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Do you think that you owe your kids a good nest egg?
Old 07-27-2011, 11:37 AM   #1
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Do you think that you owe your kids a good nest egg?

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"? It seems to me that it is going to be very difficult for folks in the USA to establish a good standard of living simply by working, since there will simply not be many jobs around, and that the only folks who will have decent standards of living are those who would inherit a nest egg.

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?
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Old 07-27-2011, 11:38 AM   #2
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Do you have kids? If so, what are you planning? If not....?
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Old 07-27-2011, 11:39 AM   #3
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Do you have kids?
Not as of yet.
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Old 07-27-2011, 11:50 AM   #4
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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.
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Old 07-27-2011, 11:55 AM   #5
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This stance may be controversial but I don't "owe" my kid a penny.

We're still several years from retirement but when we do retire we will not spend with an eye on "dear me, do our plans leave anything for DS". Our Firecalc scenario includes never having less than $xxx,xxx, just to ensure that we don't run the risk of running out of money.

OTOH, if we get to the end stages of our life and there is money left to bequeath we will happily do so.
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Old 07-27-2011, 11:56 AM   #6
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Don't you think it would be fair to also set up such a trust?
Makes sense to me (but I don't have kids). Maybe you should keep it a secret from your children (when you have some).
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Old 07-27-2011, 11:56 AM   #7
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My parents funded a majority of the costs our our two children's college educations. We intend to do the same. Both my parents and DW's parents left modest (mid six figure) inheritances to their children. If things go as planned, we will leave somewhat larger amounts to our children.

My parents made it known early that this was their intention. Since we didn't have to save vigorously for college for our kids, we were able to accumulate assets in excess of what we needed for a comfortable retirement. We feel fortunate to be able to "pay it forward".

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. We have informed our son and daughter-in-law of our intention to fund her (and any subsequent siblings) college costs. Our daughter is unmarried. For many years I have made her the offer to match any amount she puts into an IRA. We also payed off the balance of her student loans (from graduate school) when she was struggling to afford the high cost of living in NYC.

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.
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Old 07-27-2011, 12:03 PM   #8
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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. The American Dream, at least the one sought after by the middle class that is headed into extinction, is now a nightmare. Personally, I think we've likely passed the point of no return.

What I'm doing for my kids is a fully funded 529--for state school tuition, room and board etc.--if they want a private school education, they're on their own after the 529 runs dry. I'll also highly encourage them to seek their fortunes abroad. I myself am saving every thin dime I can, which hopefully will provision a somewhat comfortable retirement--most likely in Malaysia or Thailand.
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Old 07-27-2011, 12:04 PM   #9
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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. :-)
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Old 07-27-2011, 12:06 PM   #10
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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. :-)
Absolutely Agree!
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Old 07-27-2011, 12:11 PM   #11
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do you think that you owe it to your legacy to leave a big nest egg, No

it is going to be very difficult for folks in the USA to establish a good standard of living simply by working, since there will simply not be many jobs around, and that the only folks who will have decent standards of living are those who would inherit a nest egg. People have gone through difficult times in the past. Those who have become spoiled and overspent should not look upon others to feed their addiction to spend beyond their means.

I guess what I am trying to say is that folks at retirement age now were fortunate to live during the great compression The grass is always greener in someone elses pasture.

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? No. This would be irresponsible by enabling them to continue to live beyond their means. Most people with go through times of need during their lives. Some learn from these experiences by resolving their situations. Others blame it on someone or something else and expect others to come to their rescue.

Don't you think it would be fair to also set up such a trust?
IMHO one should LBYM. Use, don't abuse, what what you have saved for your retirement years. If you have an excess, then share. But be careful. What many consider "needs" are really "wants" and your generosity can actually cause more harm than good.
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Old 07-27-2011, 12:14 PM   #12
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It's up to you ! If you want to leave your kids large (or small) amounts then please do.

But no, You don't owe them anything. It's your money. You spend it as you like.
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Old 07-27-2011, 12:34 PM   #13
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Agree with many other posters. We have two kids. We will enjoy our hard earned and saved money and do not plan to restrain our retirement in any way just to leave them a legacy.

However, it is likely there will be an inheritance anyway - once LBYM it is hard to turn the other way.
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Old 07-27-2011, 12:42 PM   #14
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I don't feel we "owe" our kids anything, however, if the means are still there, absolutlely I would like them to benefit. We have paid for their college costs, even through grad school for one and will do so for the other one and hopefully will have both off the dole by the time the 2nd child graduates. From my way of thinking, every parent would like to see a better life for their children than they enjoyed, but unless things miraculously change with our economy, I don't see the same opportunities for the kids that I enjoyed, so again my desire would be to leave them with as nice a nest egg as possible.
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Old 07-27-2011, 01:11 PM   #15
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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. The American Dream, at least the one sought after by the middle class that is headed into extinction, is now a nightmare. Personally, I think we've likely passed the point of no return.

What I'm doing for my kids is a fully funded 529--for state school tuition, room and board etc.--if they want a private school education, they're on their own after the 529 runs dry. I'll also highly encourage them to seek their fortunes abroad. I myself am saving every thin dime I can, which hopefully will provision a somewhat comfortable retirement--most likely in Malaysia or Thailand.
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.
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Old 07-27-2011, 01:12 PM   #16
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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. :-)
+1
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Old 07-27-2011, 01:18 PM   #17
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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. The American Dream, at least the one sought after by the middle class that is headed into extinction, is now a nightmare. Personally, I think we've likely passed the point of no return.
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Old 07-27-2011, 01:36 PM   #18
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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 ?)
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Old 07-27-2011, 01:52 PM   #19
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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 ?)
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.
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Old 07-27-2011, 02:04 PM   #20
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We don't owe them an inheritance and we would not cut back to the bone to take care of them. That said, we hope to leave them a sizable estate. If I can speed up their FI I will gladly do it. Both kids are hard working, responsible and frugal.

But I don't buy into your premise that the "new economy" is some sort of permanent blight on America's future such that, "the only folks who will have decent standards of living are those who would inherit a nest egg."
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