Good for Them?

Richard Quinn

BETWEEN INVESTMENTS and our two homes, Connie and I have accumulated a respectable net worth. I don’t expect we’ll need those assets to live on. What will happen to our money?

  • It’ll continue to grow, I hope. I want to be sure there’s sufficient wealth if, say, we need to pay for long-term care.
  • I want the income generated by our investments to be available to Connie, should I predecease her. She’ll also receive Social Security and survivor benefits from my pension.
  • We currently give modest amounts from my annual IRA required minimum distributions to our children.
  • We want to leave as much as possible as a legacy to our children.

It’s that last point that can be controversial. Is leaving a significant inheritance to children or grandchildren a valid retirement-planning goal? I say yes. In fact, if you can afford it, I view it as an obligation.

Warren Buffett once wrote in a shareholder letter that he recommends that super-wealthy families “leave the children enough so that they can do anything but not enough that they can do nothing.” He’s giving away 99% of his money to charity.

For Connie and me, we’re not talking billions or even many millions. But we have more than most folks accumulate over their lifetime.

I’ve posed the legacy question to several people, and opinions vary. Some jump to the conclusion that retirees wanting to leave behind a healthy inheritance are depriving themselves. I don’t agree. But I also wouldn’t suggest leaving a financial legacy if it means that retirees shortchange themselves.

Several people I spoke to said they’d taught their children to be responsible and to support themselves, and they don’t “deserve” anything from their parents. I think that misses the point. It’s not a matter of deserving. I wouldn’t bail out a lazy loafer or spendthrift. But that doesn’t mean responsible children don’t deserve assistance or perhaps a better start on their retirement savings than I had.

Generational wealth creates dependence and entitlement, I was told. Yeah, maybe for the Vanderbilts or others at the 0.1% level. But I disagree when it comes to us mere mortals.

A woman told me she’d be disappointed if her parents left her a large legacy. “They didn’t start out rich. They earned that money themselves. Now, their kids and grandkids have plenty, and they should be enjoying life to the fullest.”

There it is again: the idea that leaving a legacy and enjoying life are mutually exclusive. I wonder if this woman has considered that, when parents help their children, it might boost the happiness of the parents.

There’s the notion that, because the parents paid for college and the children are now doing well, it’s okay for the parents to spend down to zero. Some even claim that teaching them to stand on their own is itself a legacy, while “propping them up” is a disservice and teaches laziness and entitlement.

Meanwhile, others told me that they’d raised their children to work and to support themselves, and also to understand the importance of saving and investing. But they don’t view that as incompatible with leaving them financially secure. One man said that he couldn’t relate to the philosophy that “it’s good for them” not to receive an inheritance.

My bottom line: provide adequately for yourself and your spouse. Enjoy retirement as you define it, but also pay it forward—by pondering how your financial success can benefit others.

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

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