About the Kids

SHOULD LEAVING money to our children be a formal part of our financial strategy—or should we focus on our own wants and needs, and let the chips fall where they may?

My wife and I have four children ages 45 to 50. They’re all married and, between them, have 13 children ages five to 17. They’re also all college graduates, with almost the entire cost paid by my wife and me. Three have master’s degrees. Arguably, we did our job when it comes to our children. They were given every opportunity.

Since graduating college, however, all four have had more employers than I did in 50 years. None has a pension. Only two have a 401(k), one with the employer match suspended. Raises have been scarce. One son works on commission.

Like many Americans, they’re caught in the crunch of saving for both their children’s college and their own retirement. They’ll have kids in college—some just starting college—when they reach retirement age. By contrast, I was age 55 when my youngest graduated college.

Here I sit with a pension, Social Security, no debt and investments I don’t plan to spend. Instead, those investments will be liquidated only if I predecease my wife and she needs the money or if there’s an extreme emergency, such as long-term-care expenses in excess of what our insurance will cover.

I’ve made it clear in the past that I’m big on reasonable frugality, living within your means, personal responsibility and so on. And yet I very much want to—and am planning to—leave as much money to my children as possible.

Is there any contradiction between my advocacy of personal responsibility and my determination to help my kids?  There would be if I concluded my kids weren’t responsible individuals. But that isn’t the case. I don’t expect them to be exactly like me and I hesitate to hold them to my somewhat unique standards.

What if they violate my financial philosophy with the money we bequeath? I can’t do anything about that. But in any case, they won’t be receiving enough to become beach bums.

Admittedly, I occasionally cringe at how they spend money. It just isn’t what I would do. But they aren’t spendthrifts or, as far as I know, drowning in consumer debt. I have no reason to believe they’re financially irresponsible. I do know paying the bills, while saving for college and retirement, is a challenge for them.

My views on money were shaped by my parents, who grew up during the Depression of the 1930s. My parents were frugal, had no investments of any kind and what money they had was in a checking account. In retirement, they lived almost solely on Social Security.

My children grew up in a very different environment and society—one that’s more affluent and more consumption-oriented. That’s shaped their financial behavior. The fact that they’re married to people who also grew up in different environments and family structures also affects their money-related behavior. So be it.

Unless there comes a time when I see extreme irresponsibility, my goal of leaving them as much as possible will not change. What if I see irresponsibility in one or more of my children? I’ll leave their share of the inheritance to the grandchildren instead.

On a retirement planning forum, I asked, “Should financial planning include a strategy to help the kids and grandkids and, if so, how?” I wanted to know what people thought about having a well-defined strategy for bequeathing a significant sum, as opposed to leaving it to chance or aiming to spend the money yourself. I quickly learned how personal the issue was. Here’s a sampling of the comments I received:

• “We gave all of our children a solid foundation and education opportunities. We’re helping them now as we choose to. They’re all doing well. We don’t feel the need to pass savings on to them. It’s not part of our goal.”
• “I still remember that my grandmother left each of us grandkids $1,000 when she died. I was eight. I’m now 49. It just stuck with me that she thought of us and wanted to help us with college one day. I want to do the same for my kids and grandkids.”
• “We set our two sons up for success in the way we raised them. We taught them that hard work will pay off. They both got an education in a field that pays well and now my youngest is 26 and earns what I make at 56 and our oldest son (30) earns more money than my wife and I combined…. No, we are not intentionally leaving a monetary legacy, but of course there should be a sizable sum left once we both pass.”
• “I plan on enjoying my retirement and, if there’s anything left, then my heirs will get something, but it’s not a priority. It’s their responsibility to live within their means and save for their own retirement.”
• “My parents have made it a huge goal in life to leave a big inheritance to their children. Me? I have a disabled son who will always need a little help, so I factor that into my savings goals, but I also plan to enjoy my retirement and travel as much as possible. If there is anything left for the kids, well, then they’ll be lucky!”
• “I am watching my parents (age 60) spend themselves into the ground and cannot stop them. I am doing the right things (41, saving, no debt, etc.) and am trying to brace my household for supporting them within 10 years.”
• “Our kids are still in school and start leaving next year for the military and college. We have plans to retire when the last one leaves. College is saved for and a few weddings are in our plan. My kids will have a firm foundation to build on and I don’t feel obligated to do anything more for them beyond helping them learn how to successfully plan their own financial future.”
• “We want to leave the kids as much as we can. We paid the 20% down payment on a house for each of them. We also told them that we’d buy them their first new car. Our initial goal was to leave them at least $1 million each, and I’m sure we will leave them more than that.”
• “If you die with an account balance, you, by definition, saved too much for retirement.”

The broad consensus among commenters: We aren’t planning to leave a legacy, but if there’s money left, that’s okay. In response to my question, a number of folks said they preferred to assist their adult children while they’re still alive:

• “I’d rather help my children and grandchildren out while they really need it and while I am living rather than leaving a lot in savings.”
• “Have you considered spending some of your money on experiences while you are still alive? Example would be a family vacation to an all-inclusive resort in the Caribbean. My parents did that for us and it created some great memories for all of us.”
• “Why leave it to them when you die when you can give it to them while you’re living and watch them enjoy it?”

Like the commenters above, no doubt readers of this article will have different points of view. I suspect some will see this as a “first world problem,” because they’re struggling to amass enough for their own retirement. For me, I see it as an obligation owed to my family. Yes, my wife and I are fortunate to be able to help our kids. But I can’t think of many better ways to use our money.

Richard Quinn blogs at QuinnsCommentary.com. Before retiring in 2010, he was a compensation and benefits executive. Follow Dick on Twitter @QuinnsComments and check out his earlier articles.

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