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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’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 QuinnsCommentary.net. 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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If you believe in “pay it forward,” then why not go forward beyond your family? Besides what I do for my children annually (mostly by funding their Roth IRAs), and having paid for their higher education, I will be leaving them about 25% of my current estate, which is enough to provide more generational education funds, travel, perhaps retiring a few yrs earlier, and general margin of comfort. The rest will go to well researched charities that I support now. They need it more.
This doesn’t have to be a one-and-done decision. Right now we have our estate plan set up where our daughter would receive her inheritance in increments over each decade. Our goals is that she’ll have some security for her own old age.
But in the coming years, we may do some more real-time assistance. For example, we will likely buy a modest home as an investment that she can live in. But we need to see that she’s got stable employment and is committed to the location she’s in before taking this step. Or, if she has children, we’d probably help out more while we’re still alive than just leave it all as an inheritance.
We have no pension, just SS, and we have more than enough money to live on. Our 4 kids are in their 30’s and 40’s. Three of them have children of their own, and at this point in their lives, any money we give them will help. Why wait until they are in their 50’s or older to give them money? It will be more beneficial now. They are very responsible, and they and their spouses all work. We gave them down payments for their homes, they have no college debt, and even bought them cars over many years. They will inherit 7 figures each when we are gone, and we are not worried about what they do with it. We are lucky that we have enough to take care of ourselves so they will not have to. My wife and I didn’t have this luxury when we were younger, working and raising 4 kids. Financial help would have been a positive blessing. Also, my mother was divorced and raised 3 young kids alone. We lived in a housing project and relied on welfare (AFDC) to survive. Financial assistance would have helped.
If i don’t see my children responsible with their own money, I’ll have doubts about giving them ours. What are your opinions about kids who aren’t smart with money getting your often hard earned money?
If they get your’ hard earned’ money after you are dead, why do you care?
after I’m dead then no care at all. thinking about while I am alive.
Good point, I’d be cautious, but also concerned about applying our standards to them.
When we gave our children part of my inheritance we did so with no strings attached. We were fortunate that one paid off her school loans, and the other used it for a down payment for his first house in 2020, so both before house prices became really silly, and their interest rate is <4%!
Richard…you and I are in agreement. My wife however, has other thoughts.
Let me explain. Like you and Connie, my wife and I are quite comfortable. We will enjoy a minimum of $100K annually, adjusted for inflation, for the rest of our lives. We will not need to draw from our portfolio, except to travel or give our kids gifts. I retired later in life, at 73 and my spouse is 69. I maxed out my Social Security, to insure her income after I am gone, we have no mortgage and zero debt.
My wife doesn’t want our children to know our finances. She also wants to give them their legacy, when we are gone. I disagree. My eldest daughter is our executrix, and she has a general idea of our situation. In addition, I have all our legal docs in place, as well as a detailed letter of instruction to my wife, should I predecease her.
I have a son who doesn’t live a life I would recommend, but he remains my son. He is a veteran and a college grad, but employment is not his primary life goal. His significant other basically covers their living expenses. Why she does is a mystery to me. I hesitate to give him a larger gift presently, as I feel he would use it to continue his “life of doing nothing.” My daughter is a different story. While her liberal, socially, politically correct attitudes irritate me at times, she has worked hard and done well. We love her spouse and I feel they would use a gift to their good fortune. Neither of my children have kids and I do not expect that to change, as he is 40 and she is 46.
I intend to give each of them $50,000 over the next 5 years. I am debating whether to do it as a one time gift, or $10,000 a year for 5 years. Since I am only in my first year of retirement, I am waiting until next year to start the process, after having a year if retirement and spending under my belt. If it works like I expect it too, and markets remain positive, I hope to do the gift giving more than once.
In Bill Perkins’ book, “Die With Zero,” he outlines his feelings on giving while you are still living in Chapter Five. It struck cord with me, as did your article. Someone on HD also phrased it something like “Giving with a warm heart vs a cold hand.”
Starting next week, we are beginning our travel. Florida in April, Branson MO in May, OK in June, Western PA in July, NC Beaches for 6 weeks in September October. My wife wants to visit all 50 states so that will be a start. We are also looking to see if there is somewhere else we would like to live in retirement. My wife is a beach person and I am more of a mountain, lake person.
So while I want give my children some money while we are living, we will still enjoy our own retirement. I don’t see them as mutually exclusive. I will have to continue to convince my wife that it’s OK, and time will tell if I succeed. But in 50 years of marriage, I have usually been ablest convince her to see the bigger picture.
Again, I enjoy your articles and comments.
I wonder why your wife doesn’t want to give the kids money until she is gone. Is this because she thinks she may need it? Does she not get pleasure from seeing them get this gift of money? Also, why are you unhappy with political correctness? If it is correct, what’s wrong with that?
“We are also looking to see if there is somewhere else we would like to live in retirement. My wife is a beach person and I am more of a mountain, lake person.”
If you don’t mind the cold of winter (although they are getting warmer, no major storms in the past five years), you might consider southern NH. We live 1/2 hour from Hampton Beach, 1 1/2 hours from the mountains, one hour to the lakes, and about one hour from Boston and Logan Airport, as well as two regional airports.
And a bonus… no income taxes!
As an executor and trustee for my parents in two different jurisdictions, I would recommend having an honest talk about your intentions and a general overview of your finances/estate…especially your daughter who’ll become the executor. Inheritances are fraught with a lot of emotions and bring up all the family dynamics and you wouldn’t want any drama to be your final legacy. Leaving anything less than equal shares among the children, irregardless of their financial situation will only cause strife and resentment.
One of my siblings, though professionally successful (mid-six figures), is a spendthrift and married a woman with serious liabilities PLUS the same spendthrift tendencies. He blows through his money and was secretly supported by my parents six figures every year. When they passed, I was named trustee for his share, and to this day he will never believe that is what our parents intended. Needless to say, we do not speak any more, and there was over a year of wasted attorney’s fees while he processed his emotions about what our parents planned. I completely relate to your not wanting to condone your son’s life of avoiding work, but if you are truly hesistant to give him an equal share, or plan to attach conditions, it’s best that everyone knows of your plans. Instead, I am now trying to execute what my parents couldn’t or was to afraid to do or say when they were alive, as they couldn’t control or instill any financial discipline or responsibility.
As for your daughter, even if she is well off and doesn’t need the inheritance, it is helpful to know roughly the responsibilities that lay ahead and also a rough ballpark to guide in her own financial planning. I was 50 when the inheritance came in, and while I was financially well off, I was not prepared for the level of wealth that came to me — how to use it, how much to invest. It took me a full 3 years to grow into an understanding of the level of wealth…the opportunities and the limits of wealth. As you, Bill Perkins and others have said, it’s better to give while alive and in my case, it would have opened up life-altering options had I received or at least known what was going to come my way.
I find myself wondering what my parents would have wanted, but the only thing I have to go on is the trust documents and some casual comments over the years. It would have been amazing to have had a discussion and ask them questions about their intentions.
Well said!
As I have written before we inherited money after my parents passing and we gave our two children a fairly substantial final Christmas gift from my parents.
I said to our financial advisor that this money was unexpected and I knew he would say, and he did, that we should keep the money as our children had their entire careers to save for retirement.
My response was if I couldn’t live off of what my wife and I had saved plus the balance of the inheritance there was something wrong with us.
One year later with growth of our portfolio our liquid assets were back to the level prior to the gifts, and in the interim their early adult lives were changed forever.
PS they still have to work!
“So while I want give my children some money while we are living, we will still enjoy our own retirement. “
This is a correct statement. With the skyrocketing cost of long-term care, we need someone to wipe our derriere in our sick bed (pardon my “french”). And it’s a good chance that “someone” may/may not be our children.
Our children don’t know our finances, but they know our general status. We have done the 50 states plus 45 countries. None of my business, but based on what you have said, I’m not sure I would come to the same conclusion as you have regarding giving money.
Sounds like you have a lot of plans to enjoy your future years together. I’d hedge my bet for a few years.
PS better not show this to your wife. 🫢
We enjoy helping out our kids NOW. Both sets of our parents did that with all of us.
We’re blessed enough to pretty much be able to buy anything we want. And give money to our favorite charities. And help out the kids. And have some money left over at the end of the month.
What we don’t want is:
Debt
Responsibility for more ‘stuff’
Being a burden on our children OR
anyone else
Obviously others can hold different opinions and still be right.
I like your general approach to this topic. My wife and I are ten years younger than you. Our lifestyle expenses are relatively modest in relation to the size of our nest egg, and the only major drain we might face would be if one or both of us need long term care in the future.
I don’t think much about who does or does not “deserve” any gifts from us. I think more along the lines that money is a tool, and I enjoy using it efficiently, in a way that makes sense to us. That includes both spending and giving it away. I do think that periodic gifts to our two adult children can be very useful for them, now that they are in their 40s with their own families. I consider these monetary gifts and our six “529-plan” accounts for the grandkids as investments in their futures. And, we support various charities primarily using our donor advised fund, and when RMDs start in two years, QCDs.
Great attitude Jack. I am on board with it. No Grandkids so no 529s, but the rest of it is a mirror to me.
It’s like I’m looking in a mirror- almost. Except we have four children and 11 529 plans.
Both the article and the comments are very thoughtful. My parents loved helping my brother and I as well as our kids while they were alive, and also left a modest legacy. Now keeping with that tradition, and although my kids don’t need our money, they’re gonna get some of it whether they like it or not.
👍 tough love eh?
I have two comments.
We are about the same age as you. 20-25 years ago I began helping my parents to make sure they had plans in order. I encouraged them to be a bit more liberal in their spending and charitable giving. I said that they had raised 4 kids who were all doing well and had no need for an inheritance. My Dad said, “Proverbs says that a good man remembers the 3rd and 4th generation.” Who was I to dispute the “good book”?
As farmers, we had purchased the family farm from ur parents. When I saw their finances, I realized that they could have forgiven all or part of the mortgage. We are glad they did not. As someone who can become obsessed with debt, very few things in our financial lives gave us more satisfaction than making the last mortgage payment. That satisfaction was priceless.
Sure it was priceless? I understand your point, but what other good could you have done for your own future or for your children if there had not been those mortgage payments?
Hi, this is Chris, thoughtful article. We are younger than you and Connie. We have been helped by modest yearly gifts from family members for several years. We are grateful for them. They helped us get our mortgage paid off. A modest amount can do a lot if you are intentional. We are new retirees and hope to be able to do the same as our family members when we are their age. Right now, we feel the important thing is to not be a financial burden to our children as we age, so don’t feel it is the right time to start giving yet.
Absolutely agree. Removing the risk of being a burden is top of the list for me too.
Nowadays, you’re likely to be closing in on retirement by the time you inherit. I did not inherit money until after I retired.
So if you leave money, you’re probably not going to make you heirs idle – they already are. It can give a nice boost to retirement.
Interesting thought, but not always the case. I was in my mid-50’s when my siblings (both younger) and I each received a modest inheritance. While my sister and I were able to use ours to reinforce our retirement savings, it was a lifeline for my perennially underemployed and health-challenged brother. It was a necessity for him. My parents didn’t know that would be the case when they created the terms of their legacies.
Good point, all our children are near of just over age 50.
My strong feelings on this topic concern the actions of those who inherit wealth. They’ve been given an opportunity to experience the safety and comfort that money brings. I think it’s the height of selfishness to keep it all for themselves, rather than passing it on to future generations. Much of money behavior seems to be innate, but parents who plan to leave an inheritance should also work hard to instill the same idea in their children.