Should I quit my teaching job with a $3 million inheritance waiting for me?

A Reddit user who is soon going to receive a large inheritance is trying to decide what her best course of action is. She’s 51 years old right now, and she is debating whether she should keep working or just take the money and live off it now. 

This decision could shape her future, so it will be important to carefully consider the pros and cons of both options. She’s also in a unique situation in that a few more years of work could have a big payoff, so that needs to be factored into her decision-making as well. 

Does it make sense to quit a job with an inheritance coming?

The Reddit user explained that she is on track for an inheritance of around $3 million. She’s debating taking that money and leaving work now and just living off the inheritance. And that idea has merit.

A $3 million inheritance could be invested and earn a substantial amount of money even if it’s invested in something pretty conservative. If the Redditor invests the money and sticks to a 3.7% withdrawal rate, which experts now suggest is a safe rate if you want to make your money last, she could end up with $111,000 to live on. That could provide a fairly comfortable life — although she would need to consider the costs of buying private health insurance until she becomes eligible for Medicare. Since that doesn’t happen until 65, she’d have 14 years of paying for private coverage, which can be fairly expensive.

Several other Redditors also warned that the original poster (OP) should not even consider quitting her job or making any change until she has the inheritance in her bank account. Something could always go wrong, and she could get less than anticipated. Even if that is not the case, many posters warned that the probate process can take time, so she might not have access to the funds as fast as she expects. 

Once she gets the money, though, if she is confident that she can live off the $111K or so that it will produce, then she has the option of quitting — if she wants to. 

There’s a pension at stake, and that changes the game

In many situations, if you receive an inheritance that provides plenty to live on, there’s very little reason not to just quit your job, assuming that you have something else meaningful to fill your days. After all, working longer when you don’t want to just to get money that you don’t need often doesn’t make sense. You’d be trading time for money — despite having plenty of money and limited time to live your life the way you want.

In the OP’s case, though, she is a teacher, and she could become eligible for a pretty nice pension. If she worked for another nine years, she would get a full teaching pension. If she worked another four years, she could get a reduced pension. The pension money would be guaranteed from her employer and would be a payoff for working many years in the school system. 

Pensions are valuable because they are a source of inflation-protected guaranteed lifetime income. This pension money is also factored into the OP’s compensation and is likely worth tens of thousands. Giving up that money entirely by retiring a few years before the pension kicks in could mean giving up a substantial amount of guaranteed income that her job should have entitled her to.

So, unless the OP is unhappy teaching and really wants to retire ASAP, it’s probably worth working at least the extra four years to get the pension benefits and perhaps even an extra nine. Teaching often provides a good amount of time off, so the OP could still do plenty of things she wants. In the meantime, she could let the inheritance grow even more as she earns her teaching salary and eventually gets her pension. With that pension, plus the invested inheritance funds after three more years of growth, the OP could end up with a true fortune to enjoy an amazing retirement or set future generations up financially.

A financial advisor can help the OP to consider the impact of working longer, and to make an informed choice about whether that move is the best one for her long-term success. 

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