"Ed Block, 81, has seen a series of expenses drain his savings in the 22 years since he retired from AT&T and moved to Key West, Florida. He and his wife helped with two granddaughters' college bills and still contribute to one grandson's prep school expenses. They've started a college fund for the rest of their grandchildren, assisted two sons who were downsized and pitched in when a grandchild needed special education.
With his diminished investments and a pension that doesn't rise with inflation, what he calls "Wall Street's agonies" added urgency to 2008 budget cuts the couple would have had to make anyway, he said.
"Twenty-two years without a paycheck is a very long time in the face of persistently rising costs," he said."
I'm sorry, not to diminish these folks problems, but
when you're retired, living on your investments and have full knowledge of your financial vulnerabilities, it just doesn't make any sense to go funding your grand-kids college expenses or doling out cash to your grown kids who got downsized at work. Likewise for grandson's prep school or starting college funds for all the other grandkids. It doesn't sound like they were in any position financially to shell out all this money, and now they're crying the blues over their foolishness. I'm ok with helping the special needs kid, though. I help those who can't help themselves, or in rare case those who try very hard but still need a helping hand. To the others, sink or swim!
Interesting comments. I do "dole" (as you put it) out cash to my son and his family in similar ways to the couple discussed in the article and which you criticize. You may be right, but here's my reasoning.
1. Helping grandkids with college - I reward my son and DIL for funding their deferred retirement accounts at work by funding Coverdell ESA's for each of their three kids. $2K/yr per child, the max allowed. This started at birth and won't cover four years of college, but I estimate the value of each account will be in the $40K - $50K range (real) by the time they're 18, so it will be a big help. Costs me $6K/yr and a few hours managing the accounts. Son and DIL would not be able to both fully fund their 401k's and do college savings. This activity does impact our lifestyle, but I enjoy doing it more than the satisfaction I'd receive from purchasing a fancier car, taking an additional vacation each year or any other comsumptive activity. It "floats my boat" so to speak.
2. Helping out of work kids - I've never had to do this but assume I would if I could. My WR is below 4% and I'd be willing to temporarily increase it to 4% to help out for a few months if necessary.
3. Helping special needs grandchild - My oldest grandson is afflicted with cerebral palsy. His expenses, of course, impact son and DIL's budget tremedously and the actions in #1 and #2 above are directly related to this. Helping is something I'm priviledged to be able to do. I spend Wednesdays with him at Easter Seals. DW (alias Gramma) is a retired special ed teacher and works with him frequently. If it turns out we can afford it, a portion of our portfolio will morph into a trust for him.
I'm perfectly free to not do these things and realize we could be living in a fancier house, driving fancier cars, taking more vacations, buying more toys/electronics/jewelry, getting deeper into our hobbies, etc., etc. But the satisfaction we receive from these giving activities surpasses the marginal utility of adding the next additional consumptive activity.
Although our giving activities are within our SWR, we understand that if things go against us financially in the future (high inflation, low investment returns, employer stops paying pension, blaaaah, blaaaah bad news, etc.), we could have been better off keeping these funds within our portfolio. And if physical limitations related to growing older prevent us from taking as many of our beloved fishing and camping trips, we might wish we had taken more now instead of spending time with the family.
It's all a crap shoot, a matter of priorities, a matter of what personally gives you pleasure.
A friend stopped by to show off his new BMW. Man, what a nice car! I could easily afford one by using the $6K/yr I put into the grandkids college funds to make the payments. But......... naw.......... My 1999 F150 (used for camping and hauling canoes and kayaks) and 2000 Civic do just fine.....
You pay yer money, you makes yer choice......
My only beef with the 81 year old couple in the article is that they are whining about their situation now.
If you're going to give during your retirement, take the time to understand what you're giving up to do so in terms of both current consumption and potential future lifestyle downgrades if things go against you financially.
