How much $$ to leave kids?

[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!

 

[ziggy29]

95% of "kids" in the world would be incredibly blessed with receiving this. I received considerably less from my parents and I still felt very blessed by what I received in terms of help paying for college, room and board in college, and inheritance after my mom passed in 2016. I got a lot more than most children do and it was still a lot less.

It is your money. And it sounds like you are planning to give them more than enough to succeed in today's economy.

The only one I'd question is -- $75K per wedding? That seems really high for something that doesn't really improve their future. Yeah, the memories are nice, but I'd think you could do that with 1/3 the cost.

No need to feel like whale poop.

 

[MichealKnight]

Hi Ziggy, re wedding

Hello Ziggy thanks for chiming in.

On the wedding expense.

My parents did pretty well for themselves..... my sister's and my wedding came to perhaps $30k each.

Of course like any naïve hopeful parents - yeah - i'll -say it - of COURSE happiness and health is the key, but I indeed would like to see them marry someone successful where one or both of them could have the lifestyle they are sort of used to. Also if they do well academically, and go to colleges that cost $70-80K per year, i'm sure there will be some families barely making it, but there will be some very well to do folks and if I need to step up for a wedding I'd like to be able to do it.

My social circle (thankfully) is almost nil But recently a dear friend's daughter who went to a private college got married - they spent $100k. People in their circle are indeed doing 70-80k. These aren;'t "wealthy " people - but they certainly are talented and worked for every dime.

Hence I'm keeping $75k each in mind. My utopia would be a quick wedding and stick 60K in the bank for each of them but that usually doesn't pan out that way

 

[FlaGator]

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 think you're generous, a little more in some areas than I'm planning, but my total probably isn't significantly different than yours. Absolutely nothing to feel guilty about. I'm 59, widowed with teens. Getting re-married in next 12 months or so.

My rough numbers, for comparison:

Education - enough for BS and Master's at a state school, less than half what you're allocating. No extras like study abroad, but incidentals (phone, car expenses, etc.) probably another $5k/year.

Weddings - nothing budgeted. Will do it out of cash flow, far less than $75K, won't spend even 1/3 of that. It's one day in what will either be a long happy time or a short miserable one.

Home purchase - Nothing budgeted. Will deal with that at the time and decide based on where my finances stand.

Your post-college/extra pool/inheritance of ~$400K each is the minimum of where I'd like to land when I'm gone, but not going to deprive myself to leave that much to them.

I want my kids to benefit from the sacrifices their late mother and I made and have an easier life. BUT, I don't want to make it too easy for them. Having a need to work and sacrifice improves the odds of inter-generational wealth, something never seen in my family. Would be good for it to start now

 

[ziggy29]

There was a reason I zeroed in on the wedding and not the other stuff -- it's because the other stuff is securing their financial future. And it's great to have wonderful memories of that "special day" -- it really is -- but no one can accuse their dad of being "whale poop" because they only allocated $75K for their wedding. Granted, they are 10 and 6 now, but unless inflation really spikes in the next 15-20 years, that's still a really nice wedding.

I'd just caution against the need to "keep up with the Joneses" in that regard. I think it's usually a better financial move to let the Joneses win.

 

[aaronc879]

Adopt me please!

All I got from my parents was a few hundred a year for birthday and Christmas. When they pass I will get half of a house worth undr $100K and maybe low 5-figures. I may get nothing if my Mom has to give up everything for assisted living.

 

[aja8888]

FYI, OP:

Our daughter had a beautiful wedding last April at a private wedding venue. There were 110 guests and a sit down dinner. All in was $25K.

 

[davebarnes]

Well, our daughter, age 33, will inherit somewhere between $100K and $12M depending on market performance and our spending over the next 34 years.

 

[jt999]

Very Generous

You're a very generous person.

I have paid tuition and R&B for my daughter and she's graduating next week.

Son is up next and I expect to do the same.

After that, anything I leave them will be what's left over from our estate when we pass. I'm not planning to earmark any money from them except what is left from the estate (which could still be considerable if things fall in place).

In terms of weddings, my father-in-law sat me down after I proposed. My wife was there. He told my wife and I he would help make up the difference to help us put 20% down on our mortgage (so we could avoid having to pay PMI) provided we saved for 2-3 years. He did this with the condition that he would only cover the cost for a modest wedding. He did not believe an expensive wedding was worth the cost. It is 1 day out of your entire life, he reasoned. A home is enduring and you will have many more memories enjoyed in your home than you will on your wedding day - Christmas with the kids, hosting for different Holidays, etc.

My wife and I decided to forego the extravegant wedding and looking back, I'm so glad we did. We have lived in the home for ~20 years now and raised both our children there. It was probably the best decision I made. My only regret is that I picked the wrong daughter.

 

[Sunset]

OP - you are being GENEROUS...

I was thinking the other day of leaving my kids $125K each when I die. Rest to DW.

My parents fed me while I paid my way through College and lived at home.
I paid for my own wedding, glad it was cheap as it didn't last forever (just felt like it at the end).
My mom left me approximately $100K in today's dollars when she died.

 

[Scratchy]

Well, our daughter, age 33, will inherit somewhere between $100K and $12M depending on market performance and our spending over the next 34 years.

Good point. How could any couple at age 43/44 have an idea to within a few thousand dollars how much will be left in the kitty when the last spouse dies?

So far no one has come forward with the opinion that $250k of support for children after high school is stingy. Hardly surprising.

 

[MichealKnight]

Hi Scratchy..... re predictions

Good point. How could any couple at age 43/44 have an idea to within a few thousand dollars how much will be left in the kitty when the last spouse dies?

So far no one has come forward with the opinion that $250k of support for children after high school is stingy. Hardly surprising.

Hi Scratchy - I think in my post I said something like "if things work out".

Part of that is, investments and nest eggs working out. And unexpected expenses don't exceed the "WTF budget" I don't include in my savings calculations.

Over long term, I am *hoping* that I can make an average yearly return of 4.9%.

About 55% of fund would be in dividend stocks, AND commercial real estate, where the lease includes 2% yearly rental bumps. Tenant would be Wendy's, or McDonald's, or a Veterinarian chain.

My *hope* is that this means that i'd keep up SOMEwhat with inflation - knowing full well savings will erode some in value. Let's say inflation is 3% per year. Let's say that 55% of my investments keep up with inflation. Approx - that means I'm still boned by inflation by about 1.6% per year.

IF I plug in 1.7% inflation, 4.9% returns......then, my "total" would be at a point that the goals I have do add up.

Of course, if things go badly - well then, I do admit I have "fat" in my budget. If it came down to food and medicine, then obviously nice vacations, eating out, etc would have to be scaled back.

I look at investment vehicles present and past.

I see Wendy's restaurants, where the corporation guarantees the lease, OR a franchisee who owns 40-50 restaurants guarantees the lease. They are paying every bit of 5.25% AFTER property tax, repairs, etc.

I'm obviously not an investment whiz, but I look at something like Vanguard Wellsley - 30 year history shows about 8% returns I think.

I see Muni Bonds - for so-so credit states paying 4.5% or so - but without income tax.

So I'm hoping, if the last 30 years returned 8% thru Wellsley-ish investments.....am I realistic to want 4.9% going forward ?

 

[SecondCor521]

I think another aspect to this question is when.

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.

Of course, it all depends on the kids and the parents and a lot of other factors.

 

[MichealKnight]

Gator

FlaGator, thank you so much for sharing and I am sincerely glad that things are working out for your kids, and I wish you all the happiness in the upcoming marriage.

I agree on generational wealth. It's just that the future is so murky. I think intelligent persons can make a good case that things will be GREAT in 20 years for these kids. BUT I think equally smart case can be made that the future is job losses, austerity, and "Hunger Games" if not literally - but close. Hence I want some safety.

So far 10 DD is somewhat cognizant about money. About work. I make a point "Daddy has to be late all this week for work". Each week she looks at grocery coupons with me, and takes pleasure on paying $3.99 for bacon that's usually $6.49. I had jobs when I was a kid and being the son of first generation immigrants I was the K-mart kid in school. My kids like me - go to a very good upscale well recognized school district. We're talking Moms with Louis Vutton crap and BMWs up the ying yang.

I want my kids to have more than I did...but not too much. Not to where they take it for granted. If they develop a sense of work, of being observant and gritty, of looking people in the eyes and talking properly, and overall, big-picturewise do well - -I'd like to have the things in place for them. Sadly I won't have enough to guarantee their futures. (My mentors who are older and better of than me - heck their kids will be getting $5000 a month for life). BUT I came up during a harder time than my mentors so I might have to settle for this as the best I can do.

The $350 per month interest income would help them just a bit. The $100k on the side - - I always thought that if there's a real Depression a la the 40s.....I could allow them to stay in my home, and the $100k could give them basic living expenses for about 3 years. If that bad stuff doesn't happen - then great, they are 100k ahead.

 

[Scratchy]

Hi Scratchy - I think in my post I said something like "if things work out".

Part of that is, investments and nest eggs working out. And unexpected expenses don't exceed the "WTF budget" I don't include in my savings calculations.

Over long term, I am *hoping* that I can make an average yearly return of 4.9%.

About 55% of fund would be in dividend stocks, AND commercial real estate, where the lease includes 2% yearly rental bumps. Tenant would be Wendy's, or McDonald's, or a Veterinarian chain.

My *hope* is that this means that i'd keep up SOMEwhat with inflation - knowing full well savings will erode some in value. Let's say inflation is 3% per year. Let's say that 55% of my investments keep up with inflation. Approx - that means I'm still boned by inflation by about 1.6% per year.

IF I plug in 1.7% inflation, 4.9% returns......then, my "total" would be at a point that the goals I have do add up.

Of course, if things go badly - well then, I do admit I have "fat" in my budget. If it came down to food and medicine, then obviously nice vacations, eating out, etc would have to be scaled back.

I look at investment vehicles present and past.

I see Wendy's restaurants, where the corporation guarantees the lease, OR a franchisee who owns 40-50 restaurants guarantees the lease. They are paying every bit of 5.25% AFTER property tax, repairs, etc.

I'm obviously not an investment whiz, but I look at something like Vanguard Wellsley - 30 year history shows about 8% returns I think.

I see Muni Bonds - for so-so credit states paying 4.5% or so - but without income tax.

So I'm hoping, if the last 30 years returned 8% thru Wellsley-ish investments.....am I realistic to want 4.9% going forward ?

Honestly speaking, I have little confidence in guessing where my net worth will be in one year, let alone 50.

 

[Mr. Tightwad]

I don't have anything set aside for any particular expense. My two daughters will be splitting what is now close to 4 mil when I die. That is unless I change my trust.

And if I had sons, I would make sure they knew that getting married would likely be the way to lose everything.

 

[pb4uski]

I think you are giving them too much. They need to learn to do for themselves and will have more pride in whatever they accumulate. In our family, we give you an education and a wedding and after that you're pretty much on your own financially.

My parents were solid upper middle class and we each got 4 years of college paid for (tuition, room & board and books and a stipend for other expenses for the first year only). As a result, I worked part-time during my last 3 years of college... about 20 hours a week for my living expenses... as well as summers. It built a good work ethic.

DW's Mom (her Dad died when she was 13) was less affluent and helped her as she could but with 7 kids it wasn't much... so DW worked and paid for her own college (though I like to say that I paid for part of her college too since she brought student loans to our marriage).

We told our kids that we would pay for 4 years of college. DD took us up on it... DS has not so far, but the offer is still out there if he decides to go.

Other than about $1,500 that DW's mom chipped in for our wedding, we paid for it ourselves... but we were both working at the time and earning good money and could afford it more than DW's Mom could so that was ok.

When DD got married a couple years ago, we offered to pay the first $15k, then 50% of the next $10k and then they were on their own after $25k. But you have to know my DD... she is frugal as heck... her and DSIL made it a mission to plan a great family-oriented wedding at a resonable cost as we all agree that the spending on weddings these days are crazy... we had a wonderful wedding for about 150 people and I think it cost them about $15k. It helped that we could rent our lake association pavilion for the reception, including tables and chairs, for only $250 since we are members... and DW did all the flowers, including the bride and bridesmaid's bouquets and boutineers for the groom and groomsmen for $200 of flowers from Trader Joe's and flowers from her and her garden club firend's gardens. At DD's wedding I was talking with a guest that has attended a wedding a few weeks earlier where they had spent $40k... just on the flowers!

We have plenty so try to be generous here and there but haven't offered help with homes or whatever. We believe that it is better for them to struggle a bit and learn to live within their means.

The only thing that I can think of along those lines is when our infant daughter died, the bill for the funeral was unreasonably small... I suspect that Dad paid the funeral director (a close family friend) for the cost and the funeral director then just billed me a little. We probably could have afforded the full expense at the time, but it would have been a dent. Dad was just like that.

In terms of an inheritance, we have told our kids that if there is something left then that is their inheritance... and every time we do a splurge of some sort we kid with them that it isn't coming our of our pocket but is coming out of theirs... which is retty close to the truth. FIRECalc suggests that our estate will be somewhere between $3-$16 million.

 

[BigNick]

We have around $2 million in the pot, plus our pensions and terrific health insurance. We basically won't need to dip into that pot to finance our retirement. But we hope to live another 20 years at least, by which time DS and DD will be 50 and 48.

(DS, in particular, will almost certainly not have the earning power that I had. His ambition seems to be to become a stay-at-home Dad with 20 hours a week of freelance stuff. His current girlfriend, for whom we have high hopes, is a lawyer, but not in the $$$-making end of the law.)

Basically we are hoping that both kids will either produce grandkids or at least settle down long enough in one place so that we can get some of this money to work for them, most obviously in the form of buying a house and getting them out of the insane rental markets in the expensive cities they both enjoy living in, so that they can start accumulating their own FIRE funds. In the meantime we give them a few hundred every now and again, but there doesn't seem much point in handing them, say, $10,000. They wouldn't have any use for it other than lifestyle inflation, which they are both quite careful of (DS in particular).

The thought of us sitting there with all that money, getting older and not going anywhere much, while our kids move into middle age postponing various plans because they can't get a decent mortgage, fills me with horror.

 

[BeachOrCity]

I think it is a good idea for you to plan for these expenses and they look reasonable. But I would not share the dollar figures with your kids as things change over time and you and your kids will change too.

You are retirement young. You have a nice egg and can most likely afford to give them all they need (not always all they want).

Take it year by year and don’t create a sense of entitlement.

 

[MichealKnight]

SecondCor….


Totally agree. Even though things sometimes don't go as planned, here is what I have in mind:


College: They will sort of know that college is covered for them. Requirements are small - basic respectfulness, and also where safe and available - part time work even if it's just a little bet. They gotta go somewhere, do something that a boss tells them to do and get a dollar out of it.


The other perks, such as the $350 per month they will obviously know about and it starts after they complete school.


The $100k emergency fund - they'd know nothing about until if and when the time came to tap it.

 

[joeea]

*Weddings

I'd have $75,000 for each kid ready to go.

IMHO, that is ridiculously high.

Your mileage may vary.

 

[RunningBum]

I don't have an opinion on the amounts. Not my business.

You should give some thoughts on the methods. Stay within the annual limits of gift giving to avoid paperwork and reducing your tax-free estate amount when passing. Strongly consider matching any wages they earn with Roth contributions so that their money grows tax-free.

 

[donheff]

If I was pulling the plug in my 40s I hope I would have done something along the lines you outlined to try to cover education, weddings, and a bit of emergency help. In fact, I was in my mid 50s and paid for the kids' college, my daughter's wedding and helped with a down payment on my son's house and will do so for my daughter. I felt an obligation concerning school and weddings. I only popped for the housing because it was apparent that I could do so without jeopardy to our own retirement finances. They are both living in my crazy expensive area so I am glad to help with housing. I am more concerned that I don't do anything that would reverse the situation and cause my wife or me to become a financial burden on them later. I'm 70 now, DW 66. In 5 -10 years (depending on how the market goes) I will consider gifting to the kids, but only to the extent that I don't negatively affect our own situation. Beyond that we will bequeath the bulk of our estate to them. When we are winding down and it is clear that the bulk of our remaining assets will be available to them I will probably consult them on their preferred AA of our funds.

 

[levindb]

Share the load...

I would encourage more sharing of the college load. I used a 50/50 approach where my sons had to fund 50% through scholarships, work, and student loans. You probably do not need to go that far, but they need to learn good work ethics and budgeting. It is OK for the Bank of Dad to be there for emergencies, but the training for real life needs to start at age 18 and not at age 22 or 24 as a lot of bad habits and good habits can be learned in college. IMHO

 

[EastWest Gal]

I’m gifting enough to fund DS’s Roth IRA, for now. At 27, he has not yet found career employment, works, but lives at home, saves virtually every penny, works and is in graduate school. He is likely to see a very significant inheritance, based on FireCalc, and that he is our only heir. I only have one niece and nephew, and they will directly inherit from my sister.

I would rather gift more now, encourage investing and saving and a frugal lifestyle. I’m not planning to leave a lot, but we are not planning to spend a lot either, even if we can. Depending on his wants and needs, gifting will be flexible, and is likely to increase as my husband and I wind down our own activities.

I doubt he’s going to want to work for money until he is at full retirement age. But then neither did I.