Hypothetical--Receiving a windfall

[ZephyrHawk]

Let's see....basing on $2 million:

1. Pay off my new car
2. Pay off student loans
3. Make some tweaks to our non-employment retirement plans
4. Gift maximum tax free allowance to DD (in December and the immediately following January, to permit two quick deposits in two different tax seasons) - DH and I would each do this.
5. Pay off mortgage
6. Permit DH to get the new car he wants
7. Probably take one nice vacation with the family.
8. Put the remainder (probably about half) in a trust.

 

[dosekies]

Pay off my college loans, any other bills SO and I have, and then buy ourselves our first house. After that, I would probably save most of it, but definitely go on a nice vacation.

 

[adisneyaunt]

I'd set up a 250k trust acct for my kiddo to distribute at 30, then 50.
Give all my siblings 25k each to do as they wish.
Donate 25k to our hometown library..
Donate 100k to Memorial Sloan Kettering
Donate 25k to Church
Donate 25k to Disabled American Veterans (in memory of my late moms favorite charity.)
My dh would indulge himself.. hobby related
We d likely due an Upgraded (first class and extend ) our Hawaii trip
I'd of course add in another disney trip lol
..then put the rest away for later use
Oh, the dreaming

 

[kamik86]

Hmm give the max I can to my parents without taking a tax hit
Give like 5 K to each of my neices, in something they can't touch til 18 for the younger two
Take a dream vacation
Pay off all our debt
Work on building our dream house (only two of us so still modest)
Put the rest in savings for paying people to mow the lawn and do maintenance on said house I don't want to do

 

[NHdisneylover]

OP here. See, that was the thing that got me thinking about this. My thoughts in my 20's would be so different than now, when I'm in my 50's. And I deliberately said a "small" fortune, versus a large one, because I was curious about the choices that people would make--if you won $100M in the lottery, you wouldn't really have to choose between paying off your mortgage or saving for retirement. At $2M or so, you couldn't just go hog-wild. Or, you could...for about 6 months.

I think once we had retirement/college set, we would upgrade our vehicles, fix up the house, and maybe take a nice vacation or three. Beyond that, I don't think we'd substantially raise or standard of living--I'd still shop at Walmart and rent condos on most vacations. I think my main splurge would be to fly first-class on long flights. Maybe a house-cleaning service once a week or so.

Funny---I have had the same basic answer since my college days. Your post made me curios, so I just messaged DS18 and asked him what he'd do if he suddenly came into 2 minllion (after taxes).
He responded with the first thing he'd do is buy the remaining unit in our building and spend the money to change/upgrade it to somewher he'd like living long term--that way he'd have a paid for house in the town he's likely to work in and if he moves it would make a good rental that would hpefully generate enough income to pay his mortgage elsewhere. He estimates that takes a quarter of the money by the time he furnishes it. He'd put a million into mutual funds as retirement savings and he doesn't know for sure what he'd do with the last quarter---probably soem cool trips and more short term savings.

That's really not all that different than what I said, in spite of a 25 year age gap.

 

[jevs]

That would be approx $2510600.00AUD

Pay off student debt.
Invest at least a million for my kids uni fees so they don't have to worry about student debt.
Buy another property somewhere in Melbourne to retire to. Rent out until I'm an OAP.
New car.
Travel.

 

[design_mom]

I'd probably consult a financial advisor before I did anything. But... if we invested it wisely, we might be able to support our current lifestyle in the interest generated from the $2M. I'd be satisfied with that -- quit work, take a vacation or two per year, but otherwise live relatively modestly. Then, we'd maintain the principal.

 

[SC Minnie]

Pay off all bill outstanding bills and mortgage. Invest 1/3. With what we already have in retirement I would probably quit my job. We would travel more, fix up the house like we want it. Still would have a lot to live on.

 

[FlightlessDuck]

if you won $100M in the lottery, you wouldn't really have to choose between paying off your mortgage or saving for retirement.

The thing about that is you have to look into whether you will make more money in your retirement savings than you would lose from interest on the mortgage. Although to be fair, I'm not sure how many people have a $2 million mortgage. So you can probably do both.

 

[NHdisneylover]

The thing about that is you have to look into whether you will make more money in your retirement savings than you would lose from interest on the mortgage. Although to be fair, I'm not sure how many people have a $2 million mortgage. So you can probably do both.

Yeah a two million dollar mortgage would indicate a fairly high standard of living for which that same amount in savings wouldn't really generate enough interest to live off of anyway. Eek.

There is a lot to look at for sure. I would consider paying off the mortgage to be part of retirement savings in so far as for DH and myself, not having that monthly bill would greatly lower our monthly financial need later on. BUT, as you say, I would hold the money aside earning interest but not actaully pay it off now (we have a 10 year mortgage with a balance due at the end, and a 2.1% interest rate---we can earn more on the money alsmot anywhere than we are paying for the mortgage now. When the balance is due, we'll look at options and see if it makes more sense to payoff in cash or take another 10 year loan on what remains).
Part of what makes paying off the house an investment in reitring though is that it is a house we know we would likely live in as retiurees. Not too big. Would require only very minor modification in the ktichen to make it fully wheel chair friendly if that is ever an issue. Property taxes are low and not likely to jump sky high (beucase that is handled differently in the country we live in than in the US---we paid about 35k in taxes when we bought but yearly is under $500----so that people can afford to live in homes they own once retired). Low maintance needs (its a condo). Near public transit in case we ever cannot drive. Etc. Etc. I'Ve owned other homes which would not really make a lot of sense as empty nester/retirenment palces and that would totally change how I used such money if I were living in one of those.

 

[QueenIsabella]

The thing about that is you have to look into whether you will make more money in your retirement savings than you would lose from interest on the mortgage. Although to be fair, I'm not sure how many people have a $2 million mortgage. So you can probably do both.

Yeah, I don't know anyone with a $2M mortgage--for us, a big future expense will be getting our kids through college (1 down, 3 to go). Also, if we had this kind of cash, you can bet there wouldn't be a lot of financial aid (not that there should be, but you have to look at full freight college tuition--ouch!) And I don't know if I'd rush to pay off the mortgage in this hypothetical situation--DH and I have discussed it, and I definitely want it paid off before he retires, but it could be the day before. Not that we have this hypothetical $2M anyway.

NHDisneylover--your son sounds very smart and forward-thinking.

 

[Pumbaa_]

At 52 and dh 60 we would retire in a heartbeat

 

[indimom]

New vehicles.
Sell our house and build my California ranch dream retirement home outside town on a couple waterfront acres.
Buy a boat and camper.

Invest the rest. With that nest age, we would continue to work, live comfortably, vacation annually, give more freely.

 

[NHdisneylover]

New vehicles.
Sell our house and build my California ranch dream retirement home outside town on a couple waterfront acres.
Buy a boat and camper.

Invest the rest. With that nest age, we would continue to work, live comfortably, vacation annually, give more freely.

Can you get two waterfront acres in California for so little that two million would buy it, pay for construction of a dream house and leave a nest egg for retirement? I've never priced property there, but I always hear how outrageous the prices are.

 

[indimom]

Can you get two waterfront acres in California for so little that two million would buy it, pay for construction of a dream house and leave a nest egg for retirement? I've never priced property there, but I always hear how outrageous the prices are.

I meant California ranch as a description of the style I like.
I'm in rural Indiana. I can get a decent sized ranch on two acres on a nice sized lake for $220-250,000. I've been ogling a house like that just this week. It's a really nice house, but I kinda want to build and I'm not sure I want a lake house with lots of neighbors/boaters. Thinking about just a nice country property with a pond.

 

[NHdisneylover]

I meant California ranch as a description of the style I like.
I'm in rural Indiana. I can get a decent sized ranch on two acres on a nice sized lake for $220-250,000. I've been ogling a house like that just this week. It's a really nice house, but I kinda want to build and I'm not sure I want a lake house with lots of neighbors/boaters. Thinking about just a nice country property with a pond.

That makes so much more sense!

 

[QueenIsabella]

I meant California ranch as a description of the style I like.
I'm in rural Indiana. I can get a decent sized ranch on two acres on a nice sized lake for $220-250,000. I've been ogling a house like that just this week. It's a really nice house, but I kinda want to build and I'm not sure I want a lake house with lots of neighbors/boaters. Thinking about just a nice country property with a pond.

I can understand the confusion--I never knew that "California ranch" was a specific house design style. Of course, I lived in the Northeast all my life, until 2 years ago--there are definite house style differences between the two. Many more porches and no woodstoves down South, for one thing. More importantly to us, though, is houses in the South are MUCH cheaper than we found in upstate New York/New England.

 

[DisneyHardin]

I would buy our dream home, buy a new van, ear mark some for travel and invest the rest.

 

[FlightlessDuck]

New vehicles.
Sell our house and build my California ranch dream retirement home outside town on a couple waterfront acres.
Buy a boat

Hrrrrm, now I want to buy a lakehouse. And some kayaks.

 

[FairestOfThemAll37]

I would invest the vast majority of it right away and keep working and using the dividends to supplement my income....extremely rough estimate would put those dividends at around 60-80k a year if you invest with dividend income being your priority.

Ditto. Except I'd be throwing those dividends right back in until it outpaced my current earnings by about 25% and would quit my job and retire.