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

[Col. Klink]

I agree with the others that would like to leave money for their children as inheritance but do not feel obligated to do so. Heard a term in an article once "Economic Outpatient Care" for children. The term refers to paying for everything for your kid. We made our kids work from age sixteen and told them all along that we would pay for tuition, R&B, at our state university. Their work money paid for books and all incidentals. They each got or are getting student loans of about $3K per year. Thankfully daughter number one worked hard, got a job as a nurse in Baltimore, and has relocated there and has a nice little apartment. She can now pay for herself. One of her male friends, who received 100% funding by mom and dad, forgot their were deadlines to apply to graduate school and does not know what he wants to do in life... be a history prof or be a lawyer. Currrently he is working as a landscaper assistant. This is one story. Economic outpatient care can set the tone of making kids dependent. There have been several stories in the media recently about adult children still living with mom and dad.

 

[kombat]

I've pondered a related idea before (possibly on this forum, I don't remember). I wonder if the disappearance of defined benefit pensions will accelerate the wedge between the "haves" and the "have-nots."

Let me explain. 50 years ago, DB pensions were much more commonplace. People would work for a company, build up a pension, and live off of it when they retired. When they died, they didn't have many assets (maybe just the house), and there were plenty of children to share in the pie, so each child's individual inheritance was a relative pittance. So everyone was on equal footing, with relatively few people inheriting substantial estates.

Nowadays, DB pensions are an endangered species. So many people are saving up for their own retirement. Their investment portfolios are providing a larger share of their retirement income than in the past. Of course, others didn't (or weren't able to) save much at all, and are scraping by on SS.

But when these couples die, the difference is that the "ant" parents are more likely to leave a large nest egg (compared to their DB-collecting 50's-era parents), to a relatively smaller number of children.

Doesn't this have the effect of concentrating wealth? Is this a risk in the future? Does anyone else agree that the vanishing of DB pensions could be a factor in a growing wealth disparity in the future? That there's an increase in intergenerational wealth transfer that's going to be amplified in the coming years, as more and more parents save up their own nest eggs (and pass them on to their children), rather than living off DB pensions (which leave nothing for the children, but leave people on more equal footing)?

 

[chris2008]

I would not feel obliged to leave anything to my kids (if I had some), but as some relatives and my parents left us modest inheritances I would try to pass on to my kids, too.

As we have no kids we will probably leave some to our nephews and/or nieces but we feel free to chose only those who are near and dear at the time of our departure or to use it up for a comfortable retirement.

 

[PaddyMac]

We don't have kids. I have a lot of siblings that are doing fine, and most of their kids are well educated and doing fine too. One niece has three small kids and they are not highly paid, so this year I will send her a gift certificate to help out at Christmas time.

We really need to create a will, but quite frankly if we both die at the same time I really don't care who gets it. We'll be dead!

 

[Tadpole]

Nowadays, DB pensions are an endangered species. So many people are saving up for their own retirement. Their investment portfolios are providing a larger share of their retirement income than in the past. Of course, others didn't (or weren't able to) save much at all, and are scraping by on SS.

But when these couples die, the difference is that the "grasshopper" parents are more likely to leave a large nest egg (compared to their DB-collecting 50's-era parents), to a relatively smaller number of children.

I guess that is what bothered me about the use of the word "owe" in the original question. Owe implies obligation. Retirement savings implies pension replacement or needed extra suplement. I don't think someone should feel guilty because they lived too long or needed their retirement money. I don't think retirement money is for the heirs unless it happens not to be needed for what it was intended. A person can hope to leave some behind but cannot predict whether the future will accomodate.

 

[mbooth]

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.

Ziggy, I have the greatest respect for your opinions and status in the forums, but on this one I have to push back.

I am one of those 'older generations' you mention, being a 'mid' baby-boomer. But I owe nothing to nobody and I had nothing to do with 'the economic mess and massive debt' you quote. There are those in 'high-places' that might possibly be responsible (most probably inter-generational), but I t'ain't one o'vem!

Like the general ethos of this board, I have lived a productive life, paid my way via appropriate taxes, brought up a family (2 x tax deductions now launched upon their own life-voyages), maintained a (mortgaged) household and generally lived below my means. In short I have 'done my bit', through volatile times, no halycon days for me thanks!

I take exception at the generally held view that I (and by inference my generation) have been some sort of economic vandals, profligate flower-child wastrels, that have had no concern but our own gratification and welfare. That we were somehow 'privileged' and have had some sort of 'golden' progress through life.

Fact is, I was born in a certain period, came to grips with that period's circumstances, was dealt a hand, played that hand and created the life and family circumstances that I now 'enjoy' (whatever that level is).

I am constantly irritated by the 'baby-boomer' inferences I see in the main-stream media, and occaissionly on this board, and I'm sick and tired of having be made to feel apologetic about the time-period I was born in. Yes I'm a 'baby-boomer', but I'm 'loud and proud' about it!

Each of us has to deal with the hand we are dealt, including generational circumstances, but being called-out for those circumstances is, well, miffable! ;-)

Good luck with your own generational circumstances, I'm sure in around 20 years or so, someone else will be along to have a shot at yours, at which point you may vaguely recall the gist of this post ;-)

Cheers - Mick

 

[HFWR]

I guess that is what bothered me about the use of the word "owe" in the original question. Owe implies obligation. Retirement savings implies pension replacement or needed extra suplement. I don't think someone should feel guilty because they lived too long or needed their retirement money. I don't think retirement money is for the heirs unless it happens not to be needed for what it was intended. A person can hope to leave some behind but cannot predict whether the future will accomodate.

Agreed. I hope there's some left over for DS, but I'm not eating ramen noddles for that purpose...

 

[donheff]

Ziggy, I have the greatest respect for your opinions and status in the forums, but on this one I have to push back.

I am one of those 'older generations' you mention, being a 'mid' baby-boomer. But I owe nothing to nobody and I had nothing to do with 'the economic mess and massive debt' you quote.

It seems to me we all have to take the blame. We voted these miscreants into office. The debt mess didn't create itself.

I take exception at the generally held view that I (and by inference my generation) have been some sort of economic vandals, profligate flower-child wastrels, that have had no concern but our own gratification and welfare. That we were somehow 'privileged' and have had some sort of 'golden' progress through life.

Agreed. The following generations (Ziggy included) are enfranchised and don't seem to be doing any better than we did.

 

[flyfishnevada]

Ziggy, I have the greatest respect for your opinions and status in the forums, but on this one I have to push back.

I am one of those 'older generations' you mention, being a 'mid' baby-boomer. But I owe nothing to nobody and I had nothing to do with 'the economic mess and massive debt' you quote. There are those in 'high-places' that might possibly be responsible (most probably inter-generational), but I t'ain't one o'vem!

Like the general ethos of this board, I have lived a productive life, paid my way via appropriate taxes, brought up a family (2 x tax deductions now launched upon their own life-voyages), maintained a (mortgaged) household and generally lived below my means. In short I have 'done my bit', through volatile times, no halycon days for me thanks!

I take exception at the generally held view that I (and by inference my generation) have been some sort of economic vandals, profligate flower-child wastrels, that have had no concern but our own gratification and welfare. That we were somehow 'privileged' and have had some sort of 'golden' progress through life.

Fact is, I was born in a certain period, came to grips with that period's circumstances, was dealt a hand, played that hand and created the life and family circumstances that I now 'enjoy' (whatever that level is).

I am constantly irritated by the 'baby-boomer' inferences I see in the main-stream media, and occaissionly on this board, and I'm sick and tired of having be made to feel apologetic about the time-period I was born in. Yes I'm a 'baby-boomer', but I'm 'loud and proud' about it!

Each of us has to deal with the hand we are dealt, including generational circumstances, but being called-out for those circumstances is, well, miffable! ;-)

Good luck with your own generational circumstances, I'm sure in around 20 years or so, someone else will be along to have a shot at yours, at which point you may vaguely recall the gist of this post ;-)

Cheers - Mick

Well said!

 

[Alan]

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

No.

We invested time and money to get them a good education and see them settled into very good jobs. The money was not a lot as they went to public schools and State universities, and we considered this to be a worthwhile investment as it included teaching them the value of money and how to LYBM.

They may get a nice inheritance but that will have more to do with our desire to not run out of money than to leave them anything.

 

[arebelspy]

It seems to me we all have to take the blame. We voted these miscreants into office. The debt mess didn't create itself.

Well said. Just about everyone would say the same thing as mbooth. It wasn't me, I worked hard, etc. etc.

It was everyone. It was you. It was me. We are all to blame.

 

[ESRwannabe]

swampwiz,

I think the topic can't be generalized. Every family will be different and have its own unique circumstances.

However, addressing specifically the topic of Baby Boomers... I would love to throw my two cents in. After all who amongst us in the younger generations (I am at the tail end of Gen X, start of Gen Y) doesn't like to talk about Baby Boomers!?!

Actually I really don't give much thought about Baby Boomers.

Baby Boomers... I really envy them in many ways. It seems that the US culture went completely to **** once Baby Boomers aged out of their teenage years. That is what I envy the most. It is so depressing to turn on the radio on my way into work... Baby Boomers had Jimi Hendrix, Led Zepplin, the Rolling Stones and so on... now we have... Lady Gaga.

As for economics, I believe that my generation will barely squeak by before things really get bad. I think the generations after mine are completely screwed when it comes to an improving standard of living.

If I have children one day, highly doubtful, my advice to them would be to leave the US and move to Asia. That is where the action is. That is where the vitality and excitement lie. I bet it feels a lot better to live in a developing country where life is getting better every year, than to live in a developed country where the standard of living is declining every year...

Happiness is relative... people feel best when they can compare themselves to others and feel that they are better off than them. That's just how humans are.

 

[gerntz]

This topic sure hit a nerve.

I agree with the early posts about LBYM and creating a reserve. Not wired/trained to live on the edge & so don't understand it for anyone with a stable income. It was unbelieveable how much my parents saved given the circumstances of their upbringing and limited educations. Both sets of parents have helped our current very good circumstances but that is far from a dominant factor.

I do feel a need to leave an inheritance. It's in large part because of the way I see the USA safety net being set up: Each coming generation pays the benefits of the one before it; i.e., we transfer wealth from the poorer youth to the better off aged generation (And on average, that is very true.). Net, my lower-asseted son will be paying my SS & Medicare bills. Makes no sense to me. We each should have been contributing to our own safety net account that we can see all thru our working career. I thus think giving back to him as best I can is an obligation.

 

[Nords]

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.

You should start a new thread on this question. You'll easily go 200 posts.

We used a combination of a UTMA and EE bonds. Today I'd use a combination of a 529 and I bonds.

Our daughter one-upped our planning with a NROTC scholarship.

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.)?

Um, no. Because either the government is going to pay for all its socialist students to go to college, or else capitalistic imperialism will knock down the college inflation rates.

Besides, the community colleges and state schools seem to be doing a fine job of educating their students without impoverishing them.

I feel an iggy coming on...

But then you wouldn't be able to learn how to ER through Chapter 7...

 

[donheff]

Um, no. Because either the government is going to pay for all its socialist students to go to college, or else capitalistic imperialism will knock down the college inflation rates.

Or parents with torches and pitchforks will descend on the universities.

 

[obgyn65]

I do not have any children so the answer is easy in my case. However, I have been thinking of adopting a child. If this happens, I would like to leave him / her with a nice nest egg if possible.

 

[bbbamI]

I feel an iggy coming on...

Hmmm...I've been on this forum for a while now...maybe not long enough?

....or is an iggy something that you can only get rid of with an antibiotic?

 

[REWahoo]

Hmmm...I've been on this forum for a while now...maybe not long enough?

....or is an iggy something that you can only get rid of with an antibiotic?

No antibiotic needed, merely mosey over to your user cp and add someone iggyworthy to your iggy list...

 

[bbbamI]

No antibiotic needed, merely mosey over to your user cp and add someone iggyworthy to your iggy list...

Ahhhhh....gotcha!

 

[kumquat]

While I don't think we OWE the kids anything, but we are somewhat conservative with our spending. Our WR is about 2.5% and that covers our wants as well as our needs. FireCalc says we have a large likelyhood of a large pot at the end. Who gets it if not the kids.

Both DW and I received a bit of inheritance, it comes to about 10% of our NW. I think the parents would want us to hand some of it on. Maybe we owe it to them to do so.

We are actually thinking about giving the kids an "early inheritance" if the pot grows large enough fast enough. That's another thread and I'll let someone else start it.

 

[FreeAtLast]

They already received a good nest egg when my wife passed away. I will help them over the years and when I am gone whatever is left is for them. I do plan to enjoy my retirement and spend the money that I have as needed.

 

[Lancelot]

I think most Americans are royally screwed.

I disagree. making your way in the USA is a cake walk compared with life as the average Bangladeshi and other third world countries.

Back to the topic, if you raise your kidds in a loving, confidence building home and educate them as well, then IMHO you as a parent have more than done your duty.

 

[DangerMouse]

Have no children of our own but have a handful of nieces and nephews. Rather than wait for death, we hope to be able to help them out financially at strategic points in their lives. We currently pay for their private education.

If we were to pop our clogs we want to leave them enough (well some of them) to give them a jumpstart in life but not enough that it means they can adopt and live a Paris Hilton lifestyle.

We never inherited from my parents, they had nothing to leave, the anger I feel in that direction is not that they left me nothing, but it's just a sign of how hard their lives were. I never felt my parents owed me a thing once I was launched from the nest.

Any extra funds we hope to leave to orphanages in third world countries to ensure they get clean water, schooling and opportunities to progress through the system in their own home country that enables them to have a lifestyle that their own parents can not imagine for them.

I would rather help out 10 families in the 3rd world with $10k inheritance where it can have a significant affect rather than given it to a relative in one lump sum who will likely use to but another pair of Nikes or go on an expensive holiday.

 

[Jay_Gatsby]

Rather than wait for death, we hope to be able to help them out financially at strategic points in their lives.

This is probably the best advice I've seen in this thread. You control what YOUR money is spent on, and as a result, you ensure that your wisdom and life experience are put to good use by ensuring that your children (or nieces/nephews) don't get ripped off or become spendthrifts.

Any extra funds we hope to leave to orphanages in third world countries to ensure they get clean water, schooling and opportunities to progress through the system in their own home country that enables them to have a lifestyle that their own parents can not imagine for them.
I would rather help out 10 families in the 3rd world with $10k inheritance where it can have a significant affect rather than given it to a relative in one lump sum who will likely use to but another pair of Nikes or go on an expensive holiday.

Again, good advice. The only problem here is that you have less control over how your money is spent. Not to generalize, but in corrupt 3rd world countries, adults often keep as much for themselves as possible. NGOs are often strapped for cash, but many times less than 50 cents on the dollar goes to the kids who need it.

 

[arebelspy]

This is probably the best advice I've seen in this thread. You control what YOUR money is spent on, and as a result, you ensure that your wisdom and life experience are put to good use by ensuring that your children (or nieces/nephews) don't get ripped off or become spendthrifts.

Again, good advice. The only problem here is that you have less control over how your money is spent. Not to generalize, but in corrupt 3rd world countries, adults often keep as much for themselves as possible. NGOs are often strapped for cash, but many times less than 50 cents on the dollar goes to the kids who need it.

Too many people use this as an excuse to not give. Wouldn't 50 cents on the dollar be better for those kids than none?

By all means, research into a charity where your money makes the most impact, but don't NOT help out because some might be wasted (likely WHEREVER your money goes, some will be wasted).