• May 10, 2023
  • Posted by General Electric Credit Union
  • 5 read

The Great Wealth Transfer: 5 Options for Your Inheritance

Baby Boomers are predicted to pass on more than $68 trillion to their children in what’s being called the Great Wealth Transfer.1 If your loved one is planning to pass down an asset to you, whether that be a home, heirloom jewelry, or funds, it’s important to have a plan for it. Use this guide to better understand your options for any monetary inheritance you’re anticipated to receive.   

5 ways to get the most out of your inheritance

1. Finance something important

Often, people will leave their loved one an inheritance in the hopes it will positively impact their life. A one-time influx of cash may be just what you need to finally make a big life change. You could use the money as a down payment on your first home, to fund a higher education, or to get a business idea off the ground. Or it could even be used to pad a retirement account or pay off outstanding debt. You’ll feel good spending the money on something that has a lasting impact on your financial future. 

2. Grow it

While you can absolutely put your inheritance money in a traditional savings or checking account, doing so means you’ll miss out on no-risk earnings. High-yield accounts allow you to leverage compound interest and earn off your balance over time. These include:  

  • High-yield savings accounts. Set aside funds for long-term goals in a high-yield savings account and earn off your balance. The best options have multiple rate tiers that reward you with a higher annual percentage yield (APY) as your balance continues to grow. 
  • High-yield checking accounts. Make your everyday spending account go to work for you! A high-yield checking account keeps your money accessible and growing.  
  • Certificates. Keep funds in a certificate for a predetermined amount of time to enjoy guaranteed returns. You can avoid early withdrawal fees by not removing the funds until the certificate reaches maturity. 

Meet with a General Electric Credit Union (GECU) CUNA Certified Credit Union Financial Counselor (CCUFC) to better understand the interest-earning accounts available. They can help pinpoint which one is the best fit for you.

3. Use it toward debt payoff

Whether you have outstanding student loans or credit card debt, some of the funds you inherit can be used to pay down debt. Every payment toward your balance, no matter how small, is one more step toward financial freedom. 

4. Donate some of it

If your loved one had a cause they were passionate about, you may consider donating a portion of your inheritance to a charity or organization. For example, donating to a shelter is a beautiful way to honor the memory of an animal lover. 

  • Looking for non-profit organizations in the Tri-State area? Check out GECU’s current Giveback Partners. Their missions and work make a direct impact on our communities. 

5. Pad a retirement account

You can use an inheritance to get a jumpstart on saving for retirement or add to an existing account, such as a traditional or Roth IRA. There are annual contribution limits for these retirement savings vehicles. Visit IRS.gov to learn more.

6. Invest it 

You could commit some of your inheritance to the markets in hopes of growing the principal. There are many options available to you, including bonds and stocks. Over the long term, stocks have been shown to yield generous annualized returns, allowing you to stay ahead of inflation.

Keep in mind that gains from investing are not guaranteed and there’s a possibility you could lose your principal, or the amount you invested upfront. If you want an outside perspective, consult a financial advisor to find the best investment opportunities based on your risk tolerance. 

  • Did you know GECU members have access to a no-cost consultation with a financial advisor with Investment Services, available through CUSO Financial Services, L.P. (CFS)?3

7. Build emergency savings

More than 70% of people don’t have an emergency savings fund.4 These funds can act as a safety net when life throws you the unexpected, which is why it’s important to have a few months’ worth of living expenses on hand. If you inherit money, put it toward emergency savings for your peace of mind. 

And remember, there are opportunities for you to earn off your balance with an accessible high-yield savings account. You’ll feel confident in your savings strategy knowing your money is accessible and growing. 

Money conversations can be difficult but they’re important to have. Sit down with your loved one if they’ve hinted there’s an inheritance set aside for you. Don’t ask for specific numbers, as doing so may be off-putting to your loved one. Instead, ask them what their plans are or if there’s anything you need to know. Give them room to be as transparent or candid as they want to be – and remember to be compassionate as they discuss estate planning

You don’t have to wait for an inheritance to grow your balance. Turn to GECU and our team of certified financial counselors for information about high-yield checking and savings accounts, certificates, and individual retirement accounts (IRAs). Contact us to learn more or schedule an in-branch appointment to go over your options. 

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