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Ran across this. Not HD content or indeed probably the average HDer being discussed but interesting on the general problems faced by over 60s
https://sherwood.news/personal-finance/boomers-money-secrets-millennial-gen-z-troubles/
I’ve always thought inheritance would eventually be the only way many of their grandkids would achieve real financial security but it seems some may be passing on a millstone in legacy.
My wife and I are all for the early inheritance camp of “doing for our kids”, but we do it in the way of helping (or all out providing) for experiences for our daughters’ families. We understand how difficult it is to raise kids with the basic necessities that our grandkids (ages 2-13) have.
We provide support via paying for summer camps for our grandkids so that they can have great experiences/ memories, while their parents continue to work during these non-school times of the year.
We sent our daughters to summer sleep away camp and it was a great experience that they always remember and made them much more independent (the younger ones go to day camp programs now, but will hopefully go to sleep away camp when they get older).
We also take our family on a nice vacation each year during one of the school breaks I.e. last year a cruise over Christmas, and this coming President’s week, a trip to Mexico. We know that these extra expenses are beyond the means of young working families and it gives us the added benefit of spending extended time with our grandkids.
With all that said, we don’t deny ourselves the benefits of our hard work throughout our lives and our view on actual inheritance and passing on of wealth to our family eventually is…”If we don’t fly first class, our kids will”. LOL
Referring to the title is this article, this is what I’ve suggested to my children and grandchildren :
1) Start investing when you get your very first paycheck into a Roth IRA
2) Invest in a broadly diversified low cost index fund
3) If you start investing a certain percentage of your income, try to increase that percentage 1% per year
4) Never Stop
Exactly what I have told them all. My grandchildren are too young to act on their own, but I have encouraged my children to set up brokerage accounts for them to get them started. I have encouraged the teenagers to always save something.
One tip you can do for your kids when they’re young, is freeze their credit. Identity theft being what it is these days, young people with SSNs are vulnerable to identity theft. This avoids a nasty surprise when they begin applying for credit in the future.
We are boomers who have never and still do not discuss the details of our finances with our adult daughters or, for that matter, with anyone else except our financial advisor and the CPA who prepares our tax returns.
Frankly, we have not viewed our finances as any of our daughters’ concern. When, as a teen, our younger daughter would ask if we could afford something, my wife’s standard answer was “yes, Dad earns a good living.” When we started making annual legacy gifts to our daughters last year – effectively, early distributions of inheritable assets – our younger daughter asked me if the gift affected our “retirement security.” I just smiled, and, to mimic Robbie Robertson in The Weight, “no” was all I said. Our older daughter, in contrast, has no curiosity about our finances. Both handles their own family finances and are doing well.
Eventually we will need to share information about our finances with our daughters as we get older and may need help with the administrative details. But that should be far off in the future. And we are doing legacy planning now and seeking to simplify our accounts and positions as feasible.
Not sharing the details of our financial life with our daughters may not be any way to run a railroad, per Mr. Ben Rodriguez’s comment, but it works for us and them now.
Interesting. And, of course a “you do you” decision so I think it’s fine. But, if I may ask what is your motivation? You want your kids to make their own way without too much expectation about the pot of gold? Or you distrust that that it might change your relationship? Or something else?
I’m sure your kids if they are switched on adults probably have a fair idea based on what your jobs were, your house, cars, lifestyle etc. And are probably grateful if you are front loading inheritance.
We want them to make their own way.
Neither my wife nor I came from families in which our respective parents divulged a lot about their finances or educated us about personal finance. Another reason for our attitude is family history.
Our daughters know that we are affluent, but do not know any details.
and they are appreciative of the front-loaded inheritance distributions and our reasons for them.
That’s an interesting read, but I’m not sure it’s just a boomer thing. It reminds me of the older people who contend that the kids today have a lousy work ethic, (not true IMO). Also, if a parent’s life is a financial train wreck, how often is that behavior passed on to the kids? Still, the article offered worthwhile suggestions to deal with the problem when it does arise.
Boomer here. My 40 something children are not interested in personal finance at all, but every year I made them look at a spreadsheet listing all of our assets and where they are located. If left to their own devices, they would do nothing about their own retirement planning, though they do have pensions. My wife and I fully fund their Roth IRA (Vanguard target fund) each year to make sure it gets done. (Too important to let them forget). I made them designate me as an agent on their Roth accounts so I can see the account, make changes and contribute. Maybe they will one day appreciate it.
That goes beyond my standards for helping. I am all for helping as needed and do and we save for the grandkids, but you are talking about adults, apparently irresponsible adults and it seems to me you are enabling them.
I sure hope your retirement finances are above and beyond any possible needs you may have.
I wouldn’t judge anyone. Busy lives, demanding jobs their own young families sopping up cash. Everyone has only so much bandwidth and, for many, things 20+ years in the future are what gives.
In such circumstances, assuming it’s not a hardship for BM, sounds a great way to be passing funds on early. He might not get to see kids enjoying the money but there will be peace of mind that he’s set them up with the best tax efficient foundation for later life.
We are able to do this easily for our children and I prefer giving them this gift rather than consumer stuff. We live a frugal life and have more than enough for ourselves. This is a bit of an early inheritance. I try to share a little financial advice in the annual meeting.
It’s not the money that shocks me, we give our children money every year too, what I find risky is managing their lives, taking over responsibility they should accept for their future retirement.
If they are as clueless money wise as you state, they may very well be irresponsible and blow the money you give them.
How do they feel about you requiring them to make you agent on their retirement accounts? You are treating them like six year olds.
Sorry, but I think this is a big mistake.
Surely it’s not taking over all their financial affairs it’s back filling on a single area where a) they may not have cash flow to fill and b) may not appreciate yet how important it is ( as in a $ is not a $ dependent on its tax wrapper).
If my dad had done the same when I was 30 or even bent my arm to kick in myself I’d have hugely appreciated it now for sure. As it was he didn’t because he was newly retired himself on a final salary pension and not in any way a sophisticated investor.
I learnt what I learnt myself when I realised ( fortunately with enough runway) where I needed to get to for my own retirement goals. People reach the point of enlightenment at different times in their lives. I would say it has very little to do with whether they are a functioning adult in other respects.
Thanks for the support. We don’t meddle in their financial lives. But I strongly suggest to them that a Roth IRA invested in a low-cost index fund over time is the best opportunity for working folks. I will gladly do it until they reach financial enlightenment. It’s like training wheels.
Countless people give financial advisors much more freedom over how their money is allocated in their retirement accounts. At least Bill’s children can be confident that he is acting in their best interests.
Sounds like a good idea, Bill. My late husband did something similar, and made sure that the adult child who had the most need for life insurance took out a policy when he was fairly young (late 30’s). As you repeat some of the same advice, it will sink in and have more meaning when necessary. I’m sure they will be grateful, or already are.
Interesting article.
The author writes,”The shock of potentially losing the house meant my siblings and I lost the safety net of having a landing pad should we experience financial emergencies ourselves. Getting financial help to put a down payment on a starter home was out of the question. While the very notion seems privileged, a whopping 36% of Gen Z and millennials plan on buying a home with a cash gift from a family member, a 2024 Redfin survey found.”
My shock is that these millennials’ plans seem to be to rely on their parents for financial assistance.
Never once did we consider that our parents would be a cash cow for our wedding (we never asked, they never offered). Immediately before we got married we both quit good paying jobs so I could go to graduate school with 5K in savings, and an offer of 6K annually for working as an athletic trainer for a local high school.
It never even entered our minds to ask for money from our parents for a down payment on our first home.
It appears we have raised a generation of non self sufficient young adults.
Oh, yeah we survived by only taking out $20 at a time from the ATM, and limiting our expenses. A big night out was all the spaghetti you could eat for $5 each at a local family style Italian restaurant.
Both the link to the Redfin survey in the sherwood.news article referenced by bbbobbins in the start of this thread and in your comment are incorrect. The correct link is
https://investors.redfin.com/news-events/press-releases/detail/1071/nepo-homebuyers-more-than-one-third-of-gen-z-and
What both of the Redfin articles highlight is the fact that many first time buyers are being priced out of the market by the combination of higher mortgage rates and higher prices. The correct article noted that the percent of buyers relying on help from their parents has increased from 18% in 2019 to 23% in 2023 followed by an increase to 36% in 2024. Home purchases by this age group are down significantly which indicates that fewer people are able to purchase homes without family help.
Are you sure it’s not just because they aren’t blowing it all on avocado toast and the TikToks? 😉
I remember my grandma sat in the lobby at the bank when my mom and dad bought their house, in case they didn’t have enough for the closing costs. This was in the late ‘60s, not sure they had the HUD forms like they do now? I remember when my folks paid off their house and feeling the way the young people feel in the article quote. I feel the same way now about our house being paid off. Maybe our family is out of the norm, but we have tried to help each succeeding generation get a foothold in starting out, even if it is just a few thousand dollars to help with closing costs on a first home or car. It is just what families do. Chris
Yet boomers’ wealth has been delivered on the back of huge real estate price growth, putting the same sort of houses out of reach of 20 and 30 somethings.
All the while with reduced job security and boom and bust pay cycles. Nevermind pension provision looking further into the future for Gen Zers
Hence the parental helping hand becoming more of a modern necessity.
It’s surely crazy to see your kids and grandkids struggling while you sit on a pot of unearned wealth you’ll never spend? That I think is the motivator behind the modern “norm” of housing assistance coming from older generations.
I’m Gen X. While I hope I’ve enough for a comfortable retirement I don’t think I’d know my margin for early inheritance until I see things play out into my 70s. So the squeeze on kids may well get tighter.
I remember as a young adult thinking that if I was able to buy a house for what my parents paid for theirs when I was in elementary school, and was able to pay what they paid for a mortgage my wife and I would be all set purchasing a house. We did not complain about it, but scrimped, saved, and sacrificed to get the down payment and to pay the mortgage all the while facing the costs of raising two children and paying for daycare by the time we were 30.
This is something that occurs to every generation. It’s called inflation, and the difference is the attitude of the people facing the conundrum, and how they attack it. If you get my drift.
BB, my brothers and I lived this story. I was 36 when I learned my parents were about to lose their home. It’s one of the main reasons I got more deeply involved in understanding personal finances beyond investing. Luckily my wife and brothers and their wives were willing to help out. Eventually my wife and I sold our home, bought my parents home, and they lived with us for the rest of their lives. The positive side is our children developed even stronger relationships with their grandparents and Aunts & Uncles. We learn lessons from good and bad times.
Rick, I read about what you did to help your parents and other family members in My Money Journey. It was a very touching story.
Thanks, bbb. It was interesting. I also read the study the author referenced about the different generations. We are later boomers and I can attest to what they wrote about later boomers having a different financial experience than earlier ones. We see that here on the forum, I think. Chris
Not talking to your kids about money is just as bad as not talking to them about your values. No way to run a railroad.