life well lived. Good luck with the Scottish trip.
One caveat: I’m an introvert, so I sympathize with your desire to age alone. However, while you will have the money for in-home care it is not a given that you will also have the mental capacity to arrange it.
The author has not accounted for the possibility of a debilitating illness like Parkinsons. It felled my Dad, a brilliant lawyer in India. I brought him to live with me in the US and took care of him until he passed away, in my home, literally in my arms. Thats the value of loving children
I’m glad you were able to care for him. That’s not the reality for most kids and parents. Most people with debilitating illnesses need professional care.
Your approach is very well thought out. The quote, “People who get seasick decide to buy an expensive boat.” is a classic.
I’d never heard of a composition class that focuses on personal finance. Maybe Jonathan could have a contest for your class with the winner being published on Humble Dollar? Anything we can do to help students start their financial lives is a big plus. I’ve promoted student financial education by pointing out that schools don’t very often have a Bill Gates or Warren Buffet graduate so future donations will come from those students who managed their money well and were able to “pay back.” Conversely, you don’t get a lot of donations from people who end up living off of social security only.
The course is about analysis of discourse and writing. One of the most interesting discourses in the United States is personal finance. This discourse embodies dreams and myths. We read the “Economy” chapter of Walden. In addition, we read the work of the minimalists, Joshua Millburn and Ryan Nicodemus. Then we read a typical financial self-help book, T. Harv Eker’s Secrets of the Millionaire Mind. Then we switched gears to read David Harvey’s a Brief History of Neoliberalism, and we end with Helaine Olen’s Pound Foolish.
Thank you for your essay Mr. Texter. I’m familiar with a local woman who helps parents write a “values, stories, sharing letter” to their children to help them understand what money/wealth meant to the parents. It’s called an ethical will. And while of course it’s non-binding, it helps some children with some sort of direction on how and how not the parents would want the children to use their inherited gift. While I believe my wife and I have set a good example for our children on how money/wealth should best be used, I’m sure many parents would find writing a letter (ethical will) helpful to provide some, again non-binding, guidance.
I like the balanced way you’ve approached your inheritance. I hope you take that museum trip someday!
I received an inheritance from my grandfather’s trust in 2005 after my step-grandmother passed. My father had already died, so my siblings and I split what was left. I’m satisfied with the values-driven approach I took, too. My oldest child went to college the following year, so that money was very timely and helpful. A lot of the inheritance went to our retirement accounts, some went to home improvements and cars, some went to charity. My only regret is that the 2008-09 took a bite out of it, since the inheritance was mostly in stocks. I wish I’d known more about managing money at the time.
I teach writing to first-year college students as well. Personal finance would be an interesting topic!
Doug, this is a nice story. You seem to be adept in handling inheritance. You have not said anything about your family. Best wishes for a happy life.
I admire your steady hand.
I, too, love Scotland. Enjoy your next visit!
PS You can start enjoying rare books now, why wait?
Douglas, nice to read a significant inheritance story which does not revolve around the person becoming a spendthrift or stingy. People who develop sensible values which reflect their personality before receiving an inheritance or major gift, appear moving forward to be most content.
Your parents most likely would be proud. Their financial gifts allowed you to continue your life on its chosen path in a personalized style.