Windfall Allocation Calculator

This calculator runs your windfall through a sequential waterfall, the same order financial planners typically recommend for a lump sum. First, it sets aside a tax reserve based on your expected rate, since many windfalls — bonuses, lawsuit settlements, certain inherited accounts — are taxable income. From the after-tax remainder, it fills your emergency fund gap up to the amount you specify, then pays down outstanding debt up to your total balance. If you've indicated you're behind on retirement savings, it next allocates up to $30,000 (a rough stand-in for the combined base annual contribution limits across a 401(k) and an IRA — not the additional catch-up amounts the IRS allows once you turn 50) toward retirement. Whatever is left over is split 90/10: 90% goes to long-term investments and 10% is set aside as guilt-free spending money, reflecting the idea that a windfall plan works better when it allows some enjoyment rather than demanding total austerity.

For context, the calculator also projects what that invested 90% could grow to over 10 years assuming a flat 7% annual return. A few things worth understanding before you rely on the numbers: the tax reserve assumes the entire windfall is taxable at your stated rate, which won't be true for things like a tax-free gift or a Roth inheritance, so adjust the tax rate input (or set it to zero) if that applies to you. The $30,000 retirement figure and the 90/10 split are fixed heuristics baked into the tool, not a personalized optimization based on your actual account limits, existing debt interest rates, or risk tolerance — and the 10-year growth projection is a single illustrative scenario, not a range of possible outcomes. Use the category breakdown as a starting framework for a conversation with a financial advisor, especially for large windfalls with real tax complexity.