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Ep 56: Mailbag: Expecting An Inheritance, Tax Withholdings, And More Thumbnail

Ep 56: Mailbag: Expecting An Inheritance, Tax Withholdings, And More

On This Episode

Should you retire early If you believe a large inheritance is coming your way? How much tax should you be withholding? Should you buy an investment property with your parents? We’re answering your mailbag questions today. 


Today we’re opening up the mailbag to answer your questions. Let’s jump into it.

Lucy asks: “I’ve decided to retire at 64, even though it’s debatable whether I have enough retirement savings to do so. But my dad is in his mid 80s, and I know I’ll be getting a fairly big inheritance from him someday. I just don’t know when, and I don’t know exactly how much. Is it a safe move for me to retire right now?”

Thanks for the question. Inheritances are tough. We like to know about them when we do financial planning. But it’s impossible because we can’t put a dollar amount or date on it. 

It’s important that you have a financial plan independent on your own. The last thing you want to do is retire and then rely on your father passing away to maintain that retirement. 

Have someone run the numbers for you so you can find out what you should do.

Danny asks: “My retirement income consists of Social Security, a small pension and money that I withdraw from IRAs. How much tax should I be withholding for each of these income streams?”

I’m not a CPA so I can’t legally give tax advice. But it depends on what tax bracket you’re in. A tax professional can help you determine how much to withhold. 

Look at your brackets and see what your income might be for each year and get a percentage on what you might want to withhold. 

Melody asks: “My mom is retired. My dad is retiring in about two years. They want to buy a vacation home that they will move into after dad retires. They don’t have very good credit, so their interest rate would be a bit high. But if I cosign the loan with them and have my name on the deed, they could get a lower rate. I’m also thinking I could write off my trips to the vacation home since I’ll be checking on my investment property. Is there a reason that I shouldn’t do this?”

There are a few reasons. It would be an investment property, so the rate would be higher than an owner-occupied home. Ask a CPA about what you can write off. Also, see what kind of rate your parents can get on their own before you go into this. You don’t want to be stuck paying for the house on your own if your parents have financial trouble. 

Listen to the full episode or use the timestamps to jump to a specific section. Thanks for listening! We’ll be back for another show every other Thursday.

The last thing you want to do is retire and then rely on your father passing away.

 - Mark Silverman, CFP®

The Layout

0:36 – Federal crimes

2:00 – Inheritance

3:53 – Withholdings

5:05 – Property with parents

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