Who Is The Best Investment Service For A $200,000 Account

How to Retire on a $200,000 Inheritance

Getting a hefty clamper of change from an inheritance is a squeamish way to boost your retirement savings. But whether or not it's enough to live off of in retirement is a very personal question. If you've received virtually $200,000 and you're wondering if your windfall makes you lot prepare to retire today, yous should consider fully assessing the math backside what you'll need in retirement. There are also a number of strategies y'all can utilize to brand your inheritance grow. These include investing, working with a fiscal advisor, maxing out your other retirement plans and more. If you have retirement planning questions, consider working with a financial advisor who can fully assess your personal state of affairs.

What to Do With Your $200,000 Inheritance

If you're lucky enough to have received an inheritance from a loved one, at that place are many things you could practise with information technology as you program for retirement. If you're hoping to stretch information technology far enough, you'll desire to avoid straight spending it for as long equally you're able to. Instead, you lot could:

Find a financial advisor to manage your investments
Invest in the stock marketplace yourself through an online brokerage
Put it in a loftier-yield savings account
Max out your retirement accounts

These options aren't mutually exclusive, and there's a skillful run a risk you can pursue a combination of these strategies. Below are a few of import examples of what you can do with your money if you're looking to retire with your inheritance in heed.

Stock Marketplace Investing

How to Retire on a $200,000 Inheritance

If you want to see serious, long-term returns on your inheritance, and you don't mind a picayune brusk-term risk, you should be investing in the stock marketplace. If you plan to have a do-it-yourself arroyo to investing, you lot could practice so through an online brokerage. This lets you manus-selection the securities you desire to invest in.

So what kind of returns tin yous wait? The average return charge per unit on stock market investing is 10%. But since the market swings upwards and down much more than savings account APYs, you lot might experience both extreme growth and massive loss. Let's exist conservative with our estimates.

Say you're 45 with plans to retire in xx years. If you took your unabridged $200,000 and put it into an online brokerage, hither's what you'd go far return after no actress contributions and a iv% rate of return:

ane year: $viii,000
10 years: $96,049
20 years: $238,224

As you can run into, investing in the stock market place more than doubled your original investment. When it comes time to cash out, you'll take a total of $438,224.

Keep in mind that this method is on the lower end of the average. If yous did somehow average 10% almanac returns after 20 years of investing, you lot could cash out with $1,345,500. That'due south your original $200,000 investment more than six-fold.

Note that these figures come from earnings alone and don't account for fees or any other contributions you make to your business relationship.

Work With a Financial Advisor

Not confident in your power to manage your own investments? Find a financial advisor in your area and let them have the wheel. Typically an advisor volition only charge around 1% of your account value annually to manage your investments. And while it'southward difficult to nail downwards exactly how much additional value an advisor tin can bring to the tabular array, research suggests you could see additional almanac investment returns ranging from 1.v% to 4%. Many advisors also offer financial planning services.

If you don't want to work with a fiscal counselor, y'all could instead invest with a robo-advisor. They tend to be a little cheaper, simply yous won't get hands-on handling, and your money will likely be invested in a model portfolio according to your risk tolerance.

Max Out Your Retirement Plans

Whether you accept a 401(1000) plan through work or an IRA you opened at a brokerage, it might be worth contributing to both, especially since you have the actress greenbacks to max them both out. For 2021, retirement plan contribution limits are:

401(k) contribution limit (traditional and Roth): $19,500
401(k) catch-up contribution limit (over 50): $6,500
IRA contribution limit (traditional and Roth): $6,000
IRA grab-up contribution limit (over fifty): $1,000

If yous're fifty years of historic period and older, y'all could contribute up of $33,000 a year to both your work-sponsored retirement program and your IRA. It would accept you six years of maxing out your contributions with your $200,000 before you lot ran out of money to contribute.

The growth of your retirement accounts can vary based on your age, when you plan to retire and the type of investor you are. Simply you can expect an average render rate of 5% to eight%, depending on market weather condition. This is on par with your regular investment accounts.

Open a High-Yield Savings Account

How to Retire on a $200,000 Inheritance

Maybe y'all don't have the stomach to identify all of your money in the stock market. And even if you do, some of your money should still exist in cash. While savings rates are currently low due to the COVID-nineteen pandemic, the all-time loftier-yield savings accounts over the last few years offer around a ii% annual per centum yield (APY). If y'all go this route, here'south what you could earn in interest alone with no other contributions:

Get-go yr: $4,000
10 years: $43,798
xx years: $97,189

So if you lot're 45 and planning to retire in 20 years, yous will have earned almost $100,000 extra on your inheritance through a high-yield account. But go along in mind that APYs can go up or down and the lender you choose for your account might have dissimilar account minimums and fees. And likewise consider that inflation will cutting into some of the value of your savings interest.

Is it Possible to Retire With $200,000?

If you've recently gotten a $200,000 inheritance, there'south a chance yous could retire on that cash lone. It depends on how you lot invest it, what type of investor you are and when you plan on retiring. The more aggressive you are, the more likely you are to get a higher return, just that as well ways a higher level of chance in your portfolio.

Recall, too, that the longer you put off retirement, the longer your money stays in the market with the potential to grow. And so while information technology'south possible to retire with just $200,000, it would likely be a very small-scale retirement if yous need information technology to live on immediately. That amount could be used in add-on to

Bottom Line

The all-time way to retire on your $200,000 inheritance is to make information technology grow. You lot can do this in a number of ways, from putting information technology into the correct savings business relationship to finding the correct risk balance in an investment portfolio. The right plan for you is going to be unique and you may want to first consult with a financial advisor to determine how to make your inheritance stretch as far as possible.

Retirement Planning Tips

Finding a qualified financial advisor doesn't have to be hard. SmartAsset'south free tool matches you lot with up to 3 financial advisors who serve your expanse, and you tin interview your counselor matches at no toll to decide which 1 is right for y'all. If you're ready to discover an advisor who tin help you achieve your financial goals, get started now.
Planning for retirement tin can be tough to exercise on your ain. Use SmartAsset's retirement calculator to get an idea of your prospects of reaching your goals.

Dori Zinn Dori Zinn has been covering personal finance for nearly a decade. Her writing has appeared in Wirecutter, Quartz, Bankrate, Credit Karma, Huffington Post and other publications. She previously worked as a staff writer at Educatee Loan Hero. Zinn is a past president of the Florida chapter of the Society of Professional Journalists and won the national organization'due south "Affiliate of the Year" award two years in a row while she was head of the chapter. She graduated with a bachelor'due south degree from Florida Atlantic University and currently lives in S Florida.