If a person inherited one million dollars, would they ever have to work again?

Say a person inherited one million dollars from their grandpa. Would this be enough money to live comfortably? Granted, taxes would take a huge chunk, but it would probably still leave about 725,000 right? If so, at an interest rate at 4%, that would still leave an annual interest amount of 29,000. I realize that prices and the cost of living fluctuate from coast to coast (as does the amount the average person would spend), but in general, could one live for the rest of their life with an inheritance like this?

It depends upon the area in which he lives, the lifestyle to which he is accustomed and his current age. It could be done - but I doubt most people would be happy or comfortable at this income level for a few decades. If the person in question were 30, by the time he turned 60, inflation would have eaten through much of the purchasing power.

Being a millionaire just ain’t what it used to be.

I know a guy who just recently inherited 2 million dollars from his fathers passing. His plans are to buy a sprint car trailer, with the car, and have his buddy race it. I have a feeling he’ll still continue to work. :dubious:

Now if it were me, I’d invest it and make sure I’d never have to work again. And then have fun! :slight_smile:


  1. You actually get $1m after/sans taxes and not half of that
  2. average of 3% inflation
  3. A balanced, but conservative investment strategy that returned (on average) 5%/year
  4. You don’t want to touch the capital (i.e. have the same amount of money at any given time than when you started)

You’re looking at about $20,000/year income in today’s buying power. Which isn’t much of a living. Of course, if you’re willing to add risk to the investments or to drain capital over time, then you might be able to pull it off.

Frankly, you’re better off investing it moderately for the next 5-10 years and continue to work. By then, you could almost certainly retire with a reasonable middle-class income assured for the rest of your life. And have something to hand to the next generation when you die.

First of all, by the time you inherit it, the taxes are paid - they are paid by the estate. So if you inherit $1million, you get $1 million (the estate may have been worth $3million, before taxes and other dispositions).

You’d wouldn’t be wealthy living off the interest of $1 million. And inflation would eventually eat into the income you do have. Can it be done, yes. Could most people live the life they want on a million, I doubt it. (You’d be paying your own health insurance without a job, that will eat up a lot of income).

stupid question: there’s taxation on inheritance? you need to pay money to the government for passing money to your kin? what’s the logic in that?

Yeah, but you need to pass on a lot of money (or a relatively valuable business or farm) before it kicks in and its being phased out. And with the business or farm, you can avoid it if you’ve taken steps before you die (actually, you can usually avoid a lot of it before you die - gifting it away each year at an amount below the taxable threashold).

The government taxes money almost anytime it changes hands. Inheritance is no different.

That’d be more money than I make in a year. But, hopefully it’s a lot less than I’ll be making in a few years. $20,000 is a frustrating amount to live on, even as a single guy.

Ms. D_Odds and I play this game often. We figure, to be safe, we’d need at least $4 million net, and better to have around $5.5 million plus.

$4 million, invested in a conservative, boring municipal bond portfolio yielding around 4% would be $160,000 net (after taxes) per year. If we left NYC, we could live on easily on $100,000 / year net, and then put the $60,000 into a more aggressive mixed bond/stock portfolio as an inflationary hedge. That leaves us plenty of cash for insurance, hobbies, college expenses, long-term care, and vacations. And even better option at $4 million is to work another 10 years, which will see my son and step-daughter through their bachelors’ degrees, and then retire, now with $5.6 million ($224,000 / year net). Retiring at 50 doesn’t sound too bad.

$1 million net simply means that we don’t go into any debt paying for college, and that our long-term care / retirement is very comfortable. While we could live on $40,000, I wouldn’t want to take that step back.

Nitpick: the estate tax (currently) isn’t being phased out. Rather, the threshold amount before it kicks in is going up annually (currently I think it’s $1,000,000), and on January 1, 2011 the threshold amount is scheduled to revert back to 2001 levels. Congress is debating whether to abolish the estate tax permanently or permanently change the levels. As this is not GD I shall refrain from making comment as to the wisdom or folly of such action.

Personally I’d rather not rely on a million dollars to take me through the rest of my life (actuarially I think I’m expected to live about another 35-40 years) but if I had no other option I think I could make it. More likely I’d find something part-time that I really liked doing to supplement the income from the million.


Yep. By 2010 it will be phased out. If Congress does nothing, it will jump back to 2001 levels in 2011. Not a nitpick at all, I didn’t want to go into it further here either.

One million wouldn’t be enough to make the wife and I stop working. Not nearly enough. Like D-Odds, it would take 5 million or so to match our current standard of living, just spending the interest. If we won a million, I think we would use it for capital upgrades rather than overhead for the rest of our lives.

Assuming (after taxes) I live off of the interest and don’t touch the principal?

Yes, I could do it here in WV – even own a house.

I’d have to watch every single penny, though, and more kids would be out of the question, as would most fun things like vacations.

I’d use maybe half a million to buy a modest house or condo and save the rest for a rainy day. I’d still have to work, but since I wouldn’t have to pay rent or mortgage, my living expenses would be drastically reduced. I could probably get by fine working part-time at something. Naturally this situation would be untenable if I had a family or something.

It will not be phased out. It will not end at the end of 2010. It will revert to 2001 levels. Phasing it out would mean that it’s going to go away at the end of some specified time frame and that’s not what’s going to happen here. Absent further Congressional action there will still be an estate tax.

Sorry Otto, I was under the impression that between now and 2010, the amount of the non taxable estate will increase until, in 2010, estates will not be taxable. If you die in 2010, you can leave your family a billion dollars without incurring tax. Die in 2011 and your estate above $1,000,000 will be taxed. Am I mistaken? If so, what is the estate ceiling in 2010? Or are we just using different definitions of phased out…I’m saying between now and 2010 it will be phased out, with it being reinstated (unless Congress does something) in 2011 and you saying that since it is reinstated it isn’t phased out. If that is the case, yep, in 2011, it comes back.

That’s the biggest difference Ms. D_Odds and I have when we play this game. I’m more conservative financially. I want $1,000,000 in the bank, and the $40,000 extra a year to pay for capital improvements, college expenses, and taking care of both sets of aging parents. She would want to invest in real estate and/or a new home. My son is very close to college, and our step-daughter is not too far away either. I value liquidity.

$5,000,000 solves that problem :smiley:

It would depend on a lot of things:

  • Where you live: For example, in a lot of third world countries you might do just fine. There is no rule that you have to stay in the USA.
  • What you already have: if you have a house free and clear, that’s typically your biggest expense. So calculate your budget from there.
  • How old you are: For someone who is 50, and can draw a pension or Social Security and Medicare in a few years, this could be the retirement nest egg. If you are a young adult then there’s almost no way.
  • What is your standard of living: if you want to live in a tent or trailer or just eat PBJs the rest of your life then you could probably pull it off.
  • How well do you invest/save: if you think, “Gee, I’m a millionaire, I need to drive a Porsche” then it won’t take you long at all to burn through a cool million. An acquaintance of mine (you’d probably recognize his middle name if you’re American) inherited about $5,000,000 when he turned 21. At 18 he’d been kicked out of his house by his parents for being a bumb and a drunk. At 21 he switched to cocaine, then eventually nitrous oxide and finally back to alcohol. I don’t know if he’s totally broke yet, but my suspicion is that he is if he’s not dead.

Exactly, if the OP had invested that million in Google shares at about the time it was posted, they would’ve earned about $10,000 today.