'My life could be cut short': I'm 55, married with $4.3 million and have a brain tumor. Should I buy a $210,000 custom Porsche?

By Quentin Fottrell

'I also want to preserve the opportunity to leave a meaningful legacy for my two sons'

"I could live a long, full life with little or no significant interruption." (Photo subject is a model.)

Dear Quentin,

I am 55, newly retired and wrestling with a question at the intersection of financial prudence, personal fulfillment and human mortality: Is it foolish to spend a substantial portion of my hard-earned wealth rewarding myself with a luxury vehicle?

I live in Denver, Colo., and I am in a blended marriage in which my wife and I maintain separate finances and manage our incomes independently. We split household expenses equally, including groceries, utilities and home maintenance.

Fortunately, I am covered under her health-insurance plan. I have two adult sons who have completed college, and I am entirely debt-free, with no mortgage, auto loans or other outstanding obligations. My net worth is $4.3 million.

Of that, $2.6 million is in a traditional IRA. I receive $154,000 a year before taxes through a substantially equal periodic payment (SEPP) arrangement, which will last for 4.5 years. The remaining $1.7 million is in a taxable brokerage account, including a $300,000 cash reserve.

I am considering purchasing a custom Porsche Cayenne Turbo Electric for $210,000, paying cash. I also intend to use the trade-in value of my current vehicle to reduce the state sales tax. On paper, spending 5% of my net worth on a rapidly depreciating asset seems extravagant.

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Health issues

If this were a purely mathematical equation, spending so much on a rapidly depreciating asset might raise an eyebrow. But there is a significant variable: I have a brain tumor. It is entirely possible that I will live a long, full and uninterrupted life. It is also possible that my time will be cut short.

But there's another factor that makes this decision considerably more complicated: I could live a long, full life with little or no significant disruption. Alternatively, my time could be cut short. I simply don't know the answer to those questions.

That uncertainty has fundamentally changed how I think about money, retirement and the future. After spending a lifetime working and accumulating wealth, I want to experience some of the rewards while I am healthy enough to enjoy them.

At the same time, I don't want to let uncertainty become an excuse for financial recklessness. There are other considerations, too. Because my wife and I maintain separate finances, I want to be certain this purchase is fair to her and consistent with our financial arrangement.

I also want to preserve the opportunity to leave a meaningful legacy for my two sons. I recognize that every dollar I spend today is a dollar that won't be available for future investments, unexpected expenses or an inheritance for my sons.

So, Quentin, what should I think about this decision? Given my age, financial position, lack of debt, substantial assets and medical uncertainty, would spending $210,000 on this luxury SUV be a reasonable way to enjoy the wealth I've accumulated, or would it be an expensive financial mistake?

Seeking Perspective in Colorado

You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com. The Moneyist regrets he cannot reply to questions individually.

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A brain tumor, depending on the location, type and stage, can impair your cognitive responses and spatial recognition, which could affect your ability to drive.

Dear Seeking,

Buy the car, if you get the OK from your doctor and insurance company.

An extravagant decision is not always a reckless one. You know the car is a depreciating asset, but you have $4.3 million in life savings, which has the potential to continue growing. You're retired at 55, enrolled in your wife's health plan, and facing a potentially life-changing diagnosis. You also have no debt, no mortgage and no outstanding obligations to your adult children.

I preface my advice with a caveat. A brain tumor, depending on its location, type and stage, could impair your cognitive functioning and spatial awareness, which could affect your ability to drive. There may also be risks of seizures and side effects from treatments. Insurance companies generally require you to disclose anything that impacts your "mental, physical or cognitive state" when signing up for automobile insurance.

It's also not unheard of for the Department of Motor Vehicles to restrict, suspend or in some cases even revoke the driving privileges of people who have a brain-tumor diagnosis in states where physicians are allowed to report conditions they believe may affect a person's ability to drive (that includes Colorado). But there are many variables, so this possibility may not apply in your case.

You have put enough aside to ensure that your wife and two children won't have to worry financially.

Talk to your neurologist or neurosurgeon about whether driving is safe, and check your insurer's disclosure requirements. Assuming you get the green light from your doctor and the relevant authorities, there is another reason I think you should buy the car, beyond the enjoyment it will bring you and the excitement of, after having worked all these years, being able to afford something so completely luxurious.

Let's assume your investments earn a 7% annual return. Your $4.3 million could generate roughly $300,000 in a year. So you would recoup the cost of the Porsche in less than a year. That hypothetical annual return would exceed the car's purchase price by roughly $90,000.

The $210,000 for the custom vehicle represents just over eight months of expected investment returns, assuming a 7% average return over the following year. That's a ballpark figure, of course, and doesn't take into account market fluctuations, taxes and other investment fees. As always, a 7% return is not guaranteed. Bottom line: A vehicle is a depreciating asset. Your portfolio, hopefully, is not.

Still, I do hope this puts the cost of your dream car into perspective. You have put enough aside to ensure that your wife and two children won't have to worry financially. In addition to your investments, your wife may also be eligible to receive up to 100% of your Social Security benefit after your death, assuming she outlives you.

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A few caveats

Like all good questions, yours raises many more. How much do you spend? What is your risk tolerance when it comes to your $4.3 million portfolio, and what are your allocations? How much of your $154,000 annual SEPP distribution do you actually need to live on? How big an inheritance would you like to leave your kids?

And now my caveats, of which I have a few. The real question is whether you can spend $210,000 without compromising your long-term financial security, particularly if you should live another 30 years. From what I know, thus far, the answer is yes.

That said, give yourself a little time to process your diagnosis. It may be that you're on something of a high, realizing that life is short, and a Porsche is something that would bring you joy. That's OK if you're 100% sure about it.

Don't buy the car if you think you will be using those precious miles on the odometer second-guessing the purchase. In other words, if you do it, and your wife is on board (not absolutely necessary, but it would certainly help you enjoy it more), don't feel guilty about it.

You don't want to be forced into investment withdrawals in a downturn.

Include car insurance and other potential costs in your calculations. For a $210,000 custom Porsche Cayenne Turbo Electric, you could easily end up paying $5,000 a year for full coverage.

That translates to roughly $416 a month, or $25,000 over five years, and takes into account the car's significant replacement value, the cost of maintaining or repairing the electric-vehicle battery and sophisticated electrical systems, the model's high performance and costly spare parts.

Spending $210,000 of your cash would leave you with a $90,000 cushion. You will need to rebuild that cushion during retirement if you want to get back to a place where you have at least enough saved to cover 12 to 24 months' worth of expenses. You don't want to be forced to take investment withdrawals during a market downturn.

Finally, you have $2.6 million in a traditional IRA under a SEPP plan that requires annual distributions of $154,000 before taxes, or 5.9% of your balance. If your portfolio loses $200,000 in one year and you withdraw another $154,000, your IRA balance would fall to around $2.25 million.

What happens when your SEPP arrangement ends in 4.5 years? Your $154,000 annual distribution accounts for nearly 6% of your $2.6 million IRA. That's not an insignificant withdrawal, so look at how your retirement income will change when those payments come to an end.

In the meantime, you have some other considerations to address before you talk about money.

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Check out The Moneyist's private Facebook group, where members help answer life's thorniest money issues. Post your questions, weigh in on the latest Moneyist columns or email The Moneyist at qfottrell@marketwatch.com.

More columns from Quentin Fottrell:

My wife cried when I found out she had only $80,000 in her 401(k). I have $2.2 million. Am I wrong to be shocked?

We're in our 70s. Should we pay off our 2.5% mortgage - or put the money in a high-yield savings account?

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