How much $$ to leave kids?

[Old Microbiologist]

My personal goal is to leave my kids as little as possible. I have given them exactly what my parents gave to me which was nothing and I supported myself through 14 years of University (through an Ivy league PhD) and have retired early with literally too much to spend. I believe a person should earn their own way and sink or swim otherwise they won't have a strong enough character to survive in this world. My parents were well off so this was a conscious decision on their part. Things went south for my parents later and I have supported my mother completely for the past 20 years. If my kids needed it I would step in but so fr they are following my example. I am not close to my kids at all and am not particularly upset about it. They are both doing well on their own. It helps that their corporate attorney mother (my second divorce) is very well off. But she has her own priorities as well and the kids are not a major part of them. Of course, my kids will get something in the end as there is no way for us to spend it all down. So, they are going to have to deal with a fair amount of real assets after we die. My wife's kids both died and her family is extremely rich so we won't leave anything to them as it is trivial in comparison so it all goes to my kids. On an aside, I think weddings are the stupidest expenditure on the planet and is a symptom of the marketing propaganda in the US. I will send them $10,000 as a gift and no more if that day ever comes and so far it is a distant possibility. Each to their own.

I have the luxury of watching my wife's family and her nieces and nephews who have never wanted for anything nor have they worked to earn anything. Their sense of entitlement is an embarrassment to everyone and they are completely spoiled rotten. None will ever achieve anything at all except to jet around the world to watch ballet, figure skating, football, formula one, tennis, sporting events, etc. They think watching is the same thing as doing and consider themselves experts at anything they are interested in which means they are those type of rich snobs that criticize everything while actually doing nothing. I am glad my kids are the opposite.

[Jollyquick]

I‘m in the, „You owe your children nothing!“ crowd. We’re not going out of our way to avoid leaving anything to our kids, but we’re not putting anything aside for them either. They‘ll have to be happy with whatever’s left over from the crazy extended party years of our retirement!

18+ years of free room, board, and education is more than either me or my wife got and we turned out just fine!

I joined the military at 17 and my wife put herself through school waitressing and bar tending. Some life lessons just can’t be bought with money. There‘s nothing more satisfying than earning and owning your own success! Conversely, Free money, especially a lot of it, can seriously warp the perspective of young minds.

[2177V]

Quote:

Originally Posted by Jollyquick I‘m in the, „You owe your children nothing!“ crowd. We’re not going out of our way to avoid leaving anything to our kids, but we’re not putting anything aside for them either. They‘ll have to be happy with whatever’s left over from the crazy extended party years of our retirement! 18+ years of free room, board, and education is more than either me or my wife got and we turned out just fine! I joined the military at 17 and my wife put herself through school waitressing and bar tending. Some life lessons just can’t be bought with money. There‘s nothing more satisfying than earning and owning your own success! Conversely, Free money, especially a lot of it, can seriously warp the perspective of young minds.

I also joined the military and had a frugal life and wanted to avoid spoiling the kids. However I made a fortune in the stock market and became rich.

My daughter married a great guy who treated my wife and I with respect but he did not earned much money. My daughter is still going to college and they ended up in a poor neighborhood. To avoid our future grand children from growing up in a high crime area, my wife and I decided to get them to buy one of our houses with a "family loan" because they could not qualify with a bank loan due to their low income.

My great son in law is still working in his blue collar job while learning hard work and the value of money. My daughter is also frugal with money although she likes overseas vacation which I do not mind because she gets stressed out going to college and needed some stress relief.

They never asked me for money and they understood my motivation to get them out of the bad neighborhood. Each family situation is different and the decision to help your children is a personal one after weighing in the pros and cons.

[athena53]

Quote:

Originally Posted by Mdlerth Oh, and one more thing. Our plan, expectation and hope is that as DW and I age, we will NOT be a burden on our kids. That's more important than slipping them a free car or house. <snip> No doubt some folks will disagree. But I'd rather leave my brood ten million I didn't consume than to pillage my stash early, causing it to run out and end up guilt-tripping the children to support their crotchety old parents.

That's my top priority. I do NOT want DS, my only child, and DDIL, cornered into taking me in because I have no money. (They may have to do that someday for DDIL's parents, who are good, hard-working people but of modest means.)

As for funding college- I'm in the camp that says it depends on the individual kid. My 4 siblings and I had very little skin in the game (I'd say that I earned 10% of the cost of my college expenses). Two have advanced degrees, (MBA, MD), the others have respected professional designations (FCAS, CPA, PE). We all had long, productive careers although two of us are now retired. Paying for your kids' education does not mean they'll party their way through school. I also paid for DS' education. I'm sure that lack of student loans enabled him to buy a house earlier and support a stay-at-home wife and their two children (soon to be 3).

They'll probably inherit something from me. Knowing that I do NOT want to be old and penniless, I'm erring on the side of conservatism in my spending while still thoroughly enjoying life. That means there's likely to be a nice pile left over and I'm fine with that.

[Sojourner]

Quote:

Originally Posted by SecondCor521 Too much too early could set expectations for later that you might not be able to - or planning to - fulfill. Too much too early could dull work ethic, frugality, and drive. Too much too early could be wasted via bad decisions by immature kid brains.

+1000

Looks like OP hasn't been active in the thread for a few days, but it's always worth mentioning the pitfalls of "economic outpatient care", as outlined so well in Chapter 5 of The Millionaire Next Door. The authors' meticulous research showed that, generally speaking, kids who receive ongoing financial assistance (or "gifts") from their wealthy parents do not achieve as much financial success as those who don't receive such assistance.

Here are four key takeaways from that chapter.

• Giving cash gifts to adult children leads to more consumption and less saving and investing by those children.
• Gift receivers, in general, never fully distinguish between their wealth and the wealth of their gift-giving parents.
• Gift receivers are significantly more dependent on credit than are nonreceivers.
• Receivers of gifts invest much less money (and build less wealth) than do nonreceivers.

[I am He]

My folks covered college and I never finished. Hence, I'm going to be tight and only offer to pay it off if the degree is completed. Probably going to urge a year or two at tech school (now that most credits fully transfer) and finishing at a university. At a maximum, I might pay for board while they cover the tuition. It's still 10 years away.

My folks were always there for me (so I knew I had a net) but never covered anything else. I only received an inheritance around 50 and don't know how young is too young? I'm sure everyone is different. I do know I don't want to rob them their sense of self accomplishment nor happiness. Thinking now that 40 might be a sweet spot as they'd be established and hopefully understand the value of things.

We just "pulled off the dock" about 4 years after that inheritance and still don't know if we did it too early? So 50 seems a good age as we're (hopefully) plenty young.

We didn't change our modest lifestyle but I worry as my child is in that stage of everything needs to be the best, the fastest, etc. Too young is definitely bad. An attorney once said "you don't want to wreck them" (if we didn't have a succession plan in place).

Time will tell.

I am thinking of adding to their IRAs. Kind of like matching dollar for dollar which should provide a great incentive to start young. Lord knows the employers' versions of matching are complete BS.

[kgtest]

Quote:

Originally Posted by MichealKnight Hello all.... The opinions i'm about to ask for are just those - opinions in that much of it has to do with personal ethos, and also one's financial picture. I have young kids....10/6. For variety of reasons I might be retiring within the year at age 43/44. Of course, I wanted to leave much more for my kids in the future - again I know some have different philosophies and that's cool. Bottom line is, I won't be "setting up" as much as I wanted to and I feel like whale poop over it. Ok, here's what I THINK i'll be able to do for kids..... I'd like to know if people think it's good, not enough, great, too much, too little, etc. Of course this is all based on things going good, kids growing up the right way ,etc. (Using today's dollars, let's keep inflation off table just for discussion's sake) *College I'd have $75,000 per year for 6 years for EACH kid. *Weddings I'd have $75,000 for each kid ready to go. *Other College Related Stuff I'd have a *total* of $25,000 for each kid - perhaps for things like a study abroad semester, etc. *After college is over I envision $60,000 for EACH kid - towards home down payment, and a little slush fund in their bank accounts. ALSO...I'd put aside $100,000 for each kid....the idea being they get $350 per month income out of it.....and if needed, it's a $100,000 emergency fund for things like deep recessions, or some of other life's pitfalls. Inheritance ********* If all goes as planned, perhaps $250,000 net per kid. Am I doing right by my kids? Or is this cheapskate city? Thanks for reading!

I just read some guy paid off like 400 college kids loans totalling 40MM. I did the math and it looks like most of the people in college leave with around 100k in college debt. I still have a co-worker in her late 40s paying off bachelor degree in Liberal Arts.

I will help my kids as much as possible. But they will be competing with ER healthcare costs .

DF who is 68 tells me his plan is 1MM per kid when he passes. BUT at his current LCOL we will get more. I know because I help manage the estate.

He does not see the value in giving any money to us children until he passes. I gave up arguing that stance. He did finally contribute $100 to my DS 529 because he realized he got a $50 tax break for it...the kicker...I had to pay him $50 to convince him to do it so it essentially cost him nothing but me $50.

PLEASE, if you are a multi millionaire raise during the great depression, try to keep an open mind.

[brett]

Everything. It all flows down. With provision for grandchildren's post secondary education funds.

But neither of them have any idea of how much this will really be.

[The Cosmic Avenger]

Quote:

Originally Posted by Sojourner +1000 Looks like OP hasn't been active in the thread for a few days, but it's always worth mentioning the pitfalls of "economic outpatient care", as outlined so well in Chapter 5 of The Millionaire Next Door. The authors' meticulous research showed that, generally speaking, kids who receive ongoing financial assistance (or "gifts") from their wealthy parents do not achieve as much financial success as those who don't receive such assistance. Here are four key takeaways from that chapter. Giving cash gifts to adult children leads to more consumption and less saving and investing by those children. Gift receivers, in general, never fully distinguish between their wealth and the wealth of their gift-giving parents. Gift receivers are significantly more dependent on credit than are nonreceivers. Receivers of gifts invest much less money (and build less wealth) than do nonreceivers.

I was trying to figure out why my parents' method worked, and how I was trying to replicate it. My parents made me save for things I wanted, but occasionally rewarded me for hard work and saving. For example, they sometimes sent us a check AFTER my partner or I got promoted, finished a degree, and when we bought our house. It wasn't help, it was a reward for a financial achievement (or, an achievement with a financial reward). When I moved in with them for a short while after college, we agreed I'd pay them rent (about 1/4 of what I'd probably pay in rent for an apartment)...and they gave me back the whole lump sum when I moved out, so I had money for furniture without dipping into savings.

And since it didn't always happen, it wasn't expected, and my partner and I didn't rely on it, it just helped us enjoy our achievement a little more. Which is why I want to fund a Roth IRA by matching whatever our kid makes at their summer job. And the kid has already calculated what they'll make at their summer job, and they've already said they want to contribute a lot of it towards our household expenses! I'm so proud!

I probably won't save it up and return it to them, as we pay more of the kid's expenses than my parents did, as I grew up barely lower-middle class, and we pay a lot more of the kid's expenses than my parents could ever afford to pay for me. But we don't mind doing that because the kid seems to maintain perspective, and doesn't really ask for or need much.

[SpinDoctorTX]

My Dad had a mom & pop will with 2nd wife, so she and her kids are spending all of the $ lol. I saw it coming long ago, and prepared accordingly.

My Mom will end up with us (in 2010 we moved to a split-plan home and her half has its own living area) and is a snow bird now. She'll burn through most of her money on my sister & her kids even after she moves in with us for good. Again, fully expected & I couldn't care less. My Mom took care of me during the ups & downs of life, and I'm happy to return the favor with no expectations.

Free money can hinder some kids, as I"ve seen in my brother's family. He's wealthy but supporting 5 adults- with only 1 still in college, and plans to work until 70 (yikes!). The rule at our house was that you were either in school or moving out to your new life (which is the path I chose). Not having a safety net really taught me resilience and pushed me to do what it took to rise in corp America without a degree. That doesn't happen often anymore.

I'm the only sibling who didn't have kids so I make no assumptions about good parenting. Hub's kids were grown when we married so I go to skip right to the fun part (being a Grandmother). Lucky me!

Sure, it would have been great to share in the largesse enjoyed by family b, but I'm not hurting, and don't take it personally no matter how it was meant.

[Teacher Terry]

I think paying for college is great if you can do it without hurting your own retirement. I know people that have done that. It gives kids a good head start in life.

[O2Bfree]

So generous!

My mom and dad helped my brother a lot, giving him money and co-signing for cars and his first house, also bailing him out of trouble with the law numerous times. Also gave him several chances to take over the family business, which he blew. He ended up homeless in his 50s. Meanwhile, I've paid for my own university degree, houses, everything since I moved out. Planning to retire in July at 57.

A lot depends on the kids' natural tendencies I suppose.

[tb001]

Quote:

Originally Posted by Teacher Terry I think paying for college is great if you can do it without hurting your own retirement. I know people that have done that. It gives kids a good head start in life.

Agreed, but it’s a different and interesting question when you’re RE. You’re potentially expressly making a decision to stop working and not have the resources to help vs work longer and help.

For us, we’re not willing to RE if it means we can’t provide for our children what *we* feel are the basics. I think that’s what the OP is really struggling with. How much of their future do you trade in order to get out of the daily grind.

[RobbieB]

They'll get whatever is left.

[imoldernu]

.... am on the wrong thread $$$

[redduck]

Quote:

Originally Posted by DFDubb You feel bad "only" giving your kids 1.5 million dollars? I'd suggest trying to regain touch with the rest of the world. Sadly, you're out of it. ETA: Your plan will also likely result in kids that are out of touch with reality as well. IMO

Whoa, slow down, Dubbster…

I dunno' but it seems as if the OP's world is pretty darn good and his reality might just be better than a whole lot of other people's reality. Besides, $1.5M ain't what it used to be.

[Flyfish1]

This is something I wrestle with and have not totally decided yet.
It's nice to see lots of different opinions on this forum.

My parents paid for my undergrad education and medical school was all loans. When I got out of residency with a wife and a small baby I was over $135,000 in debt and that was 23 yrs ago. When I was in high school my neighbor was selling a piece of junk old car and i wanted it, so I asked my Dad. The next morning at Church he introduced to a short but strong man. My Dad said , " Son you wanted a car and this is Mr. G, you start work on his farm tomorrow at 6 am and in a few weeks maybe you can buy that car" And that's what I did, I rode my bicycle an hour each way to Mr. G's farm all summer until I could buy that crappy Ford Pinto.

Alas, I fear we have somewhat spoiled our children , college paid for, bought each girl a used car, and they know I'll help with Grad school if they go that way. Weddings are saved for, and I agree they are a colossal waste of money. But my wife disagrees.

I thought about giving them the remainder of the 529's if there is any vs taking it back and paying the penalty. Maybe we will just pass it on to their kids? The original plan was to only give them money from our estate when we pass. Then it morphed into some house downpayment help, which we are saving for. I have mixed feelings about that. My financial coach, said , " you did your job, don't ruin their sense of accomplishment". My ex financial advisor had the opposite opinion.

Perhaps we would also give them some additional help in their 40's as someone suggested above. Not sure.

I would not be happy drinking cocktails aboard a luxury cruise in retirement while my kids and their kids can't afford a decent lifestyle. But that is down the road.

[The Cosmic Avenger]

Quote:

Originally Posted by Flyfish1 Alas, I fear we have somewhat spoiled our children , college paid for, bought each girl a used car, and they know I'll help with Grad school if they go that way. Weddings are saved for, and I agree they are a colossal waste of money. But my wife disagrees.

Two of the many great ideas I've gotten from this forum are to match the couple's contribution to the wedding (maybe even 2:1 or more, if they're young), or to give them a generous set amount, and let them decide whether to do a blowout wedding, or use it for a really nice honeymoon or even save most of it for a down payment towards a house.

And having them start their career without debt is a huge gift; as long as they use their own money for pizza, movies, concerts, gas, etc., they'll learn to budget and value a dollar, IMO.

[socca]

Quote:

Originally Posted by Flyfish1 I would not be happy drinking cocktails aboard a luxury cruise in retirement while my kids and their kids can't afford a decent lifestyle. But that is down the road.

So, it's OK for your kids to live beyond their means as long as they live within their means + your means?

There is no right or wrong answer here, but some folks lean more toward "make your own bed and lie in it, kid."

[Mdlerth]

Quote:

Originally Posted by Flyfish1 I would not be happy drinking cocktails aboard a luxury cruise in retirement while my kids and their kids can't afford a decent lifestyle.

My kids span a wide income range, but since none has any of their own children yet, all of them can afford a lifestyle better than I could afford at their age.

Now, where are those Yorkshiremen when you really need them?