Do you think that you owe your kids a good nest egg?

[lemming]

Are you asking for an argument for debate with your parents or your kids?

Since you say you don't have kids....

 

[easysurfer]

I do not have kids, but I'd say the answer is "no" if I were to have them.

I feel the same about siblings and myself. I would not expect to inherit anything from parents or siblings.

That said, if I was included, I'd think that it was so very kind of them thinking of me. That said, I do see myself leaving siblings, nieces (both of my parents passed away years ago) of sentimental/monetary value to them when I pass away, but I view it as a requirement of me.

 

[67walkon]

When I was growing up, my parents promised me a college education at a state school. I went to law school after college and it never even occurred to me to ask them for help. They didn't owe me anything. When my last parent died, my 2 siblings and I sold the house and split the rest up; we got around $75,000 each, which I saved.

When I go, I want to leave my 3 kids something. We have enough savings to live at about the same standard of living we have now and still leave a pretty good amount to the kids. I don't owe them a nickel, as 2 of the 3 are finished with college and have graduate degrees and the "baby" will have a grad degree in 3 years. If we can help them, we will, but we don't owe them and they haven't asked.

I just think I will die a little happier knowing that I can make my childrens' lives a little easier and more pleasant. It's a personal viewpoint for every one of us, but this is mine.

 

[Purron]

I think "owe" is the wrong word, at least for me - - that is more applicable to financial responsibilities such as repaying loans.

Although my daughter is doing better at her age than I did at that age, still I'd like to ensure that she is comfortable in her old age (which I can do without depriving myself of anything, really). This is not a matter of "owing"... it is due to my love for her as her mother.

This is a beautiful way to think of it W2R. Your daughter is fortunate to have such a loving mom. DH and I don't have children, but do have nephews and nieces we adore. I'd like to think some of our money would help them one day.

 

[foxfirev5]

I think "owe" is the wrong word, at least for me - - that is more applicable to financial responsibilities such as repaying loans.

Although my daughter is doing better at her age than I did at that age, still I'd like to ensure that she is comfortable in her old age (which I can do without depriving myself of anything, really). This is not a matter of "owing"... it is due to my love for her as her mother.

Interesting point. I look at our three children and two of the three are doing better than DW were at their age. I also don't totally buy into the new normal economy that its all down hill from here. In 1982 my DW and I calculated our net worth for the first time. It didn't take long and added up to $88 and that was optimistic. With two small children and 19% interest rates the new normal was that we would never get ahead. Sorry but I digress.
Like most here I don't feel we owe our children anything, however we will use a modest SWR in retirement. If all the calculators are correct we stand a reasonable chance of leaving a respectable legacy. I don't see LBYM going away, it's too comfortable.

 

[stoutboy]

When I was growing up, my parents promised me a college education at a state school. I went to law school.

Times have changed. Any idea what law school tuitions are these days? Even at my alma mater (a state law school in CA), tuition alone is now more than 40k per year. Education expenses have vastly outpaced inflation. It's no wonder many kids today graduate with 6 figure debt, and starting salaries, that adjusted for inflation, are LOWER than 30 years ago. That's something the boomers never had to deal with. Also, student loan debt is now no longer dischargeable in bankruptcy.

 

[fancy free]

I think we owe our kids the education to create their own lovely nest egg, which we've provided. My young teen son is opening his Roth IRA this year. He can't wait to choose his own investments.

They joke about inheriting but we always say if they're lucky we'll live to be 100 and spend it all ourselves. And they agree.

 

[Bestwifeever]

I just learned this term--"taking a ski trip" in which s.k.i. means "spending kids' inheritance".

 

[RunningBum]

Like many here, I'm paying for college, room & board, and I've retired with enough that should leave something behind. Right now I'm also contributing to his Roth IRA. As I mentioned in another thread recently, if stock options were still going up like the 90s I might've worked longer, in part to provide more of a legacy.

Perhaps things will change if the economy stays rough for the next generation, but that would also make it more likely that I'll need most or all of what I've saved.

 

[Rambler]

We kind of feel we owe the kids at least some of the costs of college. Why? Because we have lived in Japan all thru their teen years. This has helped us to pad our nest egg tremendously. But it also meant that during the time that they could have worked part time jobs to save for college, they could not, because they were not allowed to take part time jobs (school rules at their high schools, cultural norms in Japan, not having adequate grasp of the language to work, etc). That said, we still expect them to work at least part time while in school o cover their food and entertainment expenses. We pay tuition, books, and rent.

All of this said, the amounts we are spending on their the above noted costs are not even comparable to the amounts that staying in Japan to do this j@b have allowed us to save for retirement. It's a drop in the bucket...but I'll be very happy when it's over.

Also, we intend to help them pad their own nest egg by matching their contributions to IRAs as has been said by another poster, and if we are able, contributing to their purchase of a modest home. They know of our intentions to contribute to their retirement savings assuming that we are able, but that they should not expect it should we not be able. We have not told them yet of plans to help them with their housing as we've not yet figured out how to do that without triggering tax liabilities, but I really like BigNick's idea.

R

 

[FUEGO]

Before I had kids, I thought "tough love" was the way to go. Now that I have kids, I plan on leaving them all or virtually all of our assets when DW and I depart these mortal coils. It doesn't make sense to me to give it away to people outside the family. That being said, I don't intend on raising my kids as trust fund babies and making them plan on living life on their eventual inheritance. Hopefully they will understand (as I do for my parents) that what is mine is mine, and what is theirs is theirs. Until what is mine becomes theirs, they have no claim to what is mine.

We also hope to pay for the majority of their college at a state school. Maybe more if we can afford it when the time comes (12-18 years from now).

In my case, my parents have made it known (to me at least) that me and my bro will be getting an inheritance. DW is salivating over it a little ( ) but it doesn't really impact our FIRE plans at all since my parents aren't even 60 yet and my grandmothers are both still alive and in varying states of "strong". However the eventual inheritance will likely double our net worth or come very close. I think my parents chose to share this news with me and DW since they know we are independent and not likely to try to sponge money off them.

 

[rescueme]

Well, thank goodness we have the responsible generations coming after the boomers to clean everything up and solve all the problems. Their wisdom (along with body piercings and tatts) promise a bright future for all.

Ain't that the truth ...

 

[BigNick]

If I was on the "other side" of this transaction, I would say "thanks, but no thanks", I would want to build my family, without the rug being able to be pulled out from underneath me. The relationship would probably sour very quickly.

Do you mean being in the position of the DDIL ? The only way the rug would be pulled out would be if DS and we both decided to sell, which would require DS to screw over DDIL anyway. I don't see how that is materially different to if the couple owned 100% of the house (or at least, of the part which the bank doesn't own) and then had a break-up.

I would also add a clause allowing DS and DDIL to buy us out at any time. The point of the exercise is to get them a head start in the housing market, should they be living in a country where this is important. (Right now, DW and I are happy renting, but there's a lot more choice in the market for that in France or Germany than in the UK or the US, as far as I can tell.)

What we're not going to do, is gift the couple the 100K and see DIL/SIL walk away with half of that if things go south. We've seen older friends go through a similar situation with their kid; they ended up effectively subsidising SIL's feckless lifestyle to the tune of the best part of $100K.

 

[Nords]

Especially in the "new economy" in which many folks who did the right thing find themselves utterly unemployable, do you think that you owe it to your legacy to leave a big nest egg, rather than spending it all so that you can "die broke"?
I guess what I am trying to say is that folks at retirement age now were fortunate to live during the great compression (i.e., the working class taking a large portion of the economy), which now is clearly over. This generation was able to use their labor value to extract out a good return from the economy - subsequent generations will not. Do you think that folks in this generation owe it their children and children's children to leave them with the money needed to live well?
It seems that the tycoons of the Robber Baron age did not try to spend all the money they could, but instead left large trusts for their descendants. Don't you think it would be fair to also set up such a trust?

I love these posts that start out "This is the worst it's ever been, the economy is permanently broken, and nothing will ever be the same again. History is over."

OK, maybe I'm exaggerating. A little.

Let's start with WWII, when the debt::GDP ratio was well over 100%. Then move into the 1950s Cold War and the 1960s brinkmanship of the Cuban Missile Crisis. I don't think people felt that there'd be anything left to leave an inheritance to.

But let's turn the question around, Swampwiz: how much of an inheritance do your parents owe you?

Personally I don't want to be burdened by an inheritance from my father, and my spouse definitely wants nothing to do with her parents' assets. We propose to similarly avoid burdening our daughter.

I think most Americans are royally screwed. The boomers have squandered an unprecedented bounty. The consequences of the economic and political choices made by the boomers has brought about the greatest disparity of wealth in our nation's history--one that continues to increase.

You have a link for that "greatest disparity of wealth" claim? Because off the top of my head I would've put the excesses of the 1890s or the 1930s ahead of the 2000s.

 

[KingB]

I hope that by the time we come to leave a legacy, our kids won't need it for anything other than to boost their own retirement.

If we get to activate the FIRE plan with 200K more than we need, I quite like the idea of putting 100K per kid into any home purchase which they might make. That would be on the basis of an outright purchase of a part of the property, with the idea of keeping the money safe on "our side" of the family, in case of divorce. So for example if DS marries and buys a 300K property, we would buy 1/3, and we'd structure it legally so that 51% of the partnership could force a sale. That might mean us ganging up with DDIL to screw DS, but I suspect he would accept that risk ; on the other hand, it would mean that they could sell to move up, etc. (Does this make sense ? Has anyone done it ?)

I would structure it as a no-interest loan (legally documented) payable upon the sale of the property.

I understand what you mean. When a friend's son got married, my friend gave the couple an amount for them to make a substantial down payment on a house. Not long after, they got divorce and they split the proceeds.

 

[flyfishnevada]

I tried to stay away, but I can't help myself.

No way do I owe anybody anything, including my kids. By the logic used to justify this, each generation would be working to fund the next. If you work to give your kids a nest egg, whatever that is, don't they then owe you're grandchildren a nest egg, meaning they have to work as long and as hard as you did to pay the debt owed to the next generation? And so on and so on?

All this talk about the lack of jobs and future prospects is nothing but doom and gloom. The vast majority of people have jobs and aren't going to lose them. The vast majority of young people entering the job market will get a job, though it may not be the glamorous, high paying one they were promised. Despite the economy, many will begin businesses and actually succeed eventually.

I live in Nevada. Worst unemployment in the nation. We went to the movies today. Amazingly, the theater was still open. We ate breakfast at a casino, still open. I noticed many people out and about shopping, engaging in business, even, *gasp*, going to their jobs. We need to get a grip. Life goes on. This is a blip on the radar. Things will correct, one way or another. If the government doesn't do something, the market will. I'm sure all the people that lived through the Great Depression are snickering at us right now.

 

[KingB]

We told our daughter (only have one child) not to expect anything, nor do we expect anything from our folks. Fortunately, she and her husband are good savers and well on their way even with their modest income.

When she was in college, we told we would cover tuition room and board for 4 years. Misc expenses were hers, as well as anything after 4 years. She graduated in 3 1/2 years.

We do give generous gifts to them as we feel we can afford to. Once we get to SS age and have a sense of how our finances look then, we will start making some distributions to them if we believe we can afford it. Our plan provides a nest egg for them, but the plan will have bumps along the way.

Do we owe them--no. Would we like to assist and leave them something that makes a difference- you bet! But we will take care of our needs and some of our wants first, as this is OUR time.

I totally agree with you.
I told DS the same thing: 4 years of college tuition, board and lodging at the university hall and books and supplies. Work in the summer to pay for the rest of your expenses. Meaning, I will not be subsidizing your dating and drinking and others. No out-of-state tuition for me.

DD is easier. She attended a local college. I gave here the rules for using the car. I pay for gas and insurance - she can only use the car going to school and PT work.

It turned out that 4 years is not enough for them. DS switched majors and DD had not been taking full time courses. What is one to do? You can not leave them hanging when it is too close. So, I ended up paying for the 5th year.

 

[stoutboy]

How are you guys paying for your kids' educations? Did you use 529s, UTMAs, or some other means? I've got a newborn so I'm looking for some tips.

 

[WhoDaresWins]

I don't feel I "owe" my son a good nest egg but I will be sorely disappointed if I don't leave him a little something...whether he needs it or not. Would prefer to leave him a really big inheritance but who knows what life will bring.

His father died when he was young and left me pretty well off. I feel obligated...yes obligated...to pass a little something along to him. He is independent in his life now, but I am giving him a $13,000 gift every year to spend down my eventual estate. I think if I needed help (money or otherwise) at some point down the road, he could be depended upon to help me. But I would hate to ask him. I am better at being on the giving end of things.

 

[ziggy29]

I have no kids here, but I do believe older generations *do* owe something to younger generations given the economic mess and massive debt they are also leaving for them.

 

[LightningDawg]

My wife and I fully intend to leave money to our children. With the way the economy is now, and who knows how it will be in the future, the idea of giving each of them some money to help with their lives pleases us. Perhaps it will help them buy a house or a car that they need. Or perhaps it will help them pay for their kids education. That's how we feel....

 

[BellBarbara]

I don't feel I owe my son anything, but I do plan to set him up with some investments that I can spare, and let the magic of compound interest grow. He is 25 supporting himself, but I don't mind getting him a little further along.

My mom has been critically ill on and off in the last year, and if she passes, this family money may go towards a trust for him as well.

 

[Spanky]

DW & I managed to complete college without any support from our parents. We have not received any inheritance and do not expected any. Nevertheless, we are FI due to our own efforts of hard work and savings. Do we own our children anything? Technically, no, but we plan to leave them something.

 

[swampwiz]

swampwiz, with all the money you're saving with your Chapter 7 and not paying your bills you should be able to leave a bunch of money.

You know, considering the $134K I ended up saving (net) from the Chapter 7 as a base and presuming a 10% real return rate (I presume a net 7% return of the S&P and me beating the market by 3%) - and thus a 7 year doubling rate, that in 28 years, that nest egg will be worth about $1.1M. This would be a great legacy to leave to any children.

 

[swampwiz]

Our first grandchild is 7 months old. We already have $30K in a 529 plan for her. Our plan is to put the RMD's from the IRAs we inherited into that plan each year until she goes to college.

Aren't you concerned that by the time your grandchild hits college, that the costs will be so high and/or the redistributionist welfare state so well entrenched that any cash in a 529 account would basically be cash that would be implicitly confiscated (i.e., there would be no reduction in tuition for such a well-endowed student, etc.)?

We do not have to scrimp on our own lifestyle to do these things so we are happy to be able to augment the finances of subsequent generations.

Bless you. I suspect you have been an excellent parent and will be an excellent grandparent as well.