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Jonathan asked what advice I give my children related to their retirement.
Our children are ages 54, 53, 50 and 49.
I don’t give our children advice about retirement planning or money and I don’t expect to ever be in a position to do so. But even if I was, giving any advice requires detailed knowledge of all the related facts which I don’t have. I will do my best to answer a question if asked.
We all refer to our children, but when children are married there is a very different dynamic. Parents are unlikely to have influence over spouses, nor should they try in my opinion. Getting involved can lead to disaster.
Our daughter is married to a Wall Street executive who advises multi-millionaires on their investments. No chance I’m going suggest what she should do with her old IRA.
Are our children saving for retirement? Two yes, two I have no idea – but have high hopes.
Our children grew up in a house where there was daily discussion about pensions, saving, investing, health insurance, life insurance, etc. That was what my job was about and I fear I too often brought my work home. I know I talked a lot about the many issues I faced and the problems workers brought to me. The children heard a lot of horror stories.
I can only hope they picked up a grain of wisdom over the years.
None of our children have pensions, two work two jobs because they were faced with health and finically crises when their spouse became seriously ill and unable to work.
I also hope our children have learned something about managing money and debt from the examples Connie and I set. They don’t know the specifics of our finances, but they know how we live and that when we all go out to dinner “Pa” often picks up the tab. They also know we share a portion of our annual RMD with them. I told them that they may have to worry about us in our old age – that train has left the station – really old, old age, but it won’t be about money.
The other day we were driving by a country club and I mentioned how I wish we could join one. Connie said, “ you could, if you weren’t so determined to leave money to your children.” Yes, guilty as charged.
Should I drop a couple of hundred thousand dollars on a club membership and incur hundreds of dollars more in monthly expenses or do we give our children a better start in their retirement? That’s easy, this morning I am playing golf at the local county course for $45.00.
When working I got to play the most exclusive courses in the Northeast – as a guest. I once played Trump National with Trump’s caddy whom I asked about Trump’s golf game – I’ll tell you what he said after the election.
Our children have had every opportunity we could provide. Do we always agree with how they spend money? That’s irrelevant, none of our business. Do they do what is necessary for their current financial security, I would say yes and that’s why we provide a little help from time to time.
Do Connie and I deny ourselves or sacrifice any part of our retirement for our children? No.
Hypothetically if I were to give advice, it would surely include what I often state here regarding Social Security, income replacement, spreadsheets and budgeting, debt, income streams and annuities and survivor benefits.
But I’m not sticking my neck out today.
I had seen too many cases where young folks had graduated from college and upon getting their first job proceeded to buy new cars/move into expensive apts/travel/upgrade the lifestyle etc and not do the right things financially. So I cut a deal with my 2 kids. I would pay for their educations (it was a struggle) provided they agreed to the following … For the first 3 years after they got their “real jobs” they had to show me the statements indicating they had signed up for their company 401K and were fully funding it. And I strongly suggested they live at home for a year and continue to drive their “college cars”. They both did so and were able to save nice large down payments on their first homes.My son to this day updates me on his retirement savings and has thanked me many times for getting him started saving early and preaches the “time value of money”
When my kids were middle school and high school age, they had brokerage accounts (joint with me) to invest in stocks and money market funds. They also had summer jobs and invested their money. They learned about the stock market and the mechanics of buying and selling. Once they got to college, I showed them how their 529 plans worked to pay their bills. Summer jobs put more money in their brokerage accounts. When they graduated, they signed up for their 401k’s and I guided them through their option’s. I gifted them Jonathan’s book and encouraged them to read it. When they got married, I made sure they got my name off the accounts and encouraged them to have joint accounts with their spouses. When the grandkids came along, my wife and I funded the grandkids 529’s with enough to pay for their college in a good state school. I will respond to questions my kids ask about investments. They ask a few questions, but not many. They have seen our will but don’t have a view of our financials. That will come in the next year or two. Will we share more cash with them? My wife and I will have to see what these next few years bring. We are just starting our retirement so things are still fluid.
My thinking is that there’s no way to know if children understand anything about personal finance if there’s no conversation.
We also worry if the conversation starts that they’ll ask questions we don’t want to answer.
My journey, a first step is requiring my child to complete an online personal finance course which we’ll discuss as it’s completed. We’ll see where it goes from there.