Using an inheritance to boost your current lifestyle can be tempting. In fact one-third of people who receive an inheritance blow through it in less than two years.
"Inheritance is typically the only time in a lifetime that you'll receive an infusion of money that wasn't earned," says Bill Alexander, a financial expert and elder law attorney at W.G. Alexander & Associates in Raleigh, N.C.
However it's much smarter to maintain your everyday spending and use that extra money to secure your financial future. These four steps can help you do just that.
- Pay Down Debt
First clear up any debt, especially high-interest credit card debt, says Alexander. Whether or not it makes sense to pay off a mortgage depends on your financial situation. Speak with your financial advisor about your specific goals and needs so that you can make the best decision for you.
- Be Sure You're Covered
Then if you're able, purchase long-term care insurance. Research shows that someone turning 65 today has an almost 70 percent chance of needing long-term care at some point in their remaining years. With uncertainty in the health-care landscape, it's more important than ever to be prepared for the cost of long-term care.
- Make Your Money Grow
Any money you have left should be appropriately invested. Consult your financial professional on how to build your savings based on your age, proximity to retirement, and personal risk tolerance. Consider an annuity to help you create a guaranteed stream of income you can't outlive.
- Keep It for Yourself
If you're married, Alexander suggests keeping the inheritance in your name alone. That way, if you get divorced in the future, the inheritance is not a marital asset that needs to be split up.
This material is a general description intended for general public use. Jennifer Lang Financial Services, LLC. is not undertaking to provide investment advice for any individual or in any individual situation, and therefore nothing in this should be read as investment advice. Please reach out to a JenniferLangFinancialServices.com financial professional if you have any questions about products or their features.