Helping Adult Children (but not too much)

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HomerJ
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Re: Helping Adult Children (but not too much)

Post by HomerJ » Sat May 26, 2018 11:48 am

delamer wrote:
Sat May 19, 2018 4:03 pm
I inherited a significant amount of money when my mother died. I was already retired myself when I got my inheritance.

From my point-of-view, that was money ill-used. My parents could have enjoyed their money (travel, cars, charity) and/or they could have distributed more to me and my children when it would have made a difference in our lives.

So completely agree with Dandy, why make then wait?
I agree about giving to your adult children when they are older and already established... Like in their 40s and 50s.

But I believe one shouldn't help too much with children in their 20s.

I joke about it, but I also, deep down, believe it's very true that a little bit of suffering and deprivation builds character.
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Dandy
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Re: Helping Adult Children (but not too much)

Post by Dandy » Sat May 26, 2018 3:50 pm

I
agree about giving to your adult children when they are older and already established... Like in their 40s and 50s.

But I believe one shouldn't help too much with children in their 20s.

I joke about it, but I also, deep down, believe it's very true that a little bit of suffering and deprivation builds character.
A little bit of suffering -- say 20 years or so -- some might consider that a tad more than a little bit. You think maybe most of the lessons of suffering and deprivation could be learned a bit quicker by most adults??

There may be a difference between helping with needs vs helping with some wants.

When the adults are in their 40's or 50's their children are often adults and have "suffered" a bit for this extended life lesson for their parents. Or does the suffering and deprivation of their parents build their children's character enough that they can be helped earlier in life??

It is true that if you are handed everything in life with out much effort the results might not be so good. But helping adult children who are responsible and need help shouldn't have to wait decades for help from parents who can afford to.

JoinToday
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Re: Helping Adult Children (but not too much)

Post by JoinToday » Sat May 26, 2018 3:53 pm

HomerJ wrote:
Sat May 26, 2018 11:48 am
delamer wrote:
Sat May 19, 2018 4:03 pm
I inherited a significant amount of money when my mother died. I was already retired myself when I got my inheritance.

From my point-of-view, that was money ill-used. My parents could have enjoyed their money (travel, cars, charity) and/or they could have distributed more to me and my children when it would have made a difference in our lives.

So completely agree with Dandy, why make then wait?
I agree about giving to your adult children when they are older and already established... Like in their 40s and 50s.

But I believe one shouldn't help too much with children in their 20s.

I joke about it, but I also, deep down, believe it's very true that a little bit of suffering and deprivation builds character.
On one hand I really agree with you (HomerJ) that a little hardship and tightening of the belt to live within your kids means is of great benefit to their character and can help develop gratitude in kids outlook in life. But I also agree with delamer that an inheritance too late in life may be ill-used (in his/her words). Even in your 50's, the trajectory of your life is set, and inherited money is of limited benefit unless you have little or no retirement savings -- in which case it can be a life saver.

But for kids who graduate from grad school late (say age 30) with a ton of education debt ($300K-$400K), money can make a huge difference in their lives. And if you expect your kid to inherit mid 7 figures for example, your kid & spouse are not frivolous with money, and your kid and spouse show gratitude for the gifts, I think the benefit can make it worth the downside risk.
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Re: Helping Adult Children (but not too much)

Post by Horsefly » Sat May 26, 2018 4:12 pm

This is a really, really interesting thread. I've learned lots from all the posts. I hadn't really thought about many of the points that have been made here.

We have two daughters. When each was born (before there were 529s) we opened up a UTMA for them, with the intent of using it for college savings. I put money aside into the UTMAs every so often, but when 529s came out I started putting money into those. Fast forward. Both girls graduated with their master's degree, funded entirely by the 529s. When they reached the age of 21 (age of majority for the UTMAs) we handed the brokerage statement for the account that was now theirs. They each saw it as a great gift, and they really appreciated it. Obviously, they also appreciated graduating with no student debt. The former UTMAs grew to about $60K before either took any money out (new car for the 26 year old).

We expect to give them money for a wedding when that time comes. I like the idea others have mentioned here about giving them a set amount and letting them decide how to spend it (wedding, honeymoon, future home, whatever).

Aside from that, I hadn't been planning to do much for either of them, except gifts, vacations with us, and flying them home to see us. Reading this thread has me re-thinking that. I really like the idea of funding their Roth IRA contributions for some number of years. One is a real saver, and not having any problem, but the other is still having trouble setting aside the money they should (hasn't signed up for the 401K yet, and I'm not sure she will make the Roth this year unless I do help).

I'm going to go back through this thread with my wife, and see what else we should be thinking of. I do think it is good for them to work things out for themselves (and be proud of doing so), but there are somethings we really should be doing.

Thanks again!

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Re: Helping Adult Children (but not too much)

Post by SQRT » Sat May 26, 2018 6:56 pm

Dandy wrote:
Sat May 26, 2018 3:50 pm


It is true that if you are handed everything in life with out much effort the results might not be so good. But helping adult children who are responsible and need help shouldn't have to wait decades for help from parents who can afford to.
Agree. We aren’t talking about the Rockerfellers or Vanderbilt’s here, just some help getting started with education and maybe the first house. My view is this kind of help needn’t destroy a child’s work ethic. But, hey, you know your kids better than anyone else. If it does, stop doing it.

Again, I believe there are plenty of hardships in life and not just financial. There will be plenty of character building opportunities for your child even if you help them a bit. A little financial help in the right circumstances can be a huge factor in getting them off to a good start. Why wait till you die?

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Re: Helping Adult Children (but not too much)

Post by Wildebeest » Sat May 26, 2018 8:30 pm

I am planning to live to one hundred ( the best laid plans etc) and I want my spouse to outlive me. I am very grateful for all the support my parents gave me when I was young and struggling and we have forwarded that gift to our children and grand children.

What good will the inheritance do when we die, if our children will be older than we are now?
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Re: Helping Adult Children (but not too much)

Post by msk » Sun May 27, 2018 12:20 am

As the parents age there is less time for tinkering. I am 74 :annoyed 4 kids, ages 44, 41, 22, 20. Oldest pair got the lump-sum treatment (college paid + lump sum at marriage. Value today around $160k each to cover wedding and/or deposit on home. They used the money wisely, mostly on their homes not on the weddings). They were both grateful and when they had their own kids they thanked us profusely for sacrificing so much to have set aside that much. You only learn what kids cost when you get them yourself! Youngest two are now starting grad school. If I wait till they get married, I may not be around any more... But over the decades my NW has built up a lot, hence I am planning to give all 4 a monthly stipend starting from my next birthday later this year. Difficult to set a level. Too little and it's not very meaningful to the pair who already have teenage kids, too high and it's too much spoiling of the ones who are grad students. Still deliberating pegging it at between $2500 and $5000 a month each. Wish I had that much when DW and I were pauper grad students ourselves :mrgreen: We used a mattress on the floor because we could not afford a bed... Some compensation: no backaches :D The stipends come straight from their own future inheritances anyway. Being "fair" to a bunch of kids is not as straightforward as might first appear. Some are financially mature, one or two may not be. Lump sum giving is more exposed than dribbling.

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HomerJ
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Re: Helping Adult Children (but not too much)

Post by HomerJ » Sun May 27, 2018 12:30 am

msk wrote:
Sun May 27, 2018 12:20 am
But over the decades my NW has built up a lot, hence I am planning to give all 4 a monthly stipend starting from my next birthday later this year. Difficult to set a level. Too little and it's not very meaningful to the pair who already have teenage kids, too high and it's too much spoiling of the ones who are grad students.
This is a tough choice.
Still deliberating pegging it at between $2500 and $5000 a month each. Wish I had that much when DW and I were pauper grad students ourselves :mrgreen: We used a mattress on the floor because we could not afford a bed... Some compensation: no backaches
I don't think it's a good idea to give so much to adults just getting out of school. They may never feel like they succeeded on their own. That's a terrible thing to take from them.

I submit being a pauper grad student and sleeping on the floor was a big part of making you who you are today.

Or maybe not. You know your own kids. Maybe you can give them $60,000 a year, and they'll save most of it, and be millionaires in 10 years without ever having to sacrifice for anything and maybe they'll still feel a strong sense of accomplishment.

Personally, if you're going to do it, I'd do as a lump sum to help pay off a loan or a downpayment on a house, or a trust fund to pay for grandkids education.

A monthly stipend is too much like an allowance.
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HomerJ
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Re: Helping Adult Children (but not too much)

Post by HomerJ » Sun May 27, 2018 12:40 am

Dandy wrote:
Sat May 26, 2018 3:50 pm
I
agree about giving to your adult children when they are older and already established... Like in their 40s and 50s.

But I believe one shouldn't help too much with children in their 20s.

I joke about it, but I also, deep down, believe it's very true that a little bit of suffering and deprivation builds character.
A little bit of suffering -- say 20 years or so -- some might consider that a tad more than a little bit. You think maybe most of the lessons of suffering and deprivation could be learned a bit quicker by most adults??

There may be a difference between helping with needs vs helping with some wants.

When the adults are in their 40's or 50's their children are often adults and have "suffered" a bit for this extended life lesson for their parents. Or does the suffering and deprivation of their parents build their children's character enough that they can be helped earlier in life??

It is true that if you are handed everything in life with out much effort the results might not be so good. But helping adult children who are responsible and need help shouldn't have to wait decades for help from parents who can afford to.
You make good points... Let's say 10 years at least. I want my kids to experience their 20s having to make tough decisions about money. If they're in their 30s with kids of their own and are struggling, I could definitely see stepping in to help then (but helping out with specific issues, not just giving them money every month).
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wrongfunds
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Re: Helping Adult Children (but not too much)

Post by wrongfunds » Sun May 27, 2018 8:09 am

Then we have on going case in NY state where parents went to court to evict their son out of the house. My hunch is neither of them are Bogleheads :-)

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Re: Helping Adult Children (but not too much)

Post by RudyS » Sun May 27, 2018 8:46 am

Lots of good thoughts here. One thing to add to the discussion is the projection for our own future. If we go away today, there will be a great inheritance. But we want to be sure (as much as one can be sure) that long term care is covered from our assets and that the kids won't be "stuck" with us. So we are fine-tuning what we could give away to our adult kids.

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Re: Helping Adult Children (but not too much)

Post by pwesben » Sun May 27, 2018 9:03 am

I think a lot of people in my age group (71) forget what a different world it was financially when we were growing up. We did not have to start with the ridiculous debt that most of these kids are trying to start their careers with.

In the mid 60s, I was able to work summers as a construction laborer and save enough cash ($3,300) to finance 1/2 of my room, board and tuition at Harvard. I was living at home. The rest of the money came from scholarship and yearly loans ($1500/year), and working during the school year. My parents supplied none of the $ since I was the first of 11 so they just did not have it. So when I graduated in 1968 my total debt was $4,500. It was a totally different world then financially and the "system" was set up to help kids get an education and succeed. That same education today would cost 4 times $67,000 so $268,000. There is no summer job that would put a dent in that number. So all the kids end up with huge debts, at ridiculous rates.

It behooves us Boomers to realize that we grew up in the sweet spot in this world (at least those of us who survived Vietnam). When we started saving in the 80s the economy and the markets were going gangbusters and if you were smart and saved it was possible to make the nest egg needed to retire.

This is not the world today. So, yes I will help my kids. I try to do it mindfully and thoughtfully, but most of all gratefully. I try to do it while teaching how to make their lives work today.
-Paul
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infotrader
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Re: Helping Adult Children (but not too much)

Post by infotrader » Sun May 27, 2018 9:08 am

We have been contributing to both kids' roth ira to maximum ever since they have income, and they are in mid and late 20s now.
When our daughter had her first job, the employer offered roth 401k, so we asked her to max it out and we would pay for her rent. We also paid for her wedding.
We paid for their college and graduate school expenses in full, and they are debt free.
Both have no sense of entitlement, save money, and live a healthy lifestyle.
We never gave them any birthday/christmas gifts.

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Re: Helping Adult Children (but not too much)

Post by golfCaddy » Sun May 27, 2018 9:28 am

pwesben wrote:
Sun May 27, 2018 9:03 am
I think a lot of people in my age group (71) forget what a different world it was financially when we were growing up. We did not have to start with the ridiculous debt that most of these kids are trying to start their careers with.

In the mid 60s, I was able to work summers as a construction laborer and save enough cash ($3,300) to finance 1/2 of my room, board and tuition at Harvard. I was living at home. The rest of the money came from scholarship and yearly loans ($1500/year), and working during the school year. My parents supplied none of the $ since I was the first of 11 so they just did not have it. So when I graduated in 1968 my total debt was $4,500. It was a totally different world then financially and the "system" was set up to help kids get an education and succeed. That same education today would cost 4 times $67,000 so $268,000. There is no summer job that would put a dent in that number. So all the kids end up with huge debts, at ridiculous rates.
-Paul
At Harvard, no one is full pay unless they have a family income of $200k. From their Web site,
Around 60 percent of Harvard families pay an average of $12,000 per year.

donall
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Re: Helping Adult Children (but not too much)

Post by donall » Sun May 27, 2018 9:38 am

RetiredMule wrote:
Sun May 20, 2018 12:44 pm
RetiredMule wrote:
Sun May 20, 2018 12:25 pm
Two additional points to make:
1) In many cases where both the parents are involved: both parents need to realize the significance of such cases...in many cases, one of the parents maybe too lenient/soft and that's a problem in arriving at the right stance towards a "problem adult child".

2) The easiness of buying this online has made the situation tougher for those adult children who might get into unnecessary/addictive shopping habits.
2nd point should read:..."of buying things online these days..."
Wanted to let you know, that both your screen name and avatar make me laugh every time I see them.

delamer
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Re: Helping Adult Children (but not too much)

Post by delamer » Sun May 27, 2018 9:51 am

msk wrote:
Sun May 27, 2018 12:20 am
As the parents age there is less time for tinkering. I am 74 :annoyed 4 kids, ages 44, 41, 22, 20. Oldest pair got the lump-sum treatment (college paid + lump sum at marriage. Value today around $160k each to cover wedding and/or deposit on home. They used the money wisely, mostly on their homes not on the weddings). They were both grateful and when they had their own kids they thanked us profusely for sacrificing so much to have set aside that much. You only learn what kids cost when you get them yourself! Youngest two are now starting grad school. If I wait till they get married, I may not be around any more... But over the decades my NW has built up a lot, hence I am planning to give all 4 a monthly stipend starting from my next birthday later this year. Difficult to set a level. Too little and it's not very meaningful to the pair who already have teenage kids, too high and it's too much spoiling of the ones who are grad students. Still deliberating pegging it at between $2500 and $5000 a month each. Wish I had that much when DW and I were pauper grad students ourselves :mrgreen: We used a mattress on the floor because we could not afford a bed... Some compensation: no backaches :D The stipends come straight from their own future inheritances anyway. Being "fair" to a bunch of kids is not as straightforward as might first appear. Some are financially mature, one or two may not be. Lump sum giving is more exposed than dribbling.
One issue is whether it is necessary for the kids to know how much their siblings are receiving.

I have thought about this myself. Isn’t it reasonable to say “We want you to receive some of your inheritance before we are gone. This gift is between you and us (your parents). Please do not discuss it with your siblings.”?

Dandy
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Re: Helping Adult Children (but not too much)

Post by Dandy » Sun May 27, 2018 10:09 am

I think a lot of people in my age group (71) forget what a different world it was financially when we were growing up. We did not have to start with the ridiculous debt that most of these kids are trying to start their careers with.
I agree. Some other big advantages we had:

1. many jobs came with pensions and affordable group health/dental insurance-- even tuition reimbursement.
2. many could afford to have spouse stay at home --now for many couples both have to work and pay large child care expenses.
3. Good paying jobs were often available without a degree or advanced degree. More education = more expenses.
4. Job security seemed much better and people were employed full time as employees not as 1099 contractors or adjunct professors.

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Re: Helping Adult Children (but not too much)

Post by KlangFool » Sun May 27, 2018 10:10 am

HomerJ wrote:
Sun May 27, 2018 12:40 am
Dandy wrote:
Sat May 26, 2018 3:50 pm
I
agree about giving to your adult children when they are older and already established... Like in their 40s and 50s.

But I believe one shouldn't help too much with children in their 20s.

I joke about it, but I also, deep down, believe it's very true that a little bit of suffering and deprivation builds character.
A little bit of suffering -- say 20 years or so -- some might consider that a tad more than a little bit. You think maybe most of the lessons of suffering and deprivation could be learned a bit quicker by most adults??

There may be a difference between helping with needs vs helping with some wants.

When the adults are in their 40's or 50's their children are often adults and have "suffered" a bit for this extended life lesson for their parents. Or does the suffering and deprivation of their parents build their children's character enough that they can be helped earlier in life??

It is true that if you are handed everything in life with out much effort the results might not be so good. But helping adult children who are responsible and need help shouldn't have to wait decades for help from parents who can afford to.
You make good points... Let's say 10 years at least. I want my kids to experience their 20s having to make tough decisions about money. If they're in their 30s with kids of their own and are struggling, I could definitely see stepping in to help then (but helping out with specific issues, not just giving them money every month).
HomerJ,

My brother-in-law gave 200K each to his son and daughter before they graduated college. The kids know that they stand to inherit 7 figures from his father. They do not aspire to work very hard at their careers. In fact, my youngest nephew's investment income from his 200K was higher than his salary last year.

No, it does not necessarily make my nephew's life easier. He was stressed out on his first job because he had never faced any adversity or need to make any of his decision so far in his life. In fact, he felt like he accomplished nothing in his life.

KlangFool

Dandy
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Re: Helping Adult Children (but not too much)

Post by Dandy » Sun May 27, 2018 10:15 am

My brother-in-law gave 200K each to his son and daughter before they graduated college. The kids know that they stand to inherit 7 figures from his father.
I don't recall anyone suggesting such a large gift to new adults especially when it wasn't based on needs. So, sounds like a bad idea in almost all cases.

KlangFool
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Re: Helping Adult Children (but not too much)

Post by KlangFool » Sun May 27, 2018 10:20 am

Dandy wrote:
Sun May 27, 2018 10:09 am
I think a lot of people in my age group (71) forget what a different world it was financially when we were growing up. We did not have to start with the ridiculous debt that most of these kids are trying to start their careers with.
I agree. Some other big advantages we had:

1. many jobs came with pensions and affordable group health/dental insurance-- even tuition reimbursement.
2. many could afford to have spouse stay at home --now for many couples both have to work and pay large child care expenses.
3. Good paying jobs were often available without a degree or advanced degree. More education = more expenses.
4. Job security seemed much better and people were employed full time as employees not as 1099 contractors or adjunct professors.
Dandy,

Those are the American's experience. There may not be the same as the immigrants.

A) A large percentage of my grandparent's generation was wiped out in WWII.

B) My father's generation male has a life expectancy of 50 years. So, many families including my own were raised by one parent. My father passed away by 49 years old.

C) My generation had to work 20 to 40 hours week while going to college with a full-time course load (international student requirement).

So, my kids have it much easier. Even if they have to pay for college with a student loan, they do not have to work full-time to pay for their own living expense in a foreign country.

I am just giving you a different perspective on the prospect of the current generation.

KlangFool

KlangFool
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Re: Helping Adult Children (but not too much)

Post by KlangFool » Sun May 27, 2018 10:25 am

Dandy wrote:
Sun May 27, 2018 10:15 am
My brother-in-law gave 200K each to his son and daughter before they graduated college. The kids know that they stand to inherit 7 figures from his father.
I don't recall anyone suggesting such a large gift to new adults especially when it wasn't based on needs. So, sounds like a bad idea in almost all cases.
Dandy,

1) How does that compare with 5K per month allowance to the kids in the 20s while they are in the graduate school?

2) This kind of giving is fairly common among rich Asian families. Many of my rich cousins never have to work a single day in their lives.

3) "wealth doesn't last 3 generations". My family goes back 2,000+ years. We had been through many cycles of this.

KlangFool

Dandy
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Re: Helping Adult Children (but not too much)

Post by Dandy » Sun May 27, 2018 11:07 am

I am just giving you a different perspective on the prospect of the current generation.
Appreciate the comment.

Not everyone's experience is the same. My father's mother died soon after he was born. His father was born with one arm and couldn't or didn't choose to raise his 6 children upon her death, so his sister raised her 5 brothers. They all worked out well despite (or because of) a tough life. No question that many who start out with a tough life it makes them better, work harder and overcome a tough start --not sure that applies to most people who start out with a tough life.

Regardless of how things were better or worse for people years ago if we focus on today --
1. most jobs don't come with a pension - so young adults are basically on their own to save/invest/work longer etc.
2. health insurance is much more costly than it was decades ago - another challenge for them
3. college education and even advanced degrees seem more of a requirement for better paying jobs.

So, while some children might be very much better off than parents that had a tough start to life they still face a world that is putting major financial challenges on them. If they are responsible adults and parents can afford to help them I see little reason to withhold the help to toughen them up/teach them a life lesson, etc. Helping with needs vs wants is a valid issue to consider.

One daughter and her husband are hard workers with degrees but until recently both worked contract jobs. So, I helped my daughter with Roth funding 100% at first, matching as her earnings improved and finally no string gifts that she funded her Roth. :happy I feel that is a life lesson learned and a good start to securing her retirement funding. That wasn't a current need but one that she will face in retirement. In her profession a masters is almost a must is that a want or a need? These are tough issues and a lot depends on the adult children, the parents financial situation and other factors.

We are all trying to do what is best and that can be different even for children in the same family. So far our approach with our children is working out well. Good luck to you and others with what approach you have worked out.

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Re: Helping Adult Children (but not too much)

Post by RadAudit » Sun May 27, 2018 11:18 am

Dandy wrote:
Sun May 27, 2018 11:07 am
These are tough issues and a lot depends on the adult children, the parents financial situation and other factors.
+1

But, this thread has helped me a great deal as I reconsider my approach to helping the kids (30s) through this stage in their development. Hasn't changed my opinion, yet. But, there's time.
FI is the best revenge. LBYM. Invest the rest. Stay the course.

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Re: Helping Adult Children (but not too much)

Post by cherijoh » Sun May 27, 2018 11:29 am

Dandy wrote:
Sat May 19, 2018 3:11 pm
There is no right way --each parent must look at their parenting philosophy, their children's personality, work ethic and needs, their own needs and try to make good decisions. So I'm not suggesting any approach is right -- as they say "it depends"

For those who expect they might leave a decent inheritance -- it seemed strange to us to provide total support as children, not support as adults basically at all and then leave a wonderful inheritance as they reach retirement age. I guess some who are in this position and feel independence is important may not leave much to their children and leave the bulk to charity.

If your adult children are doing the "right" things e.g. managing money well, saving for retirement, spending wisely, etc. and they still are struggling a bit, why make them wait, if you can afford not to? Mine aren't young adults where they need to learn to work hard and maybe feel a bit of how hard life can be - mine are closer to middle age and have experienced/passed that test. So, for us, it makes little sense to let them struggle a bit for the next decade or two before getting their inheritance.

Basically, If you are going to leave them a bundle down the road anyway why not some now - assuming they are not young untested adults that need to learn how to live independently and mange money wisely? And of course if you are not putting your own retirement at risk. In our case we never really thought about it -- until we did and then it was :oops: :happy
I think a lot of people are uncertain that their money would outlast them should they end up need skilled nursing care at the end of their lives. Many people do not have long-term care coverage (or if the do have it whether it will adequate when they need it). So leaving a nice legacy for the kids may be more aspirational rather than a given. Your plan sounds nice on paper, but with the uncertainty of not knowing how long you will live and how much it will cost in the end, how can you be certain that "you are not putting your own retirement at risk?"

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Re: Helping Adult Children (but not too much)

Post by middistancerunner » Sun May 27, 2018 11:31 am

Like others I am finding this thread captivating. I hope you will permit some observations from a person who is a contemporary of many of your adult children.

-I have had less parental help than I think pretty much every single person in this thread has said they have offered their children. (Even Klangfool!) I knew when leaving the house at 16 I was on my own for the long term. I got into a slate of top colleges without any parental involvement and graduated undergrad with very manageable debt ($4,000) from an Ivy+ due only to the generous financial aid available at such schools to very poor kids.

-I chose my career path explicitly with the knowledge that I am my only support system. My mother until recently lived in a one bedroom apartment in Houston, TX. My fallback to rely on her financial support (or, more realistically, to move in with her) would have been in cases of extreme disability, at very most. All this meant that taking on lots of graduate school debt was not an option. Unlike prestigious undergrad institutions, lucrative master's programs don't tend to fund smart poor kids. I ruled out the idea of taking on $60-200K in debt to get a prestigious MA, law degree, or MBA, even though they are in many cases good long-term investments. It was too much downside risk for someone with no fallback support system. So I chose to pursue a PhD in a field with a good post-PhD job market, where I was paid a stipend equivalent to a low salary ($30K/year) to get the degree.

So I have some takeaways from being the poor kid in a world mostly full of your kids, as nearly everyone around me had a lot more parental help and support:

-They do not know the value of a dollar the way I do. They've never had to figure out how to make the last $10 last until the next paycheck. They waste money and they don't appreciate what they have. Even the ones with reasonable financial sense - and this is true of many of them - are able to be that way because they never had to make a truly hard financial decision, the way that I have. They've never had to budget down to the dollar or trade off something beneficial professionally in the long term, for eating in the short term. I think the experience I had making it on my own was good for building character, and I can't extricate my character today from my experiences. Yes, I have a gigantic chip on my shoulder about this.

-The top 10-20% of your kids will do better financially than I ever could, because they leveraged your help. I went the academia route, where some of them took on parental capital and living expense support to start companies, where they had 7- or 8-figure exits or more. Some got fancy MBAs or law degrees. They had a lot of options available to them that I did not.

-The bottom 20% are completely ruined by your support.

-The middle 60% probably would have been better off learning how to navigate their early 20s without your support, but paradoxically, they couldn't have taken exactly the route that I did, because top colleges expect to soak you for their tuition, and wouldn't offer them the financial aid they offered me.

I don't know exactly what I'd do in your shoes, but I think the goal would be for them to have to take on the financial burden of their choices, without needing to trade-off long-term investments due to short-term needs. That would probably mean helping with higher education and graduate degrees, but not so much so that they didn't have (manageable) debt left. Threading that needle is probably harder than it sounds on paper.

One thing that was notably absent from this thread: any discussion of the fairness of intergenerational wealth transfer, and whether it is good for the world. It genuinely bothers me that my peers (the ones that leveraged parental support without being harmed by it) are able to do things I would have liked to do but couldn't. Without diminishing their hard work and intelligence, they are successful in ways that are directly traceable to their luck in being born to the right family. Silicon valley - with all its many problems - is full of your kids, and I think you could make a strong case that the tech industry's significant blindspots arise from a lack of real diversity, background, and perspective.

I'm quite sure my tune would change if it were my children, but along these lines, I think that there is a real case to be made that you all should be donating the money you're giving your kids to people in the inner city, poor rural towns, or developing countries. I think that on a societal level intergenerational wealth transfer is a bad thing and it's worth at least acknowledging that in this discussion.

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Re: Helping Adult Children (but not too much)

Post by Dandy » Sun May 27, 2018 11:51 am

Dandy,

1) How does that compare with 5K per month allowance to the kids in the 20s while they are in the graduate school?
That wouldn't be my choice unless the money was used for room and board etc. Not likely to provide an income but to address reasonable expense needs while attending Grad School -- maybe. We financed some of our daughters grad school tuition but no stipend.
2) This kind of giving is fairly common among rich Asian families. Many of my rich cousins never have to work a single day in their lives.
I can see that that type of giving can lead to issues that easily becomes a problem. Again, I'm in favor of helping responsible adult children who have needs. My children are in their mid to late 30's, are mature, hard working and so are their spouses. We have decided to gift "early inheritance" to both couples each year with no strings. Both couples need more help with retirement savings, mortgage reduction or house down payment, both have at least one car over 13 years old, there are two grandchildren that have education expenses that need funding help, etc. We don't want them killing themselves trying to address all these needs and then 20 years from now (hopefully) getting a large inheritance. We see zero risk to our retirement and for them losing their responsible behavior. Just a but less stress and a bit more enjoying life.


3) "wealth doesn't last 3 generations". My family goes back 2,000+ years. We had been through many cycles of this.
I think there is some wisdom in the quote. Many rich families seem to have a tough time holding that wealth as time goes by. So, the message to me is not don't help your children or they will become lazy etc. It is make sure your children learn the value of hard work, saving for the future etc. Those lessons don't have to take decades to master. Some can master it in childhood (I did) , others soon after their first real job, other seemingly or actually never. A parent must try to educate and evaluate each child to determine when or if ready to not be spoiled by any financial help.

The other thing I would say is it is good to have roots and understand family history going back 2000 years. It can also make change harder - that can be good or bad. Just like lack of history can allow you to make bad decisions when a longer range view would have avoided them. We all need wisdom to know when to honor past practices like how our parents raised us and when to change them. Not easy --I think I am following many of my parents ideas almost without thinking.

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Re: Helping Adult Children (but not too much)

Post by KlangFool » Sun May 27, 2018 12:09 pm

Dandy wrote:
Sun May 27, 2018 11:51 am

I think there is some wisdom in the quote. Many rich families seem to have a tough time holding that wealth as time goes by. So, the message to me is not don't help your children or they will become lazy etc. It is make sure your children learn the value of hard work, saving for the future etc. Those lessons don't have to take decades to master. Some can master it in childhood (I did) , others soon after their first real job, other seemingly or actually never. A parent must try to educate and evaluate each child to determine when or if ready to not be spoiled by any financial help.

The other thing I would say is it is good to have roots and understand family history going back 2000 years. It can also make change harder - that can be good or bad. Just like lack of history can allow you to make bad decisions when a longer range view would have avoided them. We all need wisdom to know when to honor past practices like how our parents raised us and when to change them. Not easy --I think I am following many of my parents ideas almost without thinking.
Dandy,

The most famous ancestor of my family died of abject poverty. But, his words and wisdom passed down to millions of people over thousands of years. Meanwhile, only a few of the rich family member was remembered by others. And, this was mainly due to their philanthropy works. Anyhow, as per my family history, wealth has little to no lasting effect on my family honor and reputation. Meanwhile, the goodwill and family honor of my family lasted thousands of years.

KlangFool

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Re: Helping Adult Children (but not too much)

Post by 3CT_Paddler » Sun May 27, 2018 12:11 pm

MDR, great post. Like you it's surprising to see the number of Bogleheads that practice significant financial assistance.

I grew up in a family that provided no support beyond undergrad college, and married into a family that sees no issue with gifting one of their five year old cars or helping with a down payment. I much prefer the former, but don't want to appear ungrateful for their generosity. I do think you rob your children of their own sense of pride and independence by providing significant assistance.

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Re: Helping Adult Children (but not too much)

Post by golfCaddy » Sun May 27, 2018 12:17 pm

Dandy wrote:
Sun May 27, 2018 10:09 am
2. many could afford to have spouse stay at home --now for many couples both have to work and pay large child care expenses.
Even 40 years ago, most mothers with kids under 18 participated in the labor force. If your kids grew up in the time when stay at home moms were still the majority, that would put them in their late 50s at the least.

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Re: Helping Adult Children (but not too much)

Post by middistancerunner » Sun May 27, 2018 12:33 pm

3CT_Paddler wrote:
Sun May 27, 2018 12:11 pm
MDR, great post. Like you it's surprising to see the number of Bogleheads that practice significant financial assistance.

I grew up in a family that provided no support beyond undergrad college, and married into a family that sees no issue with gifting one of their five year old cars or helping with a down payment. I much prefer the former, but don't want to appear ungrateful for their generosity. I do think you rob your children of their own sense of pride and independence by providing significant assistance.
Thank you :happy.

My partner's family is somewhat similar to yours, with a whole bunch of added wrinkles surrounding religion, strings attached, etc.

We are currently accepting the first financial help we ever have from them - a no-interest loan - and it makes me feel very weird. Nonetheless, it is a great help to manage an unexpected situation and is unambiguously the right call for us to take it. I can see how from a rational perspective intergenerational wealth transfer helps smooth the road like this and help build wealth. (The loan was for a cash need that exceeded our 1 year emergency fund so the other option was breaking a little bit into retirement accounts, which we could have done, but this allows us to not have to do that.) But still, lots of feelings about it.
Last edited by middistancerunner on Sun May 27, 2018 12:39 pm, edited 4 times in total.

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Re: Helping Adult Children (but not too much)

Post by infotrader » Sun May 27, 2018 12:34 pm

Dandy wrote:
Sun May 27, 2018 11:07 am
Regardless of how things were better or worse for people years ago if we focus on today --
1. most jobs don't come with a pension - so young adults are basically on their own to save/invest/work longer etc.
2. health insurance is much more costly than it was decades ago - another challenge for them
3. college education and even advanced degrees seem more of a requirement for better paying jobs.
Excellent points.

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Re: Helping Adult Children (but not too much)

Post by HomerJ » Sun May 27, 2018 12:43 pm

pwesben wrote:
Sun May 27, 2018 9:03 am
I think a lot of people in my age group (71) forget what a different world it was financially when we were growing up. We did not have to start with the ridiculous debt that most of these kids are trying to start their careers with.

In the mid 60s, I was able to work summers as a construction laborer and save enough cash ($3,300) to finance 1/2 of my room, board and tuition at Harvard. I was living at home. The rest of the money came from scholarship and yearly loans ($1500/year), and working during the school year. My parents supplied none of the $ since I was the first of 11 so they just did not have it. So when I graduated in 1968 my total debt was $4,500. It was a totally different world then financially and the "system" was set up to help kids get an education and succeed. That same education today would cost 4 times $67,000 so $268,000. There is no summer job that would put a dent in that number. So all the kids end up with huge debts, at ridiculous rates.

It behooves us Boomers to realize that we grew up in the sweet spot in this world (at least those of us who survived Vietnam). When we started saving in the 80s the economy and the markets were going gangbusters and if you were smart and saved it was possible to make the nest egg needed to retire.

This is not the world today. So, yes I will help my kids. I try to do it mindfully and thoughtfully, but most of all gratefully. I try to do it while teaching how to make their lives work today.
-Paul
Paying for college is one thing... We're talking about adult children in this thread.

And you don't have to send your kid(s) to a college that costs $67,000 a year (each).

But again, everyone's kids are different... Certainly, everyone here knows what's right for their own kids. I'm just speaking my own opinion about the subject in general which is worth the paper it's written on (oh wait, it's on the Internet, so it's not even worth that) :)
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Re: Helping Adult Children (but not too much)

Post by Wildebeest » Sun May 27, 2018 1:29 pm

middistancerunner wrote:
Sun May 27, 2018 11:31 am


So I have some takeaways from being the poor kid in a world mostly full of your kids, as nearly everyone around me had a lot more parental help and support:

-They do not know the value of a dollar the way I do. They've never had to figure out how to make the last $10 last until the next paycheck. They waste money and they don't appreciate what they have. Even the ones with reasonable financial sense - and this is true of many of them - are able to be that way because they never had to make a truly hard financial decision, the way that I have. They've never had to budget down to the dollar or trade off something beneficial professionally in the long term, for eating in the short term. I think the experience I had making it on my own was good for building character, and I can't extricate my character today from my experiences. Yes, I have a gigantic chip on my shoulder about this.

-The top 10-20% of your kids will do better financially than I ever could, because they leveraged your help. I went the academia route, where some of them took on parental capital and living expense support to start companies, where they had 7- or 8-figure exits or more. Some got fancy MBAs or law degrees. They had a lot of options available to them that I did not.

-The bottom 20% are completely ruined by your support.

-The middle 60% probably would have been better off learning how to navigate their early 20s without your support, but paradoxically, they couldn't have taken exactly the route that I did, because top colleges expect to soak you for their tuition, and wouldn't offer them the financial aid they offered me.

I don't know exactly what I'd do in your shoes, but I think the goal would be for them to have to take on the financial burden of their choices, without needing to trade-off long-term investments due to short-term needs. That would probably mean helping with higher education and graduate degrees, but not so much so that they didn't have (manageable) debt left. Threading that needle is probably harder than it sounds on paper.

One thing that was notably absent from this thread: any discussion of the fairness of intergenerational wealth transfer, and whether it is good for the world. It genuinely bothers me that my peers (the ones that leveraged parental support without being harmed by it) are able to do things I would have liked to do but couldn't. Without diminishing their hard work and intelligence, they are successful in ways that are directly traceable to their luck in being born to the right family. Silicon valley - with all its many problems - is full of your kids, and I think you could make a strong case that the tech industry's significant blindspots arise from a lack of real diversity, background, and perspective.

I'm quite sure my tune would change if it were my children, but along these lines, I think that there is a real case to be made that you all should be donating the money you're giving your kids to people in the inner city, poor rural towns, or developing countries. I think that on a societal level intergenerational wealth transfer is a bad thing and it's worth at least acknowledging that in this discussion.
It is good to have perspective and I appreciate yours.

You may enjoy this article:
https://www.theatlantic.com/magazine/ar ... cy/559130/

We will leave the majority of our estate to charity.
The Golden Rule: One should treat others as one would like others to treat oneself.

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Re: Helping Adult Children (but not too much)

Post by NotWhoYouThink » Sun May 27, 2018 2:17 pm

What really amazes me about this thread is the insight the parents have on their kids' finances, even after the "kids" are married. My parents never knew my income, and my in-laws certainly didn't. They never knew how or how much we were saving. I know some of what my kids have, but with both of them in grad school that mostly means I know they are poor. We have never funded their Roths or 401ks and probably never will. It feels intrusive to me and they would probably not react well to it.

After the market gains the last few years, and with both of us soon to be retired, we may decide we can safely start giving some away now. To middledistancerunner's point, we regularly give much more to charity than we do to our kids. No need to wait until we're dead for that.

There is one BIL who may eventually need money, so we're mentally budgeting for that. Our kids have no debt from undergrad, one has a manageable debt level from grad school. We could pay that off, perhaps, and match the payment to the one that is still living on a stipend. Or not. My siblings and I all graduated from college with no debt and made our own way. I don't see that much has changed in the last 30-40 years to make doing the same any harder for our kids. They do know that if they ever really need help it is available, and that's a pretty big deal.

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Re: Helping Adult Children (but not too much)

Post by middistancerunner » Sun May 27, 2018 2:27 pm

Wildebeest wrote:
Sun May 27, 2018 1:29 pm


It is good to have perspective and I appreciate yours.

You may enjoy this article:
https://www.theatlantic.com/magazine/ar ... cy/559130/

We will leave the majority of our estate to charity.
What an amazing article - thank you for sharing.

I hope others take the time to read it as well.

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Re: Helping Adult Children (but not too much)

Post by Dandy » Sun May 27, 2018 2:50 pm

My siblings and I all graduated from college with no debt and made our own way. I don't see that much has changed in the last 30-40 years to make doing the same any harder for our kids.
Well if you go back about 50 years I worked in the summer at not much above minimum wages and could pay my tuition for state college. Not books, etc but tuition. Middle class people I know are thinking send kids to Junior College for 2 years then full year college. College expenses seem to have grown much more than wages. Our state also keeps cutting funding for higher education so those shortfalls are passed on to students (or their parents).

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Re: Helping Adult Children (but not too much)

Post by NotWhoYouThink » Sun May 27, 2018 3:01 pm

My point was that if you graduate from college with no debt, making your way beyond that point is still very doable.

Graduating without debt may be harder than it was, but we made that happen for our kids. The question is whether we need to do more financially any time soon.

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Helping Adult Children (but not too much)

Post by Cruise » Sun May 27, 2018 3:10 pm

middistancerunner wrote:
Sun May 27, 2018 11:31 am

One thing that was notably absent from this thread: any discussion of the fairness of intergenerational wealth transfer, and whether it is good for the world. It genuinely bothers me that my peers (the ones that leveraged parental support without being harmed by it) are able to do things I would have liked to do but couldn't. ...

I think that there is a real case to be made that you all should be donating the money you're giving your kids to people in the inner city, poor rural towns, or developing countries. I think that on a societal level intergenerational wealth transfer is a bad thing and it's worth at least acknowledging that in this discussion.
It is great that you have been able to bootstrap yourself. Congrats.

It is quite another thing to go through life living with envy for others who have had an easier life, and then forming judgments about the unfairness of parents able to support their children in ways that you were never able to experience.

There is a real case to be made for being thankful for your own abilities, and not trying to paint a bad light on people who have been fortunate to accumulate wealth and then decide for themselves where such wealth should be distributed.

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Re: Helping Adult Children (but not too much)

Post by mac808 » Sun May 27, 2018 3:18 pm

Wildebeest wrote:
Sun May 27, 2018 1:29 pm
It is good to have perspective and I appreciate yours.

You may enjoy this article:
https://www.theatlantic.com/magazine/ar ... cy/559130/

We will leave the majority of our estate to charity.
Wildebeest, I have a genuine question for you: what obligations do you believe your kids have (in the moral sense) to spend time caring for you as you get older? If you got dementia and were unable to manage your own affairs, would you expect them to step in and help? If one day you can't live alone and move to a nursing home, how intensively would you expect your kids to manage your caregivers and medical staff?

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Re: Helping Adult Children (but not too much)

Post by student » Sun May 27, 2018 3:24 pm

middistancerunner wrote:
Sun May 27, 2018 2:27 pm
Wildebeest wrote:
Sun May 27, 2018 1:29 pm


It is good to have perspective and I appreciate yours.

You may enjoy this article:
https://www.theatlantic.com/magazine/ar ... cy/559130/

We will leave the majority of our estate to charity.
What an amazing article - thank you for sharing.

I hope others take the time to read it as well.
I am aware of the article. It is relatively interesting but I am unconvinced by some of its use of data. The author made reference to Figure 1. The author wrote, "At their peak, in the mid-1980s, people in this group held 35 percent of the nation’s wealth. Three decades later that had fallen 12 points—exactly as much as the wealth of the 0.1 percent rose." This is an absolutely correct statement but why compare the current situation to the maximum. The figure gives the timeline from before 1930 to now. The shares of the two groups remain the same on the two ends (1930 and now). In referencing to the 9.9%, the author wrote "In the tale of three classes (see Figure 1), it is represented by the gold line floating high and steady while the other two duke it out." I see it remains about 60% from the the start to 1980's. The it drops to about 55% in the 1990's and stabilizes.

I am not saying the article is without merit but I do find the article biased.
Last edited by student on Sun May 27, 2018 3:46 pm, edited 1 time in total.

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Re: Helping Adult Children (but not too much)

Post by middistancerunner » Sun May 27, 2018 3:28 pm

Cruise wrote:
Sun May 27, 2018 3:10 pm
middistancerunner wrote:
Sun May 27, 2018 11:31 am

One thing that was notably absent from this thread: any discussion of the fairness of intergenerational wealth transfer, and whether it is good for the world. It genuinely bothers me that my peers (the ones that leveraged parental support without being harmed by it) are able to do things I would have liked to do but couldn't. ...

I think that there is a real case to be made that you all should be donating the money you're giving your kids to people in the inner city, poor rural towns, or developing countries. I think that on a societal level intergenerational wealth transfer is a bad thing and it's worth at least acknowledging that in this discussion.
It is great that you have been able to bootstrap yourself. Congrats.

It is quite another thing to go through life living with envy for others who have had an easier life, and then forming judgments about the unfairness of parents able to support their children in ways that you were never able to experience.

There is a real case to be made for being thankful for your own abilities, and not trying to paint a bad light on people who have been fortunate to accumulate wealth and then decide for themselves where such wealth should be distributed.
Wow. I was extremely careful to not dump on the kids of privilege, nor paint them in a bad light. I said that the most successful kids I went to school with used their own talents, but a key component of their success was their ability to leverage the advantages handed to them by their family of birth. I didn't say they didn't "deserve" it, whatever that even means, and I didn't say I envy them. I tried to explain how it seems like parental support tends to work out for the group of people in my universe. And I concluded by hazarding that it is is probably bad for society that the upper echelons of the world are populated disproportionately by those kids.

Thanks for dumping on me in return, though.

I am extremely thankful for my abilities. I didn't go into detail on this dimension, but I am acutely aware of how much better I had/have it than most lower-class kids. There are many specific ways that I benefited from our system more than your typical poor kid.

Nonetheless, here's a story for you. When I was in my early 20s, I co-founded a startup. So did a lot of my peers from my tech-focused Ivy+. Unlike my peers, I had to continue to work full time. Unlike my peers, I did not have the ability to have a "friends and family" (always family) round. Unlike my peers, I didn't have family connections to investors. Unlike (some) of my peers, the startup didn't end up working out. Do I blame myself for it not working out? Of course - there were lots of things I could have done differently. Do I regret it not working out? Not really - I am happy to be where I am now. Do I know for a fact that I would have had a greater probability of success had I come from a different background and had family support? Absolutely.

It's not envy at all to point out that if you aggregate these kinds of experiences up, the upper echelons of society are comprised of people who *in part* benefited from wealth they didn't themselves earn. There is a lot of talent being left on the table by this. That's my point. The atlantic article another person linked does a good job at articulating this.
Last edited by middistancerunner on Sun May 27, 2018 3:34 pm, edited 2 times in total.

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Re: Helping Adult Children (but not too much)

Post by mac808 » Sun May 27, 2018 3:30 pm

middistancerunner wrote:
Sun May 27, 2018 11:31 am
-The top 10-20% of your kids will do better financially than I ever could, because they leveraged your help. I went the academia route, where some of them took on parental capital and living expense support to start companies, where they had 7- or 8-figure exits or more. Some got fancy MBAs or law degrees. They had a lot of options available to them that I did not.

-The bottom 20% are completely ruined by your support.
This mirrors my own observations. If you end up with "great kids" in their mid to late 20s, they can leverage any support you give them and be incredibly productive. Seems like a win-win.
middistancerunner wrote:
Sun May 27, 2018 11:31 am
One thing that was notably absent from this thread: any discussion of the fairness of intergenerational wealth transfer, and whether it is good for the world. It genuinely bothers me that my peers (the ones that leveraged parental support without being harmed by it) are able to do things I would have liked to do but couldn't. Without diminishing their hard work and intelligence, they are successful in ways that are directly traceable to their luck in being born to the right family. Silicon valley - with all its many problems - is full of your kids, and I think you could make a strong case that the tech industry's significant blindspots arise from a lack of real diversity, background, and perspective.
It's important to note that inter-generational wealth transfer and the aristocratic class structure it supports has been the rule since the dawn of civilization. World wars, global plagues, and violent revolutions served to shake things up from time to time, but are becoming less common now. The long-sustained American spirit of independence is an aberration (a fascinating, fortunate, and important one) and there is a lot of evidence that we are now in the process of reverting back to the historical mean. I don't know what should happen, or what will happen, but sometimes the first step is just pointing out the situation for what it is.

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Re: Helping Adult Children (but not too much)

Post by HomerJ » Sun May 27, 2018 3:38 pm

NotWhoYouThink wrote:
Sun May 27, 2018 2:17 pm
They do know that if they ever really need help it is available, and that's a pretty big deal.
Yes, it is. It was a huge deal for me. And I believe it's a huge deal for my kids.

20s and "broke" is much easier when you know there's always a place to get a good meal, and your absolute worst case is you might have to move back to the McMansion with the big-screen TV.

But buying a McMansion for them? No way, let them save up for it. They'll appreciate it more.
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Re: Helping Adult Children (but not too much)

Post by Theseus » Sun May 27, 2018 3:39 pm

mrsbetsy wrote:
Sat May 19, 2018 1:06 pm
When our daughter started her first real job, we matched her Roth dollar for dollar for two years just to help get her started. We also fund a family vacation every year or so.

She comes over once a week for dinner and we send her home with leftovers.

Otherwise, it's good for her to manage and grow and learn it on her own. She's always been a saver and frugal. She probably saves 30% of her income already.

I do think it is possible to help too much and undermine their path to "adulting". Just because you can, doesn't mean you should.

I suppose our viewpoint comes from watching a niece's father help so much that she is now 30 with multiple degrees and still no work ethic or real job. She's lived off her dad for far too long.
I think this is a great approach. Last year I made a deal with my kids that if they save and invest the money from their allowance I will match it $ for $ if they promise to not touch the invested money until they are 35. They both saved around $1000 and I matched it. Its invested in Vanguard S&P500 fund. They are both very excited about it.

I like your idea of taking it further when they start working. I am definitely going to do that when they get to that point.

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Re: Helping Adult Children (but not too much)

Post by middistancerunner » Sun May 27, 2018 3:41 pm

mac808 wrote:
Sun May 27, 2018 3:30 pm
It's important to note that inter-generational wealth transfer and the aristocratic class structure it supports has been the rule since the dawn of civilization. World wars, global plagues, and violent revolutions served to shake things up from time to time, but are becoming less common now. The long-sustained American spirit of independence is an aberration (a fascinating, fortunate, and important one) and there is a lot of evidence that we are now in the process of reverting back to the historical mean. I don't know what should happen, or what will happen, but sometimes the first step is just pointing out the situation for what it is.
Agreed completely on this. I think what is unique about the American middle class is their/our ability to live in denial about what you're saying. But you are absolutely right that this is more the historical norm than we credit.

A lot of my meditation on this comes from the fact that I imagine I will need to make choices like this one day for my kids. If all goes as is fairly likely, I will raise kids like the peers I went to school with. They won't be raised like I was, and I'll have to make choices about school districts, public v. private school, university, grad school, etc. I don't know if I'll be as high-minded when it's my own offspring.

marcopolo
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Re: Helping Adult Children (but not too much)

Post by marcopolo » Sun May 27, 2018 4:24 pm

middistancerunner wrote:
Sun May 27, 2018 2:27 pm
Wildebeest wrote:
Sun May 27, 2018 1:29 pm


It is good to have perspective and I appreciate yours.

You may enjoy this article:
https://www.theatlantic.com/magazine/ar ... cy/559130/

We will leave the majority of our estate to charity.
What an amazing article - thank you for sharing.

I hope others take the time to read it as well.
It was a very interesting read on how we got here. His suggestions at the end on how to address some of the structural issues seemed a bit weak (Federal, State, and Local Government could reverse some vague things). His suggestions that individuals also need to change would be more convincing if he gave some examples of what he is personally doing (other than a lot of hand-wringing) to improve the situation that he says is partly of his own making.
Once in a while you get shown the light, in the strangest of places if you look at it right.

Dandy
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Re: Helping Adult Children (but not too much)

Post by Dandy » Sun May 27, 2018 4:58 pm

Wow the possible end of the individualism and drive that made America great is pretty serious. I agree that creating generations of spoiled, pampered children will not end well. So, we should take care that good intentions don't get out of hand. I'm not for distribution of money to spoiled kids or to spoil them.

I think that for every kid/young adult that made it the hard way without help there are kids that showed maturity and acted responsible and got help and also did well. I can imagine that there are many that would or could have achieved more if they were just given a bit of help. e.g. kids/young adults with talent and drive that needed some help but dropped out of college to support themselves when a bit of financial help might have made them achieve in a career they were well suited for but had to settle for "job" to make ends meet.

My grandson is very focused on science at age 7. We said we would pay for after school STEM (Science, Technology, Engineering, and Math) classes and provide transportation. He loves those classes and has been signed up for 2 more series. Who knows if that will have any effect on his future career or earnings - but it enhanced his drive and enthusiasm. I guess my daughter could have afforded that -- she didn't ask but we know they are stretched a bit.

So, like most things the devil is in the details. Help can spoil or enhance. Lack of help can't spoil but may not be optimal. It is up to us to determine what, when, How much if any.

GenXer
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Re: Helping Adult Children (but not too much)

Post by GenXer » Sun May 27, 2018 5:56 pm

Like others I am finding this thread captivating. I hope you will permit some observations from a person who is a contemporary of many of your adult children.

-I have had less parental help than I think pretty much every single person in this thread has said they have offered their children. (Even Klangfool!) I knew when leaving the house at 16 I was on my own for the long term. I got into a slate of top colleges without any parental involvement and graduated undergrad with very manageable debt ($4,000) from an Ivy+ due only to the generous financial aid available at such schools to very poor kids.

-I chose my career path explicitly with the knowledge that I am my only support system. My mother until recently lived in a one bedroom apartment in Houston, TX. My fallback to rely on her financial support (or, more realistically, to move in with her) would have been in cases of extreme disability, at very most. All this meant that taking on lots of graduate school debt was not an option. Unlike prestigious undergrad institutions, lucrative master's programs don't tend to fund smart poor kids. I ruled out the idea of taking on $60-200K in debt to get a prestigious MA, law degree, or MBA, even though they are in many cases good long-term investments. It was too much downside risk for someone with no fallback support system. So I chose to pursue a PhD in a field with a good post-PhD job market, where I was paid a stipend equivalent to a low salary ($30K/year) to get the degree.

So I have some takeaways from being the poor kid in a world mostly full of your kids, as nearly everyone around me had a lot more parental help and support:

-They do not know the value of a dollar the way I do. They've never had to figure out how to make the last $10 last until the next paycheck. They waste money and they don't appreciate what they have. Even the ones with reasonable financial sense - and this is true of many of them - are able to be that way because they never had to make a truly hard financial decision, the way that I have. They've never had to budget down to the dollar or trade off something beneficial professionally in the long term, for eating in the short term. I think the experience I had making it on my own was good for building character, and I can't extricate my character today from my experiences. Yes, I have a gigantic chip on my shoulder about this.

-The top 10-20% of your kids will do better financially than I ever could, because they leveraged your help. I went the academia route, where some of them took on parental capital and living expense support to start companies, where they had 7- or 8-figure exits or more. Some got fancy MBAs or law degrees. They had a lot of options available to them that I did not.

-The bottom 20% are completely ruined by your support.

-The middle 60% probably would have been better off learning how to navigate their early 20s without your support, but paradoxically, they couldn't have taken exactly the route that I did, because top colleges expect to soak you for their tuition, and wouldn't offer them the financial aid they offered me.

I don't know exactly what I'd do in your shoes, but I think the goal would be for them to have to take on the financial burden of their choices, without needing to trade-off long-term investments due to short-term needs. That would probably mean helping with higher education and graduate degrees, but not so much so that they didn't have (manageable) debt left. Threading that needle is probably harder than it sounds on paper.

[OT comments removed by admin LadyGeek]
Thank you, MDR, for writing the most well-written, thoughtful Internet post I've read this week. I've been fascinated by this thread as well--and a little shocked at how many BHs are administering what clearly seems to be massive "outpatient economic care," while not seeing themselves as doing such. I wonder whether I too will do this as my kids get older and move out. I work in a high school in Silicon Valley--not one of the ones that makes lists of "Best High Schools" in the U.S. or California (which all seem to be filled with children of affluent families), but one that does a very good job of moving some very poor kids into good colleges. I estimate that less than 10% of our parent population has graduated from college. While I have a lot of students who are not super-engaged academically (nice kids, though), I also have a number every year who are so bright, so talented, so hard-working ... but they have few parental/family advantages or connections. Our staff does everything it can to increase our students' skills and opportunities to move up the socioeconomic ladder, but reading this thread--and the Atlantic article--makes me wonder if our efforts are futile.

Cruise
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Re: Helping Adult Children (but not too much)

Post by Cruise » Sun May 27, 2018 6:39 pm

middistancerunner wrote:
Sun May 27, 2018 3:28 pm
Cruise wrote:
Sun May 27, 2018 3:10 pm
middistancerunner wrote:
Sun May 27, 2018 11:31 am

One thing that was notably absent from this thread: any discussion of the fairness of intergenerational wealth transfer, and whether it is good for the world. It genuinely bothers me that my peers (the ones that leveraged parental support without being harmed by it) are able to do things I would have liked to do but couldn't. ...

I think that there is a real case to be made that you all should be donating the money you're giving your kids to people in the inner city, poor rural towns, or developing countries. I think that on a societal level intergenerational wealth transfer is a bad thing and it's worth at least acknowledging that in this discussion.
It is great that you have been able to bootstrap yourself. Congrats.

It is quite another thing to go through life living with envy for others who have had an easier life, and then forming judgments about the unfairness of parents able to support their children in ways that you were never able to experience.

There is a real case to be made for being thankful for your own abilities, and not trying to paint a bad light on people who have been fortunate to accumulate wealth and then decide for themselves where such wealth should be distributed.
Wow. I was extremely careful to not dump on the kids of privilege, nor paint them in a bad light. I said that the most successful kids I went to school with used their own talents, but a key component of their success was their ability to leverage the advantages handed to them by their family of birth. I didn't say they didn't "deserve" it, whatever that even means, and I didn't say I envy them. I tried to explain how it seems like parental support tends to work out for the group of people in my universe. And I concluded by hazarding that it is is probably bad for society that the upper echelons of the world are populated disproportionately by those kids.

Thanks for dumping on me in return, though.

I am extremely thankful for my abilities. I didn't go into detail on this dimension, but I am acutely aware of how much better I had/have it than most lower-class kids. There are many specific ways that I benefited from our system more than your typical poor kid.

Nonetheless, here's a story for you. When I was in my early 20s, I co-founded a startup. So did a lot of my peers from my tech-focused Ivy+. Unlike my peers, I had to continue to work full time. Unlike my peers, I did not have the ability to have a "friends and family" (always family) round. Unlike my peers, I didn't have family connections to investors. Unlike (some) of my peers, the startup didn't end up working out. Do I blame myself for it not working out? Of course - there were lots of things I could have done differently. Do I regret it not working out? Not really - I am happy to be where I am now. Do I know for a fact that I would have had a greater probability of success had I come from a different background and had family support? Absolutely.

It's not envy at all to point out that if you aggregate these kinds of experiences up, the upper echelons of society are comprised of people who *in part* benefited from wealth they didn't themselves earn. There is a lot of talent being left on the table by this. That's my point. The atlantic article another person linked does a good job at articulating this.
Here is your statement that reeks of envy:

"It genuinely bothers me that my peers (the ones that leveraged parental support without being harmed by it) are able to do things I would have liked to do but couldn't."

Here is your demand that people not make their own choices on what to do with their heard-earned money:

"...you all should be donating the money you're giving your kids to people in the inner city, poor rural towns, or developing countries."

And you think I am dumping on you? I would suggest that you be content on making your own choices in life and let the people on this thread --one devoted to intergenerational wealth transfer-- comfortably do all the intergenerational wealth transfer they desire without having to be lectured by you.
Last edited by Cruise on Sun May 27, 2018 6:43 pm, edited 2 times in total.

infotrader
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Re: Helping Adult Children (but not too much)

Post by infotrader » Sun May 27, 2018 6:39 pm

There is another angle to look at this issue: how to pass our wisdom of money management to our kids.

Although I have an easy job for the last 30 years, I find it a burden, since it is much easier to make money with money, and I want my money to work much harder.
I have accumulated some knowledge about investment, and I really want my kids know how to efficiently manage their money.
My main goal in helping them financially is to let them know how to manage their money properly which can be more important than just work hard.
Look around: we have so many people who work really hard but know nothing about saving and investing, and this pattern is passed onto their kids. This is quite unfortunate.

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