Special to USA TODAY
Published 7:00 AM EDT Oct 26, 2018
Dear Pete: My grandmother just passed away, and I’m set to inherit quite a bit of money. It’s more money than I’ve ever dreamed of having. My entire adult life has been spent working full time, and I’m tired. To be honest, I don’t want to lift another finger once I get this money. My kids are in middle school, and both are pretty bright, so I’m pretty sure they’ll get scholarships. Am I thinking clearly? Do I have any moral obligations with this inheritance? — Susan
Practical experience says that if you are asking about the morality of a decision, you likely already have your answer.
If that's a little too vague an answer, Susan, I’ll gladly provide you some context. Inheriting money, although pretty common, is one of the strangest things a person can experience. Frankly put, someone dies and you financially benefit. How is a person supposed to deal with the intense emotions surrounding a death followed closely by a blast of good fortune?
I’m not certain you have a moral dilemma, but you do have something in the ballpark. Your grandmother had no moral obligation to you in regards to her estate. Whether she bequeathed it to you or gave the money to a local feline music education program, it really didn’t matter. But if you blow through the inheritance, did you somehow violate the unwritten rules of morality?
Consider this hypothetical: Imagine that your parents received your grandmother’s inheritance when you were the age your children are now. And your parents' decisions resulted in the money not being made available to you at your parents' hypothetical passing. Does that bother you?
If it doesn't, this might not be a moral issue. If you put yourself in your kids’ shoes and can’t imagine a scenario in which you’d be upset if your only source of college funding was scholarships, then you don’t have a moral issue.
But you may have a significant flaw in your thinking on the issue. But it's one that you can easily patch. Assuming your kids will receive scholarships because they’re "pretty bright," good at sports, charming or they’re great at video games is an incredibly bad idea.
Please understand, I’m not doubting their brilliance or talents. I’m just making clear that it’s more common than not for even exceptional students to be left scholarship-less upon graduation. Keep up this perspective on their education funding and you will quite likely leave them with burdensome student loans that could be avoided, given your situation.
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I can’t say that unnecessarily leaving your children in a student-loan debt straightjacket is immoral, but I wouldn’t do it. I generally discourage people from going down the “grandmother would have wanted me to …” path, but I think its fair to assume your grandmother would not have wanted you to leave your kids in a lurch.
Finally, there’s one other phrase you used in your query that makes me nervous. What is “quite a bit of money?”
I asked this question to the first five people I came across after reading your email. All five had wildly different answers. You may have inherited quite a bit of money, but that might not be enough money to cancel your career indefinitely.
If you want to instantly retire, your inheritance and your current investable assets would need to be equal to at least 25 times your current income. For example, if you currently earn $50,000 annually, a $1.25 million inheritance would be enough inheritance to instantly retire. Believe it or not, $1 million likely wouldn’t be enough.
But, if you planned on spending any of the inheritance in bigger chunks (like to pay for your kids’ education) then the inheritance would need to be even more than 25 times your current income to make the calculations work. What you mean by “quite a bit of money" might be the bigger issue to sort out here, not the morality of the situation.
I have no doubt your grandmother’s passing was an emotional experience for you, and the arrival of the inheritance has certainly raised questions for you. In a perfect world, the inheritance is enough to prevent your kids from taking on student loans and allow you to make a satisfying career decision. If that’s the case here, there shouldn't be a moral quandary.
I’m sorry for your loss, Susan. Stay resolved in your commitment to not let the money cloud your judgment.
Peter Dunn is an author, speaker and radio host, and he has a free podcast: "Million Dollar Plan." Have a question for Pete the Planner? Email him at [email protected] The views and opinions expressed in this column are the author’s and do not necessarily reflect those of USA TODAY.