Should Financially Secure Boomers Help their Millennial and Gen Z Kids? Thought Provoking Example...

[Adam12]

This Tread posters:

 

[Singletrack]

To answer the original question, we lost our son 10 years ago, and recently we decided to do more to help our daughter and grandchildren. We helped them get into a new home, we are going to start giving them the annual maximum ($36,000 jointly) to stay within the gift exemption, and we will likely give her even more. Our thought process is that we would rather see her and the grandbabies enjoy our gifts now rather than waiting until we pass. In addition, along with the gifts, we can assist in helping our daughter learn sound investment concepts. As with anything, your mileage may vary.

 

[AZLife]

I’ve got two kids. One of them got a free ride thru private middle school, high school & college. The other one got a crap job, waited to move up, literally ground on himself to finish college outside of work in a few years mostly paying his own way.

Which one do you think appreciates his dad & talks to him every week, and which one do you think believes he has all the answers, is arrogant towards his father, and now we don’t speak?



The answer….


The one who got life on a silver platter has no respect for me. The one who’s worked hard talks to me all the time. That one knows, when the time is right to buy a house or get into a business, his dad will be there for him. He has no expectations. He even hates to hear kids in his own generation whining so much.

 

[RobLJ]

I don't think there is a good answer to this (it all depends), But I will never forget my father borrowing 1500 and giving me his old car (an old Mazda that ran on squirrels) so I could go to grad school in Cali in 1980. It was in his original small town in Southern Oklahoma and Dad asked the banker if he needed to pledge anything as a security, and the banker said, "No. I've known you for 40 years."
He didn't have much and the parental units were dealing with my very ill twin, so I never forgot. I saved my salary as a TA the first 4 months and tried to pay him back over Christmas and was refused.
DW and I are talking about giving both sons 10k a year, more if the portfolio increases now that I'm about to take SS. Alternatively, we could help the youngest with a downpayment, if he decides whether to stay put in Reno or go somewhere else.
Both kids worked hard; the oldest (the winemaker) already was helped considerably by his wife's parents when they bought the house in Merced, so I'm not forgetting him either since he has 3 kids.

 

[Beachcomber]

Nothing gets the heart pumping and keyboard pounding more than the topic of entitlement.

I think if parents have the resources they should help their children graduate college (or technical school) with no debt. That’s such a gift.

Personally, I think baby boomers should use their wealth to pay down the SS and Medicare deficits, most of which are caused by those same boomers.

SS was paid for by the person who worked for a living. Medicare is used by many who pay zero, why should boomers pay for someone else's medical bills?

 

[Beachcomber]

Anyone with a net worth of 8 figures would be a one percenter, no? So how rare is this.
That said, times are different now with 2 parents working and stay at home moms a thing of the past. I would prefer the old days when one parent stayed home to raise the kids. I support my 2 stepsons with gifts of $24k annually (each) and their college was covered. They both have good jobs and careers, over $100k salaries, own homes, but also pay for previous divorces. They certainly appreciate it.

My parents helped me, and I helped them. What I find troubling is that money is really needed when you are just starting out, and when you are older, you have plenty of money but much less need for it. I have friends who even buy their kids homes for them. Perhaps it depends on the children.

 

[big-papa]

After reading a lot of the responses in this thread, I can say that generalizations only have, at most, a smidge of truth in them, generally speaking.

My parents weren't able to do much at all to help me financially, even when I was in college. I was one of 11 kids and the only one to finish college. There came a point in time where I was financially able to help them and I did that by buying a house for them. While modest, it was fairly new was the best place they ever lived in their entire lives and I, along with my siblings, were able to help them out in other ways. It just seemed like the right thing to do.

Fast forward and our only kiddo went to college and launched last year. Before college, because some universities required it for scholarship consideration, we filled out the FAFSA forms so she knew what our situation was, financially, at least 6 years ago. Even with a decent scholarship, we helped her out all through college. When she launched, I gave her my Honda Civic as a graduation present which is now in her name and which she is responsible for all expenses. We still have her on our mobile plan and on our statewide highway toll system account. All other expenses are 100% hers. We've had the discussion, and we have a plan to make her fully self-sufficient on those two as her salary rises over time.

Early on after college, she needed a little assistance and we handled it as an interest free loan which she paid back quickly. She has stated that she assumes that we won't help her out in any big way while we're still around and she has made the statement that she's not going to operate as if we're going to leave anything to her. She may be wrong on both of those accounts, but I'm not going to tell her, at least not for a while.

Cheers.

 

[marko]

I support my 2 stepsons with gifts of $24k annually (each) and their college was covered. They both have good jobs and careers, over $100k salaries, own homes, but also pay for previous divorces. They certainly appreciate it.

Sounds like your short-cutting a trust fund-kid situation by a generation or two.

 

[Luvtoride]

They will get it all in the end, so why wait (hopefully) 30 years when we can meaningfully impact their lives now….and not impact ours.

That is exactly the reason why we do it and believe in this approach. Will they really “need it” and appreciate it in 30 years (hopefully). It can impact their lives positively NOW while you can share in the enjoyment it brings!

 

[corn18]

That is exactly the reason why we do it and believe in this approach. Will they really “need it” and appreciate it in 30 years (hopefully). It can impact their lives positively NOW while you can share in the enjoyment it brings!

This is our view as well. They need it now, not in 25 years. So we help where it makes sense and hope for the best.

 

[marko]

This is our view as well. They need it now, not in 25 years. So we help where it makes sense and hope for the best.

Just make sure there's enough left over for yourselves should LTC and/or high inflation, poor market performance enter the picture!

As always in these discussions, the size of the portfolio and one's age makes a difference. Shelling out $20k a year [pick a number] on a $1MM portfolio at age 60 is different from doing so with a $10MM portfolio at age 75.

I worked with a guy who desperately wanted to retire but "had to keep working" because his daughter got divorced and he was now supporting two families.

 

[corn18]

Just make sure there's enough left over for yourselves should LTC and/or high inflation, poor market performance enter the picture!

As always in these discussions, the size of the portfolio and one's age makes a difference. Shelling out $20k a year [pick a number] on a $1MM portfolio at age 60 is different from doing so with a $10MM portfolio at age 75.

I worked with a guy who desperately wanted to retire but "had to keep working" because his daughter got divorced and he was now supporting two families.

Agree. I retired 3 years ago at 55. We are metering our help at this stage because of all the unknowns. Once we get to 70, my military COLA pension + SS covers all our expenses, so we will decide on a floor at that point for LTC and open up the purse strings to help our progeny.

 

[AZLife]

Inflation is the primary reason I have not passed on a bunch of cash to my younger kid.

We should also not forget the potential disruption of future AI adoption.

 

[marko]

Inflation is the primary reason I have not passed on a bunch of cash to my younger kid.

Past inflation shows that it will eat up about half of your buying power over 20 years.

 

[Gumby]

Past inflation shows that it will eat up about half of your buying power over 20 years.

At 3.6% average annual inflation, that is true. But that may be the reason to keep it in a well balanced portfolio earning an average of 7% rather than giving it to someone who will spend it right away.

 

[jdnd9091]

I was helped out a lot by my parents. My parents helped out my kids. I help out my kids a lot too. That being said, two things:

1. I love my kids. Making them "more comfortable" is not always the most loving thing to do for their long term well-being.

2. It's pretty well understood in my family that anyone feeling that entitled to someone else's money serious risks not receiving another dime until their attitude adjusted. I was raised to be thankful for what gifts I received, not resentful for gifts I didn't.

The assertion that the current economic situation is somehow a "new level" of harder than what previous generations have gone through seems ignorant of history and, quite frankly, ridiculous. I bet if they objectively compared their current situation with their parents' situation at a similar age, it would be the same or better.

We have always helped out our kids when we felt they could use it, and we have also helped out both of our parents. Most recently we put an extra 100k down to move my FIL into his own house instead of a condo (which will ultimately be somewhere for our youngest Daughter to live with her two kids). We also gave our oldest Daughter 100k towards her house as we are all moving into the same neighborhood. We haven't even told the kids this is an early inheritance. We don't have 10 million, but would rather help the kids now than later. This is our choice, and each person needs to make that choice for themselves. We were also raised by parents who lived through the great Depression, but my mom would give you her last dollar to help you out. I think she rubbed off on me. I would not want to be helping these kids out with that type of attitude though. My kids are always so grateful for anything, and expect nothing. [MOD EDIT]

 

[Luvtoride]

Jdnj, that is an awesome attitude and well stated for how some of us feel. We are away in Aruba right now with one of our daughters, SIL and 2 grandkids (the other set wasn’t off from school this week so couldn’t join us this time) and we are receiving that appreciation and excitement in more ways than money could buy (things).

 

[Closet_Gamer]

Well, that's the point of my post. I'm trying to decide if I want to do this or not and am asking for opinions on it.

So much depends on the person -- is this help or enablement -- and I think the structure of the help is critical.

A different situation that may be useful:

DW's sister just got divorced. Needed to happen and I wish she'd done it five years ago. She's doing a great job of driving her own life forward with upskilling, career development and now pulling the trigger on this very hard decision.

To protect her kids through this she bought a house in her current neighborhood which is honestly nicer neighborhood than she can afford on her own. Got herself in a position where she'd be living for her mortgage and would clearly benefit from some help. So we decided to help.

We could have put her on family welfare where we send her $1k/mo for a long time. Both emotionally and practically that's negative help. Every day she would get up feeling reliant on us and we would entangled with her choices.

Instead, we wrote one sizeable check for her to pay down/refi the mortgage to something more manageable. Now she will have the cash flow to make responsible decisions and continue lifting herself up.

To me that's a good, warm hand situation.

I think the same applies to kids both in terms of timing, rationale and structure.

(We do and will likely continue to pay for things like dinners and airline tickets to ensure we see each other. For example, we're paying for DDs flight home for Xmas while she is still in her hospital residency. I think those are apples-and-oranges to the original question.)

 

[robnplunder]

I left home at 17. Both parents were alcoholics and just barely put food on the table and paid the rent in a housing project we lived in. I paid for their funerals....that was my inheritance. Oh, college...I paid my own way for both degrees. My two younger sisters left home at about the same age I did and never went to college. One, I think, never made to through high school.

I'm helping my daughter out because she has a husband that is a few months from going on full medical disability.

I hear you. I've worked since I was 14, all of the money I've earned going into DF's entertainment fund (drinking, womanizing). I put myself through college, even sending home a small amount of money while in college. After college, I supported both of my parents financially (even after their divorce) for the next 40 years. I hardly complained and took it as my responsibility as a child. I blame my luck for having such parents and count my blessing b/c DS & DIL are financially independent. Last year, I tried to pay off DS's student loans and DIL convinced DS not to accept.

 

[robnplunder]

I figure I will help him retire in another 10 years' time when he is close to 50.

Ditto.

 

[Joseph]

This what happens when parents make their kids their "pals". It changes the dynamics and sets different expectations.

Mom's side of the family is quite wealthy and we were brought up with the story of poor cousin Jimmy who died broke because he was irrevocably disinherited for asking for a head start on his inheritance.

"Don’t even think of asking for money!"

I get annoyed when my stepdaughter mentions her “ inheritance “. Or a loan from the “ family bank”
We aren’t even retired yet and although our financial future looks solid we are by no means well off and I realize a couple adverse advents can throw a monkey wrench into that retirement, no matter how many contingencies I plan for.
My father told me that I won’t ever have to worry about taking care of them financially, that’s good enough for me ( him and mom both have primo LTC policies from the 1990). We used approximately 400k of that benefit in nursing home b4 passing and mom has around 600k benefit if she enters one)
I just tell my kid expect no inheritance at all, hopefully she doesn’t need to care for us
She has paid off any family loans in timely and in full.
We did pay for 100% of her college and has her in a used vehicle once she learned to drive and until she had a full time job.

 

[Joseph]

My biggest adjustment once I moved out of my parents house was I change in lifestyle. We were definitely upper middle class with what seemed like an endless stream of cash ( and it actually almost was. My dad was basically a street guy for NYC who moved us to upstate ny and had a very profitable numbers/ gambling racket for 60 yrs). My adjustment was living week to week once I moved out ( dad always told me straight up, don’t expect this lifestyle when you’re on your own). I eventually loved the lifestyle because I enjoyed living by my own rules much more than material stuff. Parent would give me cash infusions when they saw fit but I never had the expectation or asked. I also never took on any serious debt except some CC debt that I paid off quickly on my own.
Even now at 60 I know I most likely will get a bit of inheritance ( it’s in a irrevocable family trust) but I don’t factor it in my future net worth ( got to admit that’s not as easy as it sounds )
Definitely understand thinking about potential inheritance but if I get zero I will get over it in a day because it’s not my money

 

[Lewis Clark]

I never need, nor asked for, financial help from my parents. But I did help my parents the one time they asked.

They were getting ready to do a home remodel and needed cash. I had some money in a money market fund (MMF) as the time that I did not need to spend in the foreseeable future. My parents asked if they could borrow the money from me, and they paid me a bit more interest than I would have received from the MMF. That still cost them less than they would have paid if they had taken out a normal loan.

They did pay me back in full ahead of schedule.

 

[athena53]

It took me awhile to remember this example in my own family.

My sister has 3 daughters. Each, in her own way, ended up needing bailouts.

Daughter #1 had her head together and never gave them any trouble but got a Psych degree, found she couldn't make a decent income at it, and they put her through nursing school. They also paid off her credit cards at least once and paid a hefty vet bill when her dog got sick.

Daughter #2 left home on her 17th birthday to move in with her boyfriend and his mother. It broke my sister's heart but they kept her on their medical insurance, paid for her eventual wedding and the marriage broke up a year later. No kids. They paid her way through college to get her a teaching degree.

Daughter #3 went off the deep end- drugs, skipping school, getting in a wreck, then having a baby at age 19 with a Baby Daddy my sister described as "a sweet little guy with the brains of a paramecium". That straightened her out somewhat although she lived with Daughter #2 till daughter #2 got engaged to her second husband and then moved in with DS and DBIL. (She moved out on Baby Daddy when his drug-addicted mother moved in with them. They paid HER way through college and she became a radiology tech, finally using her very good brain.

Unexpectedly good endings. All 3 in stable marriages to good men. Daughters #1 and #3 still working outside the home; Daughter #3 has two kids with her husband and he adopted daughter from previous relationship. Daughter #3 got advanced training and is an interventional radiologist. Daughter #2 married a graduate of The Citadel who would give you the shirt off his back and he's done well in the military. They have 2 daughters and she teaches Sunday School.

A long road and it took a lot of money; DS and DBIL are enjoying a comfortable retirement so they didn't jeopardize their own futures. I don't know if I could have been that patient.

 

[ut2sua]

Let's say the parents in the article gift $100K, $200K, or $500K to the person in the article, I would predict that after a relatively short time, that OP would end up where they were before the gift was given financially. Below were the indicators allowing me to make the prediction:
1- Two decades of work with no significant saving (none mentioned, I believe).
2- $20K cc debt appeared to indicate a LAYM (vs LBYM) life style.
3- The mind set that there should be more $ coming from the parents, so why need to save (?)
#1 and #2 could be the result of some recent hardship (medical issues etc.) that were not mentioned. #3 seems to be the current thinking of the person.

We happen to believe in helping our kids early, but if any of our kid have the above mind set, we would think differently. Fortunately for us, our kids seem to not have those.
ps: I am guilty of not reading thru the whole thread