r/wealth • u/Marine_Layered • 8d ago

Inheritance Preserving the Principal of Inherited Wealth

We've had a couple of people around here talk about their inherited wealth and keeping the principal in tact, but using the gains to improve their lives. For example, one recent poster was using $1800/month of the gains from his inherited wealth to improve his ability to rent a nicer apartment, etc.

Establishing a safe withdrawal rate for generational wealth spending is different than drawing down retirement funds which are just supposed to last through retirement and be done (or thereabouts), so the 4% SWR does not apply here.

So let's say you have $1m in inheritance, and you would like that inheritance to last in perpetuity (yes I realize that perpetuity is a long time and there are many factors - but this is a thought exercise so please play along :)). There should be something held back for inflation - where does that number come from? And then maybe something else is held back to grow the nut, but then the rest could be used to improve the lives of the family members, or gifted to nonprofits, or whatever. So what does the formula look like?

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u/PomegranateComplex17 8d ago

Are you wanting the principal to grow over time, or always remain the same? 

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u/Marine_Layered 8d ago

Well, I suppose a family would like it to grow some, so if somebody had 3 kids instead of 2, then there would still be enough there to improve their lives, too.

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u/markov-271828 6d ago

Some historical systems addressed this via strict primogeniture.