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Old 06-11-2012, 04:57 PM   #21
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We aren't talking about what it cost to raise a kid 20 or 40years ago. I'm talking about a kid born in 2011 or 2012. If we use Bestwifeever's calculator, a kid born in the South (VA on down) and going to public college will run about $434K. In the NE, it's $499,400. The wild West runs $481K. All more for private colleges.

Our kids are 41 and 37, and both went to public colleges. My estimate of the cost to raise them was about $250K each - but that was quite a while ago. And I made a lot less way back then.

If you can raise kids with less expense, more power to you. But the costs add up really fast unless you are really thrifty.
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Old 06-11-2012, 04:59 PM   #22
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But the costs add up really fast unless you are really thrifty.
I am.
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Old 06-11-2012, 05:05 PM   #23
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Welcome to the board! Not sure I follow the title. We have zero income aside from whatever Soc Sec amounts to when we get there. But if you have adequate net worth, and yours is considerable at your age (congrats), there are all sorts of ways to convert part of it to passive income. From the simple/mundane like annuities, income funds or just spending dividends (only) - to more creative options and others in between.
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Old 06-11-2012, 06:15 PM   #24
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Other than college costs, we don't expect a lot of major expenses, and the tax benefits largely outweigh the marginal costs of kids for us. But we are very frugal apparently.
Don't forget braces!
And wisdom teeth
And higher auto insurance premiums
And ...
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Old 06-11-2012, 07:31 PM   #25
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Don't forget braces!
And wisdom teeth
And higher auto insurance premiums
And ...
Braces and wisdom teeth are not 100% certain expenses that will have to be incurred. Odds are not all of the kids will need all of the procedures. And they may be partially covered by insurance. And even if we do incur the expense, it is a one time expense.

Along with auto insurance comes "kids getting summer jobs to pay for auto insurance". And we live in a walkable area so a car is not necessarily 100% required, although it would certainly put a damper on their adolescent social lives.

I have no doubt that costs will go up some around high school, but at some point they have the capacity to earn their own fun money.

College will undoubtedly be expensive, but we don't plan on providing a full ride. There are so many sources of funding available, that we figure covering tuition, fees, and books will be good enough. That is running ~$30,000 a kid right now locally, and will unquestionably be higher in the future.

I don't doubt that it costs half a million per kid to provide an upper class life for the little guys. Unfortunately for my kids, they won't be receiving quite that entitlement. The half million figure seems about right for some parents, especially the ones of my peers who are still spending thousands or tens of thousands supporting their kids in their 30's (their kids' 30's).

Given that our whole household spends around $25000 a year total for the two of us plus 2 kids, I am very skeptical of claims that kids have to cost close to a half million to raise.

Edit to add: To the OP: you can spend a bunch on kids, or you can spend very little net after tax benefits. Reasonable minds here disagree on exactly how much it takes to raise a kid. My take on it is have kids if you want to and figure out how to pay for it. You have close to $3 million, you can figure out a way. I assume most kids, upon careful introspection, would choose to experience a slightly suboptimal childhood from an expenditure standpoint versus never existing at all.
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Old 06-11-2012, 07:46 PM   #26
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As for your main question, it sounds like you have all these assets but can't figure out how to get income from them sufficient to live on. Focus on total return of all the assets. Equities will increase in value over the long term, so the theory goes you can spend a percent or two of your principal and the gradual increase in investment prices will offset your sales. Add that percent or two to the 2-2.5% or so dividends you can get from most equities and you have your 3-4% annual spending.

I can't really talk about bonds much because I don't see them playing a big roll in a 30-something's portfolio since they have real returns right around zero now. Cash has negative real returns (after inflation). But I may have a non-traditional view on investments.

I personally hope to be around 35 when I pull the plug in another few years, and I am planning on having a very high allocation to equities as long as fixed income investments yield around zero in real terms. YMMV of course.
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Old 06-11-2012, 07:56 PM   #27
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Regarding kids, here are a couple older threads that exhaustively discuss what it costs (or doesn't cost) to raise kids:

I finally understand why people say kids are expensive - daycare!

How did Kids affect your retirement plans?

If you (& spouse) made $160K/yr, would you force your kids to wear 2nd hand clothes?

And don't forget that if at least one of you in the marriage is ER'd with kids, your child care costs can drop to zero since you can take care of the kid full time.
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Old 06-12-2012, 06:45 AM   #28
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Don't forget braces!
And wisdom teeth
And higher auto insurance premiums
And ...
Got them done at NIH for free since I was "unusual" and they were developing a technique for it.

By the time the wisdom teeth had to be pulled I was on my own and paid it myself.

When I was 16 Dad told me to get a job to pay the additional premium, which I did.

There are workarounds....
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Old 06-12-2012, 07:05 AM   #29
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No offense to any parents here, but I always roll my eyes whenever I hear a parent enumerate all the ways in which having children has diminished their quality of life, but then inevitably finish off by saying, "But they were worth all the expense, suffering, and sacrifice."

Don't you kind of have to say that? What's the alternative? Admit you made a horrible mistake that you can't undo? Goodness, what would the other parents think if they heard you admit you regret having children? You'd be run out of the PTA!
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Old 06-12-2012, 09:34 AM   #30
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IMHO, the whole ER/economic argument about whether or not to have kids is kind of silly. Either you and your spouse want to have kids and be parents or you don't. If it comes down to how it will effect your plans for ER, then you really don't want them and should take a pass. People who earn $500K a year have kids and people who earn $20K a year have kids. They adjust their lifestyles to make it work.
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Old 06-12-2012, 10:03 AM   #31
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A few (hopefully final) comments on the financial impact of children. According to a Fed study recently released (here) (discussion thread here) couples with children have greater incomes than couples without children. Their net worth is lower, which makes sense (at least to me). The variable that most affects net worth, however, is not children but college education. The additional net worth than is enabled by college ($170K) is much greater than the additional net worth of childless couples ($78K).

The message is that what matters most is college education.





On a personal note, I have never known anyone that made a choice about family based solely or even primarily on cost or finances. The desire for children was always driven by other deeper motives.
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Old 06-12-2012, 10:12 AM   #32
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Braces and wisdom teeth are not 100% certain expenses that will have to be incurred. Odds are not all of the kids will need all of the procedures. And they may be partially covered by insurance. And even if we do incur the expense, it is a one time expense.
Just got braces yesterday for DS, cost was $6900+ and private insurance doesn't cover this. We've been talking to a few friends for referrals, surprised to find out braces have been recommended (and billed for) more than 1 time.
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Old 06-12-2012, 10:21 AM   #33
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No offense to any parents here, but I always roll my eyes whenever I hear a parent enumerate all the ways in which having children has diminished their quality of life, but then inevitably finish off by saying, "But they were worth all the expense, suffering, and sacrifice."

Don't you kind of have to say that? What's the alternative? Admit you made a horrible mistake that you can't undo? Goodness, what would the other parents think if they heard you admit you regret having children? You'd be run out of the PTA!
A couple of times we tried to return them but I had lost the receipt. Man was DH mad at me.
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Old 06-12-2012, 10:23 AM   #34
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IMHO, the whole ER/economic argument about whether or not to have kids is kind of silly. Either you and your spouse want to have kids and be parents or you don't. If it comes down to how it will effect your plans for ER, then you really don't want them and should take a pass. People who earn $500K a year have kids and people who earn $20K a year have kids. They adjust their lifestyles to make it work.
Exactly.
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Old 06-12-2012, 10:30 AM   #35
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A couple of times we tried to return them but I had lost the receipt. Man was DH mad at me.
I hear you can drop them off at a fire station, no questions asked. That might be especially tempting when they are teenagers but it might not work.
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Old 06-12-2012, 10:54 AM   #36
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Here you go: Cost of Raising a Child Calculator | BabyCenter

This calculator includes things like a few grand for housing the child--oops, forgot to spend that! Another grand for transportation for 8-year-olds--oops, forgot to spend that! And I don't think the tax breaks are included. Reminds me of the economists' calculation of the value of the stay at home parent.
...
Just for fun and because I hardly ever get to quote myself and to see how far I can derail this thread before it meanders back to its topic, I'm throwing in this story about how much dads and moms are worth in terms of their household duties--$80,000. How did we ever survive.

Report finds wages for household work 3 times greater for women - chicagotribune.com

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The website matched U.S. Department of Labor wage data to 13 different fatherly household tasks to calculate the index. Among the jobs were barbecuing, which was matched to the Labor Department's category of "cooks, all other;" killing spiders was matched to "pest control workers" and mowing the lawn was matched to "grounds maintenance workers."
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Old 06-12-2012, 11:46 AM   #37
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Kids can be expensive. As soon as mine finished college I broke their dinner plates and changed the door locks.
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Old 06-12-2012, 02:15 PM   #38
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I hear you can drop them off at a fire station, no questions asked. That might be especially tempting when they are teenagers but it might not work.
At some point they figure out how to get back home on their own.
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Old 06-12-2012, 10:34 PM   #39
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No offense to any parents here, but I always roll my eyes whenever I hear a parent enumerate all the ways in which having children has diminished their quality of life, but then inevitably finish off by saying, "But they were worth all the expense, suffering, and sacrifice."

Don't you kind of have to say that? What's the alternative? Admit you made a horrible mistake that you can't undo? Goodness, what would the other parents think if they heard you admit you regret having children? You'd be run out of the PTA!
There are many websites out there in which parents express regret that they had children. Do a simple search of the words "Children" and "regret" and you find many of them. They are anonymous posts, of course, so those parents won't get run out of the PTA.

Although I knew years before I could ER that I never wanted to have kids, I also know that there is no chance in hell I could ER at 45 if I had kids. That and my life would be miserable if I had kids, besides not being able to ER.
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