Planning with inheritance

I have to say it's been nice this past week or so without the calls and texts from my uncle asking about the inheritance. I'm glad that is done with. Now I can focus on myself and what I'm going to do regarding my inheritance. It's a very nice sum and I'm very blessed to receive it at this time of my life.

It's an inherited IRA, which means 1) I have to pay taxes on the distributions and 2) I have 10 years to take it all out, per IRS rules. My main use of it will be to pay off my mortgage on my house. Taking it all out as a lump sum distribution would be the least advantageous to me. It would put me in the 35% tax bracket. No thank you. 

I have created a spreadsheet and crunched the numbers every which way I can think of, for the best outcome of growing the investments, taking the required distributions and minimizing my taxes. Of course the % of growth I might earn over the years is unknown. "They" say that invested in stocks (which this IRA is) has been an average growth of 10% a year. In my spreadsheet I put in 7%, to be a little bit conservative.  Then I worked out a formula to take out the distributions over 10 years, including the growth of the IRA

I also added calculations for each year on my wages, tax deductions and estimated taxes, by tax bracket. Everything is linked, so as the investment numbers change, all the results update. Before all this I already had an amortization spreadsheet for my mortgage (as I had paid extra at times), so I'm linking these distributions to the amortization schedule to reflect an annual lump sum payment to my mortgage, each year I take the distribution. So, I can play around with all the numbers and see how it comes out. 

Right now I have it worked out that I would pay off my mortgage in Jan of 2030, 1 year before I would retire at 67. That would give me a year of working income, with no mortgage payment, which I can use to increase my retirement savings, as well, during that year. 

From this point forward I will just have to see what the actual earnings on the investments end up being as each year progresses, so of course my numbers will have to change. By retiring in 7 years, at age 67 (my full social security retirement age) my best plan, tax wise, is to take more of distributions during the 3 years (left out of the 10 years to distribute) after retirement, when my income is lower and my tax bracket would be lower for the distributions.

I will say the group of stocks in this inherited IRA are good and solid. There are 5 of the "Magnificent Seven" companies. Six of them are also on the Dow30. I'm excited to watch the growth of the Nvidia shares this year. According to everything I read, I think just that stock is going to end up making my earnings for the year more than estimated.