Congratulations on inheriting a significant amount of money! While it is possible to live off a $3.5 million inheritance for the rest of your life, it is important to consider various factors and create a comprehensive financial plan to ensure long-term financial security. Here is a detailed answer outlining the key aspects to consider:

1. Assess your financial goals: Start by determining your financial objectives, such as the lifestyle you desire, any major expenses you anticipate (e.g., education, housing, healthcare), and your expected lifespan. This will help you estimate how much income you need annually.

2. Create a budget: Develop a detailed budget to understand your current and future expenses. Consider factors like housing, transportation, healthcare, taxes, travel, and leisure activities. This will give you an idea of how much you need to sustain your desired lifestyle.

3. Calculate your withdrawal rate: The "4% rule" is a common guideline used by financial planners. It suggests that you can withdraw 4% of your investment portfolio in the first year of retirement, adjusting for inflation in subsequent years, without significantly depleting your funds over a 30-year period. So, if you have $3.5 million, you could withdraw $140,000 annually (4% of $3.5 million) initially.

4. Consider inflation: Inflation erodes the purchasing power of money over time. It is crucial to factor in inflation when estimating your annual expenses and adjusting your withdrawal rate accordingly. Historical average inflation rates can be used as a reference point, but it's important to note that inflation rates can vary.

5. Diversify your investments: To protect your wealth and generate income, it is advisable to diversify your investments across different asset classes (e.g., stocks, bonds, real estate, etc.). Consult with a financial advisor to create an investment portfolio that aligns with your risk tolerance, goals, and time horizon.

6. Manage investment costs: Minimize investment costs by selecting low-cost index funds or exchange-traded funds (ETFs) that track broad market indexes. High fees can erode your investment returns over time.

7. Regularly review and rebalance your portfolio: As you progress through life, regularly review and rebalance your investment portfolio to ensure it aligns with your changing goals, risk tolerance, and market conditions. This will help you optimize your returns and manage risk.

8. Consider professional advice: It is highly recommended to consult with a certified financial planner or investment advisor who can provide personalized guidance based on your specific circumstances. They can help you create a comprehensive financial plan, considering tax implications, estate planning, and other important factors.

Remember, this answer provides a general overview, and your specific situation may require additional considerations. It is important to conduct thorough research, seek professional advice, and regularly review your financial plan to ensure long-term financial stability.