Can We Still Retire if We Don't Receive the $750k Inheritance We're Expecting?

Matt and Beth, both 57, plan to retire early within the next two years. They've saved diligently, own multiple properties, and expect a $750,000 inheritance. With monthly expenses of $4,900 and annual travel costs of $6,000, they aim to retire by 59½ to avoid early withdrawal penalties on their retirement accounts.

James, stresses the importance of managing withdrawals, especially in the early years before Social Security and the inheritance kick in. Balancing income flow, healthcare costs, and a potential $25,000 for their child's wedding, they must carefully plan to maintain their lifestyle.

Real estate also factors into their plan, as they consider selling their primary home and condo to buy a $550,000 property in Michigan. Though they expect a substantial inheritance, James warns of the risks of relying on it too heavily. He advises flexible strategies, including managing withdrawals from various accounts to minimize taxes, keeping savings liquid, and staying open to part-time work if needed.

The key to Matt and Beth’s successful retirement will be maintaining flexibility and planning for various scenarios to ensure long-term financial security.
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⏱Timestamps:⏱
0:00 - Meet Matt and Beth
3:02 - Overview of retirement plans
5:45 - Expenses in retirement
8:13 - Relocation plans and rental property
11:39 - Post-retirement income and inheritance
17:20 - Projected cash flows
25:54 - Projected withdrawal rates
28:58 - Projecting no or reduced inheritance
37:12 - Pipe dreams or real possibility?
39:25 - Considering future taxes
44:11 - Prioritize flexibility

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Worried about retirement?

[Sookisushi]

With regard to inheritance and retirement I've always assumed I would inherit nothing and planned for funding retirement completely from my own savings and investment. That way I can care for my aging parents and help them manage their money without feeling any conflict about how they need to or choose to spend the money they worked hard their whole lives to earn. If I do inherit money I may end up having worked longer than I needed to but I'd rather have that problem than feel dependent on my parents leaving me money.

[Mary-tjqx]

Just a note to say thank you to this couple for sharing their journey. The questions around inheritance are very emotive and will get a lot of reactions, none of which are about this couple. Many of us are in this same phase with our parents and it is a topic that produces a lot of opinion. It’s super helpful to show it in this way and this couple has done us all a favor being so open about their own thought process and situation. Ty

[NipItInTheBud]

Your first mistake is expecting an inheritance. Never expect....just appreciate it if you get one. Second, always plan as if you're not getting an inheritance. Then if you do get one then it's just a bonus!!!

[denise-stevens]

I appreciate your guests who are willing to lay out their financial life for all to see because we can recognize ourselves in these scenarios including all the what-ifs, uncertainty and anxiety. Being vulnerable to do this is immensely helpful to viewers, even though immediately some opinionated viewers start shaming and criticizing these normal people who are just trying to help others. I hope this doesn’t damper others’ willingness to go through this exercise with you. Nobody else is doing this on YouTube and it’s more helpful than talking generally or with generic case studies.

[chris-cxrv]

Another great video. Thank you for the real life scenario interviews.

[pearleelife]

It’s absolutely the worst way of looking at it. None of their sources are guaranteed. Back ups of back ups. Siblings contesting stuff can drag it out YEARS. Ffs

[penelope]

The thing is...even though it sounds like a very nice inheritance, you just don't know if one, or both, of her parents might end up needing nursing home care. Two years in a NH, for each of them, would put a huge dent in that $750, 000.

[Mary-tjqx]

No judgement, just sharing my experience. My parents were very, very clear from day 1 that there would be no inheritance. This, among other lessons, forced all of us onto our feet. I have had several friends over the years who inherited trust funds (and not huge trust funds) just enough to kill any self-reliance in them. I can’t think of one who actually benefitted from this windfall, and several really messed up their lives with the money. I do think it’s generally a huge mistake to lead anyone to believe they are going to inherit money. For this reason I will not do that. Odds are I will leave something to certain people, just not enough to change their lives and certainly without letting them know it’s coming.

[steveo]

An inheritance is a gift. It is not to be expected nor should you stick your nose into the grantor's financial affairs. It is NONE of your business until the person passes and the estate is settled. As others here have mentioned, you plan for NO inheritance and maybe you are surprised by a gift.

[Beadgcfb]

This was a very instructive episode. I'm sure they left with a better focus as James identified the more impactful variables. Most importantly they appear to be able to face and work together on their retirement dreams and challenges.

[noveltyrobot]

James, this is quite good. It's a great insight into what a financial plan actually is, how a planning session goes, the value of an advisor/planner and so much more

[duanec.duanec.sutherland]

I retired at age 53, so I am in my early 60s. Many of them resisted me because they couldn't understand the idea of not working if it wasn't necessary. I considered the phases of my life. I worked very hard to achieve what I have now, but in my last years, I owe it to myself to "stop and smell the roses." In my instance, I departed the nation after retiring and currently reside in Latin America. It made it possible for me to appreciate my new surroundings while escaping all the bad things that were going on in America. Nobody that I know of regrets retiring has yet to come to me.

[jeffb.]

Great series. Keep up the good work James. Might be interesting to look at someone or a couple around 20 years away from retirement.

[damienbates]

New vehicles in the US are an unfortunate necessity due to the expense. It’s unlikely I’ll ever buy brand new again. Since I’ll be buying with cash, a 3-4 year old vehicle is a better option hands down. I avoid the serious depreciation of the first few years at the expense of not having every option I might desire. So far, it’s been a successful strategy for me and my kids. It does take much more shopping, negotiating and cash upfront.

[janethunt]

Another "Never Count on:" The value of a property when time to sell. We had a condo in a great location, put it on the market for $50K more than it sold for. We're thankful that it didn't need any major repairs in the year that it sat on the market. James, great video as always. Good to see that you've traded your fluorescent tan for a little sunburn.

[andre-lj]

Thanks, Matt and Beth! I appreciated all of the nuances and caveats you shared with us during your planning.

[cablaze]

"Risk is what's left over after you think you've thought of everything" is a quote attributed to Carl Richards. I was thinking it was Morgan Housel.🤨

[mattr]

James what probability of success percentage do you like to have most clients at for a minimum? Roughly…

They should talk to a mortgage broker about getting a mortgage once they no longer have income.

Consider living in the condo for 2 years and then selling it to avoid paying any taxes on the gains which I’m sure they’ve had due to the most recent housing price increases.

[fobbitguy]

My only caveat i would have for this nice couple is are they sure about this inheritance. Its ok to trust theirr parents about this inheritance but i would VERIFY that this is going to happen? I learned this painful lesson from own experience. I would verify this inheritance by looking at any wills and trusts in black and white on paper. Then, youll be shocked what type of estranged family comes out of the wood work to claim part of the inheritance. The nicest family members and their spouses can easily turn when dollars signs start being seen. Trust your parents but verify

[kaushikbakhandi]

First of all thanks to the couple for sharing the details! Can the couple be in better position to delay housing adjustments by 5 years or so? I am curious to know how the plan will look. They will still be able to achieve many of the life goals and may be in a better position to know about the inheritance.