Getting an inheritance: what to do with a cash lump sum

29 August 2021
Receiving an inheritance can lead to intense emotions and confusion over what to do with the money.
Receiving an inheritance can lead to intense emotions and confusion over what to do with the money.

If you’re about to receive or have just received an inheritance it’s likely you’re going through an intensely emotional time.

You may feel pressured and unsure of what to do with the money. You could be feeling overwhelmed as to what the best course of action is.

Read on for things you should consider before you invest your inheritance.

Stay calm, take your time

If you have just gone through an emotional experience (or still experiencing it), you may end up doing things with the money you could later regret by being reactive.

Take a step back from everything, take a deep breath and get used to having the money in your account. Allow yourself time to think about what you want to do with your money and consider if speaking to a financial planner would help.


Consider options to financially position yourself for a better future

You have options to consider with the money you’ve just received. You could spend some or all of it now, however you may be eliminating longer-term opportunities to financially position yourself for a better future.

Instead of spending everything, you could:

Pay off some debts or eliminate them entirely

If you’ve had interest clocking up on outstanding debts for years, you could use some of your inheritance to reduce them or eliminate them entirely. By paying off debts such as car loans, mortgage or credit card debt, you’ll be taking a lot of financial pressure off your shoulders.

By focusing purely on short-term happiness you may be eliminating longer-term opportunities to financially position yourself for a better future.
By focusing purely on short-term happiness you may be eliminating longer-term opportunities to financially position yourself for a better future.

Contribute to your personal emergency fund

Negative life events occur without warning, to anyone and everyone and it’s nice to have a safety net if the unthinkable happens. The possibility of serious sickness and injury, the loss of a job, financial market crashes and much more could be just around the corner. As we learned from 2020, even a worldwide pandemic is possible.

Make voluntary after-tax contributions to super to set up your post-working life

Growing your super is an incredible way to get yourself ready to live the life you really want after retirement. Your inheritance is a fantastic opportunity to make a voluntary after-tax contribution to your super to give it a real boost. Depending on your circumstances you can add up to $330,000 in non-concessional contributions, and if you have a partner they may be able to add another $330,000. That’s a potential extra $660,000 waiting for you when you retire. However, it’s important to note conditions apply based on your age and the amount you wish to contribute. You may wish to seek professional financial advice before making any decisions about contributing to super as you cannot reverse super contributions.

Just received an inheritance but not sure what to do with it?

This can be a difficult period for many, you’re not alone.

If you’ve spent a significant amount of time thinking about what to do next but still feel uncomfortable making a decision, we recommend making an appointment with a financial adviser.

A financial adviser may be able to help you see where you’re at financially, help you set financial goals and help you understand how your inheritance can contribute towards those goals.

You can choose your own financial planner or you can take advantage of the service available through Industry Fund Services (IFS). If you don’t have an existing relationship with a planner, you can contact the Financial Planning Association and access their “Find a Planner” service to locate an FPA member near you. The financial planners at IFS can advise you about the options available to SA public sector employees.

If you would like to learn more about financial planning, or to make an appointment with an IFS planner, please call the Super SA Advice Administration team on 1300 162 348.

The superannuation schemes administered by Super SA are exempt public sector superannuation schemes and are not regulated by the Australian Securities and Investments Commission (ASIC) or the Australian Prudential Regulation Authority (APRA). Super SA is not required to hold an Australian Financial Services Licence to provide general advice about a Super SA product. The information in this publication is of a general nature only and has been prepared without taking into account your objectives, financial situation or needs. Super SA recommends that before making any decisions about its products you consider the appropriateness of this information in the context of your own objectives, financial situation and needs, read the Product Disclosure Statement (PDS) and seek financial advice from a licensed financial adviser in relation to your financial position and requirements.

Fees may apply. Super SA has engaged Industry Fund Services (IFS) (ABN 54 007 016 195 AFSL No. 232514) to facilitate the provision of limited scope and comprehensive financial advice to members of the superannuation schemes administered by Super SA. Advice is provided by financial planners who are Representatives of IFS. Fees may apply. Further information about the services can be found in the relevant IFS Financial Services Guide, a copy of which is available from your IFS financial planner or by calling Super SA on 1300 162 348. IFS is responsible for any advice given by its Representatives. Super SA does not recommend, endorse or accept responsibility for products or services or products provided or recommended by third-party organisations, including IFS. Super SA does not accept liability for any loss or damage caused by the products and services or products provided or recommended by IFS.

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