Question: I’ve recently inherited a large sum of money. I’ve already used part of it for some long overdue home improvements and to change my car, but I still have a substantial amount left.

As I’m in the later stages of my career and would like to put the remaining money aside to help supplement my retirement, I’m looking for some advice. Should I invest it or simply keep it on deposit for safety?

Answer: An inheritance can feel both like a gift and a responsibility. You’ve already done something very sensible: you used part of the money to deal with real life needs, the house and the car, rather than letting the entire sum sit untouched out of fear of “doing the wrong thing”. That alone puts you ahead of many people who find themselves in a similar position.

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Now you’re looking at the remaining balance and wondering how best to use it to support your retirement.

The key is to shift your thinking from “What should I do with this lump sum?” to “What role should this money play in my long term financial life?”

Three pillars

There are three pillars to consider – time horizon, risk tolerance, and purpose.

1. Time horizon: this is often misunderstood even if you’re in the later stages of your working life, retirement isn’t a finish line, it’s a new phase that can last 20 to 30 years. Money you set aside today may not be needed for a decade or more. That longer horizon gives you more flexibility than you might think. Keeping everything on deposit may feel safe, but over a 10 to 20 year period, inflation quietly erodes the real value of cash. A deposit account protects the nominal amount, not its purchasing power.

2. Risk tolerance: this is personal and some people can watch markets rise and fall without losing sleep; others find volatility deeply uncomfortable. The good news is that you don’t need to choose between ‘all in’ or ‘all cash’. A balanced approach, where part of the money is invested for long-term growth and part is kept accessible, often works best for people who want stability without sacrificing the potential for returns. The goal isn’t to chase high performance; it’s to give the money a chance to outpace inflation while still respecting your comfort level.

3. Purpose: you’ve been clear that this money is to supplement your retirement income. That means you’re not trying to maximise returns at all costs. You’re trying to create a reliable, sustainable resource that can support you when you stop working. For most people, that points toward a diversified, medium risk investment approach rather than leaving everything on deposit. Investments introduce short-term uncertainty, but they also offer the possibility of long-term growth, something cash simply can’t deliver in a low interest environment.

A useful way to think about it is to divide the money into ‘buckets’. One bucket might remain in cash for peace of mind and near term needs. Another bucket could be invested with a 10 plus year view, where short-term market movements matter far less than long term compounding. This kind of structure helps you stay disciplined because each portion of the money has a clear job.

Martin Glennon is head of financial planning at ifac.

Map it out

Before making any decisions, take a moment to map out your expected retirement income, state pension, occupational pension, savings, and any other sources. Then look at the gap between what you’ll have and what you’ll need. Your inheritance can be used to close that gap, either by generating future income or by acting as a buffer for unexpected costs.

The most important thing is that the money aligns with your goals, not with headlines or market noise. You’ve already shown good judgement by using part of the inheritance to strengthen your day to day life. Now the task is to let the remainder strengthen your future.

This isn’t personalised financial advice, but it should give you a clear framework. A qualified financial adviser can help you tailor the approach, but the principles remain the same: protect what you need, invest what you can, and let the money support the retirement you want.

Five questions everyone should ask before investing an inheritance

  • 1. Will I need this money within five years? If yes, protect what you need.
  • 2. What income will I already have in retirement? Include the state pension, workplace pensions and other savings.
  • 3. How much extra income will I need? Your inheritance should help fill this gap.
  • 4. How would I react to a market fall? If a temporary drop would cause panic, invest more cautiously.
  • 5. Does every euro have a job? Separate money for emergencies from money intended for long-term growth.

    • Martin Glennon is head of financial planning at ifac, the professional services firm for farming, food and agribusiness.