Windfalls2 min read · Updated October 21, 2026
Got a lump sum? What to do with $100,000 in the US
A sensible order for a bonus, inheritance or sale in the US: cushion, card debt, then 401(k), IRA and index funds, with a worked $100,000 example.
Pause first
Put the whole amount in an easy-access account for a few weeks. No decision is urgent, and grief or excitement is a poor time for big ones.
A sensible order
- Fill your cash cushion: three to six months of essential costs.
- Clear expensive debt. A 22% card costs more than most investments earn.
- Pay down cheaper debt if the rate is above what you can safely earn.
- Put the rest to work: 401(k) up to the match, then IRA and low-cost index funds.
A worked example
You receive $100,000 with $8,000 in cash and $4,000 of monthly essential costs. Six months is $24,000, so the cushion needs $16,000. Next, a $20,000 card at 22% is cleared, saving about $4,400 a year. The remaining $64,000 goes to retirement accounts and index funds.
Check the tax
An inheritance is generally not income for the person who receives it, but earnings on it are taxed. A bonus is taxed as pay. A home sale may trigger capital gains above the exclusion. Check the IRS rules or ask a tax professional.
Common questions
Should I clear debt or invest first?
Clear debt that costs more than you can safely earn from investing, after keeping a cash cushion.
How big a cushion do I need?
Three to six months of essential costs.
Is a windfall taxed?
It depends on the type. Inheritance, a bonus and a house sale are treated differently. Check before spending.