This story appears in the
June 1998 issue of
Entrepreneur.
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Does wisdom come with age? That depends. Baby boomers often
don't know what to do with windfalls of $50,000 or more,
according to a recent survey of 33-to-51-year-olds. The reason?
Boomers tend to lack an understanding of finances.
One common mistake boomers make is to act on a windfall too
quickly and ignore their tax responsibilities in these situations.
"Windfalls usually come with lots of emotion--divorce, layoff,
retirement or the loss of a loved one," says Jane Ann
Whitchurch of OppenheimerFunds Inc., the mutual fund company that
conducted the survey. "Many people [try] to make themselves
feel better by spending money on luxury items."
It's best to wait until you have your emotions under control
and then consult a financial advisor. "In fact, talk to a
financial advisor even before getting a windfall," says
Whitchurch. And while the survey threshold was $50,000, Whitchurch
says you should create an investment plan or consult an advisor
even if you receive a lump sum as low as $2,000. Bottom line: Look
before you leap--or what seems like an enormous cash resource could
quickly dwindle away to nothing.
Next Step
OppenheimerFunds Inc. publishes four brochures on
handling windfalls; these brochures cover divorce settlements,
severance packages, retirement payouts and inheritances. To order
free copies, call (900) 525-7048.