What's a windfall? Think of it as a good fortune. Whether you've won it big in the lottery, are expecting a sizable bonus, or just received a generous inheritance, there are many factors to consider with having a large sum of money at your disposal.

Unless you receive a substantial amount of money, you may consider continuing to work, with a few adjustments. Even a large inheritance of a million dollars could diminish quickly, if you don't do some planning.  

Here are some things to consider when you come into a large sum of money. 

Invest part of it

Maybe you have a wish list for money, such as paying off bills, buying a new car, remodeling the house, or donating to your favorite causes. But your money may be more valuable in the years ahead, if you invest at least a portion of it today.

For example, let's say you just inherited $50,000 from a relative. You spend half of it pay bills, take a vacation, or buy a car. You'd still have $25,000 to invest. By putting that money to work in the financial markets, you may be able to amass a much bigger nest egg than the original $25,000. It's always important to keep in mind that investing involves risk, including the potential for loss of principal. 

Here's a hypothetical example to demonstrate how $25,000 could potentially grow over the next four decades, based on a 7% per average annualized return. (Of course, your return could be more or less than 7%).

• Over 10 years your investment could nearly double to about $49,000
• Over 20 years it could nearly quadruple to about $97,000
• Over 30 years it could grow nearly 8-fold to more than $190,000
• Over 40 years it would grow 15-fold to almost $375,000.

(Note: Hypothetical examples are for illustrative purposes only and not intended to represent the performance of any particular investment product, nor does it take into consideration any product expenses or fees. The results would be reduced if the costs were included).

Plan & pay off debt

In addition to investing make sure you address pressing financial issues, with your money. Some important actions to consider once your windfall arrives:

1. Make sure taxes are paid or accounted for before you spend any money. Although an inheritance or life insurance check may come tax-free, a bonus check or a lottery ticket typically comes with a hefty tax bill.
2. Pay off high interest debt. If you have credit card debt that carries a high interest rate, paying down the debt should be a top priority. 
   
3. Do something fun now—and later. Whether it’s a newer car, a Caribbean cruise, a wardrobe upgrade or a household remodel, pick one and enjoy it.
   
4. Invest in tax-favored investment accounts. Consider converting a large sum to tax-favored investment. That means maxing your 401(k) at work & IRA contributions. (Learn more on this topic: Found money: Maximizing your IRA can lower your taxes and pump up your savings)
   
5. Fund an education savings plan for your kids or grandkids. The money in a 529 or Coverdell college savings plan grows tax-deferred and can be withdrawn tax-free if used for qualified educational expenses. (Learn more about this topic: Start a Coverdell Education Savings Plan)
   
6. Set aside a reasonable amount for your favorite cause or charity. If you’re passionate about a nonprofit organization, this may be a good opportunity to contribute to it.
   
7. Pay down student loan debt. This will help reduce your monthly burden. Or you could pay it off entirely if your windfall was substantial.
8. Pay off your mortgage. Paying off a house may put you in a better financial situation for the future. But if you have a mortgage at the current market rate—which is under 5%—think about it before paying it off. The long-term return in the stock market (S&P 500® index, which represents the average performance of a group of 500 large capitalization stocks) over the past 50 years has been about 11%, which is more than twice the current average mortgage rate. By paying off your mortgage, you would also lose the potential for an annual interest rate deduction on your taxes. 
9. Prepare an estate plan. Consider setting up or updating an estate plan. That way, you can be certain your money passes to your heirs as you choose. While an estate plan is a fairly complex document that may take many hours to prepare for you and your attorney, it can save your loved ones a great deal of time and trouble after you’re gone.
10. Connect with a financial professional. If you’ve won the lottery or inherited a large sum, you may want to consult with an accountant, an attorney or a financial advisor to help you manage your money. A Thrivent financial advisor may be able to help. 

You have many options and strategies for managing a windfall. The key is to think beyond the moment and invest as much as possible to enhance your life for many years to come.

Past performance is not necessarily indicative of future results.