Supporting grown-up kids after FIRE

[BigNick]

I think we can all agree that there's nothing worse on the Internet than one of those posts where someone quotes chunks from six other posts and replies to them - indeed, tries to rebut many of them - point by point. Right? Well, with that in mind, here goes...

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Originally Posted by REWahoo You should know your kids better than anyone else, but one very common personality trait of children is to look at this type of "investment" by parents is as a gift under an assumed name, regardless of the attached strings. If you felt the need to exercise your rights regarding your investment at some point in the future, there is a real possibility it will cause problems between you and your son.

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Originally Posted by Texas Proud Reading your last post... that makes a difference... as long as you charge interest etc. That is what my mother did... she loaned for downpayments on house or other things.... but charged interest at a higher rate than she was getting on her CDs....

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Originally Posted by Milton You are setting yourself up for conflict and resentment. Loaning money to friends or family is invariably a bad idea. Either keep your money, or give it with no strings attached.

For all of the above: that's why we would want to structure it as an "investment". It would be extra money that we don't need in the portfolio. So if it went on a house down payment, our (financial) return would be any progression in the value of the house, and if it went into a business, we would be a shareholder.

From my point of view, that's neither a gift or a loan. I agree that loaning money to your family is a dreadful idea - you can't exactly send round the repo man, or Big Vinny. When I borrowed a small amount from my parents to furnish my first apartment, no repayment schedule was mentioned and I presumed they'd waved bye-bye to the money, but I was determined to send it back to them in a single payment within a year, and managed it. See also this wonderful book, where repayment of a family loan becomes a central point in the relationship between the main character and his mother, with, as they say, "hilarious consequences", only because it's Anne Tyler, the consequences are both genuinely funny and moving.

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Originally Posted by Milton it is natural and desirable that you want to protect and assist your children. However, part of parenting involves cultivating their independence, so that they may develop into full human beings who are capable of looking after themselves when you are no longer around.

You make it sound like they're some kind of cocooned Beverly Hills kids... they're most assuredly not. DS is working, this week, in a vacation camp with kids from modest backgrounds, some of whom are mentally handicapped. DD travels every opportunity she gets, camping wherever possible.

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Originally Posted by Milton I am unsure exactly what you mean when you say that you would “feel uneasy about being nicely off if our kids were having to struggle”. If by "struggle" you mean coping with events entirely beyond their control (e.g., a serious illness), that is one thing. If you mean that they may have less disposable income than they might wish because they will be in entry-level jobs, I respectfully suggest that the latter is a normal phase of life and does not warrant your unsolicited assistance;

I suspect that one of the things I mean is that I don't want them moving back in.

More seriously, DS has a stress-related medical condition which we suspect means that he will never have a substantial career in a "risky" environment. We hope he will go into academia, but he will probably never have the full earnings potential which someone of his background, education, and (frankly) good looks (we don't know what happened there...) would aspire to.

In fact, DS reminds me very much of my Dad, who was the brainier of two brothers. His brother was a doctor and Dad was tipped for great things, until a piece of shrapnel hit him very hard in Italy in 1943. He never finished his studies and ended up working for our town's highways department. Kind of a waste. (I'm very glad I started this thread, if only because it has allowed me to make this connection between Dad and DS. DS is so much like his mother in most ways - 80%, I'd say - that I have never looked at the grandfather-father-son line. DD is 80% like me.)

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Originally Posted by Khan Sometimes I wonder if the money to the kids isn't just a way to keep control. I have observed this dynamic.

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Originally Posted by flyfishnevada I also agree that a lot of parents give their kids money to maintain control.

I don't think that this is about control - partly because I don't think we've been "in control" since each of them discovered travel, alcohol, and the opposite sex - but I agree that your own motives need to be checked when making any decision which will "help" your kids.

Still, for DD's possible business project, depending on the area, I might be interested in it as my ESR job...

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Originally Posted by flyfishnevada Weddings are the classic example. My DW used to do wedding planning. She saw so many unhappy brides because mom and dad were paying and they were in control. They picked the place, the food, the music, the church and invited all their friends to show off to. It wasn't pretty.

Weddings? Ha. They're on their own for that.

We paid for our own wedding for exactly the reasons you outline (and also because we had more money available than DW's parents, even back then). It was quite a nice affair, by our standards, but having been to other people's weddings I can see that we were practising LBYM even then. I think that a wedding should cost less than a new automobile, but some people seem to be able to spend a large BMW on it.

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Originally Posted by donheff I think the bottom line is you do what you can to help while trying to avoid undermining them by making things too easy.

That's it in a nutshell. I want any help which we give them to be close to investment-grade, but I'd rather have DD's business or DS's home financed at least partially on the basis of us taking the risk rather than some bank getting rich off it, and expecting monthly payments whatever else happens.

[Emeritus]

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Originally Posted by BigNick . We paid for our own wedding for exactly the reasons you outline (and also because we had more money available than DW's parents, even back then). It was quite a nice affair, by our standards, but having been to other people's weddings I can see that we were practising LBYM even then. I think that a wedding should cost less than a new automobile, but some people seem to be able to spend a large BMW on it. .

I'm the Father of the Bride for the second time this October. In DW family weddings are a special case. Part of the 'family compact" over several generations is that hard working focused decent kids can have a "reasonable wedding" at parent's expense. My Mother in law was finishing a PHD when she married at 24. DW was 23 and a medical student when we got married. Her sister was in Grad School. Both of my DD are in school and mid 20s. In all cases parents paid for the wedding as part of the deal that kept the kids in school and moving towards a professional career.

DD was give a budget and is in absolutely total control of the party. She was captain of her college ice hockey team and as a child she made "taking candy from a baby" into a hazardous contact sport.

in our area if you can do a wedding at the cost of a small BMW you are very frugal

[BigNick]

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Originally Posted by Emeritus in our area if you can do a wedding at the cost of a small BMW you are very frugal

Slightly OT but it's my T - when my German neighbour was looking to get a pool, he took me along to help with translation, although he didn't really need much help. His first question was, "So, how much does a pool cost?" The salesman said, immediately, "As much as a car". And my neighbour, of course, fell into the trap of saying, "How big a car do you mean?". I couldn't resist. I chimed in "How big a pool do you want?" with the salesman and would have got a high-five from him if that was the sort of thing you'd do round here.

Actually, that broke the ice quite well. My neighbour ended up with a nice pool. But then he does drive a Mercedes-Benz. (I can't swim, and DW's not big on it. That's another way to LBYM.)

[REWahoo]

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Originally Posted by BigNick For all of the above: that's why we would want to structure it as an "investment".... From my point of view, that's neither a gift or a loan.

Ah, there is the rub.

The problem isn't how you view it but rather how your son son and/or daughter perceive the transaction. Intentions, documentation, and pronouncements won't necessarily prevent ill will when/if you decide to cash in on your investment.

[My Dream]

Doh!

[BigNick]

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Originally Posted by REWahoo The problem isn't how you view it but rather how your son son and/or daughter perceive the transaction. Intentions, documentation, and pronouncements won't necessarily prevent ill will when/if you decide to cash in on your investment.

That's why the intention is to do it with money which we won't need. We can accept the idea of it being tied up so that we can't get at it without the child's consent. The idea is never to cash in, but not to just gift it in such a way that people outside the family end up with half. We've seen enough relationships fail, with messy financial consequences, not to be prudent in that regard.

DW told me that when we got married, her parents said to her "The most important person in your life now is your husband. He should be more important to you than we are. We will understand and support you if it comes down to a choice between his way and ours, on any matter. But, he will never be as important to us as you are, and we will always be on your side, no matter what." I think that's fantastic, and it's how I hope we can send our kids off when they get hitched.

[Nords]

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Originally Posted by Khan Sometimes I wonder if the money to the kids isn't just a way to keep control. I have observed this dynamic.

Or for a lifelong parent to preserve their identity without having to confront empty-nester syndrome.

But I do know a couple parents who claim to enjoy living with their adult children. Personally I can't imagine it.

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Originally Posted by flyfishnevada Maybe you have the dough to continue to lavish your kids with expensive homes, vacations, cars, etc. in retirement, but I doubt it. Some day it is likely you will not want or even be able to work. Will you be willing to tell the kids to go cold turkey then or will you slowly throw your life saving at them so they can continue the artificial lifestyle you set up for them and hope you die at 75 so your money doesn't run out?

Nah, I'd just move in with the kids, enjoy my share of their nice home, and play with their really cool toys!

[My Dream]

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Originally Posted by Nords Nah, I'd just move in with the kids, enjoy my share of their nice home, and play with their really cool toys!

Can I play with the toys also.........can I..........can I?

[Milton]

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Originally Posted by BigNick The idea is never to cash in, but not to just gift it in such a way that people outside the family end up with half. We've seen enough relationships fail, with messy financial consequences, not to be prudent in that regard.

Reminds me of a movie I once saw, in which a Frenchman insisted on his fiancée signing a prenuptial agreement, apparently at the behest of his suspicious parents. Finally she refused to accept such controlling behaviour / lack of trust ... and good for her.

[KM]

I feel pretty sure that when it comes to "helping your kids out" there isn't a "one size fits all" answer to the question. Family dynamics are so diverse. A lot depends on the parents, their deepest reasoning for doing whatever they are doing with the money (guilt, control, personal happiness, love......), the son/daughter, their own expectations and reasoning, the situation, and any previous history. And even then - what worked well for one might not work so well for another. I know some awfully nice young adults whose parents have given them a lot. I also know some rather spoiled kids. I don't think what you do when they are 20-25 has much bearing on it at that point. It's more about what you did when they were 5-20........

I know I would work until my dying day to help either of my kids financially - if they were in a situation over which they had no control (ie medical care needs). But I would not sacrifice my retirement to buy them clothes, cars, houses, or a college education. We did pay for college - but because we could afford it and they were both good students. I would not have borrowed to pay for it and they had rules.

Both my kids know they can always come home and have a roof over their heads. food on the table, and a warm bed. I don't care how old they are. But we won't bail them out of debt or pay their bills. I feel confident saying this, because DS has had some bumps and this is how we handled it. To his credit, he has never expected money from us either.

Would I like to do more for them? Actually, yes, I would. But we can't predict the future and dont know if some day we might have to do more for them. So, for now, they are on their own. Still, I dont there is anything inherently wrong with helping your kids out with $100, $1000, $10,000, or $100,000. It really depends on you, your kid, your personal finances, and your motive.

[Orchidflower]

Don't know about most of you, but I want BigNick as my daddy in my next life...hint, hint.

[youbet]

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Originally Posted by BigNick how far do/did you plan to support your kids after they finished college/left home?

Our son never returned home after college, which he attended on our nickle. He and his college girlfriend, both engineers, got jobs in the same city and moved in together. A year later, I did pay for the booze at their wedding reception and several years after that bought them a mini-van when grandchild #3 was on the way.

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At what point is "enough" enough? (If I stayed at work until 65, and put the excess above expenditure into a trust fund, I could probably have both children's future retirements provided for!)

Enough is enough when your personal allocation of your money says that you'd get more enjoyment from spending it someplace else. Much of this has to do with how much money you have. If funding grandkids' college accounts means you take zero vacations.......ahhh......I don't think I'd do that. If funding grandkids' college accounts means you get a new car every five years instead of every two years, why that would sound good to me. You have to make those allocation decisions yourself.

The gift our son and DIL appreciate the most from us is our time. When our oldest grandson was born with cerebral palsy, we said we'd stay here in the area for at least several years to help out rather than move to a more typical retirement location. When the next two grand kids arrived, they served as additional "little anchors" and we're definitely still here. Both DW and I enjoy the strong family ties. Son and DIL appreciate having occasional baby sitters and DW's help (retired special ed teacher) with the oldest grandson's special needs.

The biggest satisfaction we get from having a "comfortable" retirement income vs. relatively frugal tastes is knowing that if the need arises, we'd be able to help out significantly without disrupting our own lives and retirement in ways we'd rather not.

[NW-Bound]

I'd prefer that my children will do well on their own that they will not need my assistance. But we will never know in this economic climate.

On the other hand, we do not want to be so ready to offer help, lest them get lazy and complacent. It is a matter of playing it by ear, like most people.