When do you start gifting the max to your family members? When is enough NW totally enough?

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delamer
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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by delamer » Wed Sep 11, 2019 9:30 am

AlohaJoe wrote:
Wed Sep 11, 2019 9:18 am
elcadarj wrote:
Wed Sep 11, 2019 8:53 am
For a college graduate, Buffett reckons ''a few hundred thousand dollars'' sounds about right. "
FWIW, "a few hundred thousand dollars" for a college graduate means maxing out the annual gift exclusion every year for a decade, which is probably far more giving than most Bogleheads think is appropriate for a recently graduated 20 year old.

In any case, I don't see that Warren Buffett has any special expertise in raising children, so I'm not sure his advice carries much weight.
I also don’t get how a few hundred thousand is “enough so they feel they could do anything” but have to work.

How much does he think a person needs to maintain a basic, non-poverty level lifestyle?

cherijoh
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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by cherijoh » Wed Sep 11, 2019 9:41 am

HomeStretch wrote:
Sun Sep 08, 2019 6:32 am
There is no benchmark, it’s a personal decision. IMO when/if someone starts gifting to family depends on the giftor’s net worth, age and having a very solid handle on financial projections. It also depends on the giftee’s age/situation too.

It looks like you are age 40 per a prior post. A person age 40 most likely has a long remaining life span. I wouldn’t consider gifting at that age unless the portfolio was in excess of 50x expenses (which reflected solid estimates of post-retirement expenses like healthcare and long-term care). Also, any children of a 40-year old are likely too young to benefit in a good way from ongoing gifts aside from paying their education and support until self-sufficient.
I am in basic agreement with your post, since I have friends who are still working because they were overly generous with their kids (when the kids were in their twenties). The kids seem oblivious to the situation and are unlikely IMO to come to their parents aid - i.e., financial largesse is a one-way street coming from Mom & Dad and going to the kids.

But if I were a parent of teens or twenty somethings (and was financially able to do so), I would also consider funding Roth IRA up to their wage compensation or the annual IRS limit whichever is smaller - at least through HS and college. This would hopefully reinforce good savings habits and get them off to a good financial start.

I would also consider providing enough cash to cover security deposit on an apartment (and utility bill if necessary) if moving away from home for first job or let them live rent-free at home for a pre-specified period if their first job was close to home.

There was no such thing as a Roth IRA when my brother and I were starting out, but my parents let my brother live at home for several years for a nominal rent while he saved up for a downpayment for a townhouse.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by cherijoh » Wed Sep 11, 2019 10:15 am

EnjoyIt wrote:
Sun Sep 08, 2019 4:11 pm
In regards to our children, how do we know giving them financial assistance is going to help them or harm them. Ok, coming out of school debt free seems like a good idea. What about buying a car when they get their first job or helping with a mortgage down payment? Are we making their lives better or are we making those kids dependent on those handouts to live the lifestyle we are helping supply? On the other hand, you wait too long and the money can be almost meaningless. Today, if my parents started giving me $14k/yr, it would be nice, but it won't make much of a difference for us. On the other extreme, if I started receiving $14k/yr while in undergrad, I very well may have blown it away on really stupid things and not reach the success we have today. Who the heck knows?
I do think the trend to provide downpayment help - especially a couple each giving child and their spouse the maximum (i.e., 4x the gift tax exclusion) may be fueling the arms race for larger and more expensive homes which could be a cash flow drain when it comes time for the kids to keep up with the mortgage.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by cherijoh » Wed Sep 11, 2019 10:21 am

TomatoTomahto wrote:
Mon Sep 09, 2019 1:01 pm
Gnirk wrote:
Mon Sep 09, 2019 12:52 pm
We feel blessed that we are in a financial position to help our adult child.
And blessed to have raised a thoughtful older daughter. Let’s hope that the treatments for mental illness continue to improve.
+1

I was thinking the same thing.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by EnjoyIt » Wed Sep 11, 2019 10:54 am

cherijoh wrote:
Wed Sep 11, 2019 10:15 am
EnjoyIt wrote:
Sun Sep 08, 2019 4:11 pm
In regards to our children, how do we know giving them financial assistance is going to help them or harm them. Ok, coming out of school debt free seems like a good idea. What about buying a car when they get their first job or helping with a mortgage down payment? Are we making their lives better or are we making those kids dependent on those handouts to live the lifestyle we are helping supply? On the other hand, you wait too long and the money can be almost meaningless. Today, if my parents started giving me $14k/yr, it would be nice, but it won't make much of a difference for us. On the other extreme, if I started receiving $14k/yr while in undergrad, I very well may have blown it away on really stupid things and not reach the success we have today. Who the heck knows?
I do think the trend to provide downpayment help - especially a couple each giving child and their spouse the maximum (i.e., 4x the gift tax exclusion) may be fueling the arms race for larger and more expensive homes which could be a cash flow drain when it comes time for the kids to keep up with the mortgage.
I don't know if it was this thread or another, but one poster commented how they helped with the mortgage or down payment, but only after the child found the house, already had plans to afford it, and without the knowledge of any family money coming in.

EnjoyIt
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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by EnjoyIt » Wed Sep 11, 2019 11:02 am

Everyone is different, I get it but I will share my life experience.
My parents provided some assistance in college and grad school, But it was a small amount but I had to take out plenty loans, and if I was going to have fun, I had to fund it myself. I definitely appreciated the assistance my parents were able to afford me back then. By doing this, I learned how to budget, and how to survive and enjoy life on very little which allowed me to continue to enjoy life without needing to spend a fortune to do so.

I have another friend who had significant assistance all through college and grad school. Everything was paid for as well as very comfortable living arrangements. Today this person is struggling to keep up because their baseline was high already, and additional lifestyle creep has put him in a position of not saving enough for retirement.

It is a fine line and I think impossible to know where it is. We just do our best and hope for the best.

My plan is to educate my offspring about the value of money, the value of work, how money does not necessarily buy happiness and in particular how more money does not necessarily buy happiness. I will assist wherever I feel it is appropriate and from there on, I will hope for the best.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by Not Law » Wed Sep 11, 2019 11:27 am

"But if I were a parent of teens or twenty somethings (and was financially able to do so), I would also consider funding Roth IRA up to their wage compensation or the annual IRS limit whichever is smaller - at least through HS and college. This would hopefully reinforce good savings habits and get them off to a good financial start."

This is what I started doing with my teenage grandchildren. I told them that I would give them a million dollars - they just have to wait until they are 60 to get it! Any touching of the contributions, without our permission will result in no more gifts. Of course they being teenagers have no concept of what I am doing and how it works.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by cherijoh » Wed Sep 11, 2019 12:45 pm

EnjoyIt wrote:
Wed Sep 11, 2019 10:54 am
cherijoh wrote:
Wed Sep 11, 2019 10:15 am
EnjoyIt wrote:
Sun Sep 08, 2019 4:11 pm
In regards to our children, how do we know giving them financial assistance is going to help them or harm them. Ok, coming out of school debt free seems like a good idea. What about buying a car when they get their first job or helping with a mortgage down payment? Are we making their lives better or are we making those kids dependent on those handouts to live the lifestyle we are helping supply? On the other hand, you wait too long and the money can be almost meaningless. Today, if my parents started giving me $14k/yr, it would be nice, but it won't make much of a difference for us. On the other extreme, if I started receiving $14k/yr while in undergrad, I very well may have blown it away on really stupid things and not reach the success we have today. Who the heck knows?
I do think the trend to provide downpayment help - especially a couple each giving child and their spouse the maximum (i.e., 4x the gift tax exclusion) may be fueling the arms race for larger and more expensive homes which could be a cash flow drain when it comes time for the kids to keep up with the mortgage.
I don't know if it was this thread or another, but one poster commented how they helped with the mortgage or down payment, but only after the child found the house, already had plans to afford it, and without the knowledge of any family money coming in.
That would be prudent for a downpayment. It could become an expectation if subsidizing the actual mortgage payment.

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Re: When do you start gifting the max to your family members you like?

Post by protagonist » Wed Sep 11, 2019 12:48 pm

PhilosophyAndrew wrote:
Sat Sep 07, 2019 10:43 pm
Isn’t the answer: Whenever you want to?

This isn’t the case where there will be a uniform or recommended financial guideline; whether it is advisable to do this, and exactly when to do this, depends on many factors, mainly non-financial ones, and mainly ones that are sensitive to families’ and individuals’ specific circumstances.

Andy.
+1
You deserve your moniker "PhilosophyAndrew". I am astounded at how many let finances be the sole and prime motivator of their lives, like the tail wagging the dog.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by WhiteMaxima » Wed Sep 11, 2019 1:14 pm

I start gift to my family from my 1st paycheck. Instead to gift my children $$$$ to buy expensive car or vacation. I put every gift $ into 529 plan. This would only be used for high education for future generation tax free.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by Leesbro63 » Wed Sep 11, 2019 1:45 pm

goodenyou wrote:
Wed Sep 11, 2019 8:41 am
The obvious answer is when your family members become registered and contributing Bogleheads. :D
I really like this answer. For those who have “it”, yes, it makes sense to trickle the wealth down the family tree. But trickling too much too soon can reduce incentive for adult children to maximize their own earning/saving/investing power as well as ability to learn how to properly manage money. But there’s generally a point where it’s clear that adult kids have property launched, financially, and it makes sense start gifting.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by megabad » Wed Sep 11, 2019 2:02 pm

Prettyfrtnt wrote:
Sat Sep 07, 2019 10:23 pm
When is enough totally enough???
The second I thought with reasonable confidence I would be over the federal 11/22 million dollar estate tax limit I would increase my desire to throw money away to relatives and others. Before that, I would only give to appropriate causes that I believe in and my NW would be irrelevant if I believed in the cause. I gave money when I was a kid to a friend that needed lunch money. My NW was probably <$50 bucks at the time but it was a good cause (I thought). He was super grateful. I remember it to this day. Money well spent.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by Bacchus01 » Wed Sep 11, 2019 2:15 pm

We already do, by way of some very important means.

My wife and I paid our way through 4 college degrees and started off believing we wanted our kids to do the same. But as they aged and as our household income really grew, we realized we were going to have more than enough for ourselves and we wanted to give it to our kids before we die and can’t enjoy it with them.

So, we do the following:

- We will give them a car to use when they turn 16 and not some jalopy, and pay the insurance and major upkeep, but they have to have a job to pay for the gas. This allows them to have meaningful work and manage a small budget.
- We will pay for their college costs. All tuition/fees/room/food. They want to go on Spring Break with their buddies or buy pizza inn saturday night or head out of town to visit their girlfriend, they pay for it. This causes them to save up money before going to college and likely end up with a part time job on campus as well as meaningful summer work. Budget. Responsibility. Managing discretionary spending.
- We will match their annual earnings by contributing to a ROTH IRA on their behalf, matching dollar for dollar. They then understand the value of compounding, the differences in investment choices and doing their taxes with some limited complexity.
- Lastly, we’ve told our kids that we would like them, and their families someday, to go on vacation with us once per year, completely paid for by my wife and I. This is an activity we’d like to do for life.

Add all that up. As our oldest is now a FR in college, we are seeing that it’s nearly $50k/year in some years. But it’s also not just handing them some cash and saying good luck. My wife and I have talked that we may step up to an annual gift when the kids are likely married with children, but we’ll see about that later. For now, this is our approach to make sure they get some benefit, and frankly, we get some benefit out of it too!

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Taylor Larimore
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The Gift Tax Return

Post by Taylor Larimore » Wed Sep 11, 2019 3:21 pm

Not to mention that the max annual gift (without filing a return) is $15k if single or $30k for a couple giving which isn't enough for most people to live off of without other income. Of course, if the receiver is a couple that can be doubled.
Bogleheads:

The above is true about filing a gift tax return, but it is important to understand that for 2019 the estate and gift tax exemption is $11.4 million per individual, up from $11.18 million in 2018. That means an individual can leave $11.4 million to heirs and pay no federal estate or gift tax, while a married couple will be able to shield $22.8 million. You can read more here:

Instructions for Form 709 (2018)
United States Gift (and Generation-Skipping Transfer) Tax Return


Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by TomatoTomahto » Wed Sep 11, 2019 3:38 pm

Taylor, that’s true, but some States have much lower exemptions. Massachusetts, for example, starts cliff taxing at $1M, and the tax quickly rises to 16%.
Okay, I get it; I won't be political or controversial. The Earth is flat.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by Leesbro63 » Wed Sep 11, 2019 4:12 pm

Actually, the numbers for most (with a 6+ year life expectancy) are really $6M and $12M (single/married). Because that’s what it will be in 2026 under current law.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by RudyS » Wed Sep 11, 2019 4:23 pm

TomatoTomahto wrote:
Wed Sep 11, 2019 3:38 pm
Taylor, that’s true, but some States have much lower exemptions. Massachusetts, for example, starts cliff taxing at $1M, and the tax quickly rises to 16%.
Unfortunately we just moved to Massachusetts and are faced with this. We had been all set to essentially ignore estate/gift taxation, but now it's time to see an estate attorney to figure out what kind of trust, etc., will work best for us.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by TomatoTomahto » Wed Sep 11, 2019 4:36 pm

RudyS wrote:
Wed Sep 11, 2019 4:23 pm
TomatoTomahto wrote:
Wed Sep 11, 2019 3:38 pm
Taylor, that’s true, but some States have much lower exemptions. Massachusetts, for example, starts cliff taxing at $1M, and the tax quickly rises to 16%.
Unfortunately we just moved to Massachusetts and are faced with this. We had been all set to essentially ignore estate/gift taxation, but now it's time to see an estate attorney to figure out what kind of trust, etc., will work best for us.
It does present some challenges, but I wouldn't say that we feel in any way unfortunate to have moved to MA. We love it here. If you're around the Wellesley area, I can recommend a good estate attorney whose main office is in NH but spends a day or two in Wellesley weekly, and who charges rates more in line with NH. PM me if you're interested.
Okay, I get it; I won't be political or controversial. The Earth is flat.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by FIREchief » Wed Sep 11, 2019 5:01 pm

Not Law wrote:
Wed Sep 11, 2019 11:27 am
"But if I were a parent of teens or twenty somethings (and was financially able to do so), I would also consider funding Roth IRA up to their wage compensation or the annual IRS limit whichever is smaller - at least through HS and college. This would hopefully reinforce good savings habits and get them off to a good financial start."

This is what I started doing with my teenage grandchildren. I told them that I would give them a million dollars - they just have to wait until they are 60 to get it! Any touching of the contributions, without our permission will result in no more gifts. Of course they being teenagers have no concept of what I am doing and how it works.
I wouldn't be so quick to attribute lack of understanding to their young age. Many of us Bogleheads certainly understood investing and compounding during our teen years. My own children (now adult) fully understood it. If the kids "have no concept," I would "blame" the parents. In your case, having started to match or fund their Roth's, don't you think they're gaining a good foundational knowledge/understanding of saving and investing?
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by Taylor Larimore » Wed Sep 11, 2019 8:27 pm

TomatoTomahto & Leesbro63:

Thank you for the corrections. This is why I seldom give tax advice. The laws are so complicated that nobody understands them all. I spent five years in the IRS as a Revenue Officer so I know.

You may be interested to learn that I left the IRS after filling a 33 page Grievance against my boss.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by HornedToad » Wed Sep 11, 2019 8:38 pm

$30Million or so. Or 4x life expectancy/annual expenses. e.g. 20 years life expectancy and 80 years of expenses.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by Prettyfrtnt » Thu Sep 12, 2019 12:49 am

Not Law wrote:
Wed Sep 11, 2019 11:27 am
"But if I were a parent of teens or twenty somethings (and was financially able to do so), I would also consider funding Roth IRA up to their wage compensation or the annual IRS limit whichever is smaller - at least through HS and college. This would hopefully reinforce good savings habits and get them off to a good financial start."

This is what I started doing with my teenage grandchildren. I told them that I would give them a million dollars - they just have to wait until they are 60 to get it! Any touching of the contributions, without our permission will result in no more gifts. Of course they being teenagers have no concept of what I am doing and how it works.
Love this! Smart.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by Prettyfrtnt » Thu Sep 12, 2019 12:50 am

HornedToad wrote:
Wed Sep 11, 2019 8:38 pm
$30Million or so. Or 4x life expectancy/annual expenses. e.g. 20 years life expectancy and 80 years of expenses.
This answers my question and I think you’re quite knowledgeable...

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by RickBoglehead » Thu Sep 12, 2019 5:10 am

Bacchus01 wrote:
Wed Sep 11, 2019 2:15 pm

- Lastly, we’ve told our kids that we would like them, and their families someday, to go on vacation with us once per year, completely paid for by my wife and I. This is an activity we’d like to do for life.
Sounds generous, until you consider that many can only take a vacation once per year, maybe twice, and that these are usually family vacations, i.e. parents and kids. Your offer basically puts them in a no-win situation. Free vacation, but with grandparents. Don't accept, and feelings get hurt.

We often visited relatives during the holidays or perhaps summer. Most visits were a few days. Our vacations were sking with the family at places we picked. Grandparents would have not fit in with our trips - brown bagging ski lunch, dinners on the fly, lounging in room after a hard day skiing doing nothing, sometimes using the hotel's cocktails and munchies as dinner...

I would not put that on a kid who is just entering college. Just something to think about.


We got our kids to fund their IRAs early. Taught them basics of investing. Paid for college and grad school. Now they live their lives with advice - if they ask for it, not money.
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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by TomatoTomahto » Thu Sep 12, 2019 5:29 am

RickBoglehead wrote:
Thu Sep 12, 2019 5:10 am
Bacchus01 wrote:
Wed Sep 11, 2019 2:15 pm

- Lastly, we’ve told our kids that we would like them, and their families someday, to go on vacation with us once per year, completely paid for by my wife and I. This is an activity we’d like to do for life.
Sounds generous, until you consider that many can only take a vacation once per year, maybe twice, and that these are usually family vacations, i.e. parents and kids. Your offer basically puts them in a no-win situation. Free vacation, but with grandparents. Don't accept, and feelings get hurt.

We often visited relatives during the holidays or perhaps summer. Most visits were a few days. Our vacations were sking with the family at places we picked. Grandparents would have not fit in with our trips - brown bagging ski lunch, dinners on the fly, lounging in room after a hard day skiing doing nothing, sometimes using the hotel's cocktails and munchies as dinner...

I would not put that on a kid who is just entering college. Just something to think about.


We got our kids to fund their IRAs early. Taught them basics of investing. Paid for college and grad school. Now they live their lives with advice - if they ask for it, not money.
Kids, for now, get very little contiguous vacation time. What we have done is bribe them to come visit us by making our home as much of a resort as we can: pool, tennis court, etc. They come for long weekends when they can get away and don’t have a better offer elsewhere. They feel comfortable inviting their friends to stay. I absolutely love them to pieces and love our time together, but young people should spend majority of their time with other young people. Just my $0.02.
Okay, I get it; I won't be political or controversial. The Earth is flat.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by abuss368 » Thu Sep 12, 2019 7:20 am

Taylor Larimore wrote:
Wed Sep 11, 2019 8:27 pm
TomatoTomahto & Leesbro63:

Thank you for the corrections. This is why I seldom give tax advice. The laws are so complicated that nobody understands them all. I spent five years in the IRS as a Revenue Officer so I know.

You may be interested to learn that I left the IRS after filling a 33 page Grievance against my boss.

Best wishes.
Taylor
I would agree. The tax laws are so complex that nobody understands them all. I have experience with IRS auditors and I was surprised at how limited some of their knowledge was in certain areas.
John C. Bogle: "Simplicity is the master key to financial success."

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by RickBoglehead » Thu Sep 12, 2019 8:33 am

TomatoTomahto wrote:
Thu Sep 12, 2019 5:29 am

Kids, for now, get very little contiguous vacation time. What we have done is bribe them to come visit us by making our home as much of a resort as we can: pool, tennis court, etc. They come for long weekends when they can get away and don’t have a better offer elsewhere. They feel comfortable inviting their friends to stay. I absolutely love them to pieces and love our time together, but young people should spend majority of their time with other young people. Just my $0.02.
Agree.

We sometimes invited them to join us on a ski vacation. They paid to get to/from the destination airport, we paid for trip. They could feel free to say no, and this was for twenty-something young men, and one of them was still at home (until 2 1/2 years ago), so it was really just inviting the other one. The last time we did this was December 2017 / January 2018. Now one is married, the other in a serious relationship, and we don't have any plans to repeat it. And that one was a disaster, lousy conditions and 3/4 of us got the flu despite flu shots.

We just asked our oldest, now married, IF they planned on taking a Christmas vacation, and they replied that they did not and would be home and working (except for the paid days off and weekends). We ASKED them if we decided to drive to that area of the country during our 16 day break, would they mind if we stayed a few days? They had the right to say no thanks (they invited us last year, but it was 3 weeks after the wedding and we declined).

As to setting up our retirement home to make it "attractive", I get where you're coming from. With one in California and one in Florida, and our planned retirement perhaps in SC, we don't know if making it attractive will be enough, but once the new grandchildren materialize (if they do, we have a 10 year old step-granddaughter), we would hope they'd visit every so often. Throughout their childhood we visited, or had the grandparents visit, at least every year (all were many states away). But again, that's their call. We plan on living on waterfront, in a nice area, but one is very close to the Atlantic and the other can drive to the Pacific if they want, and both are warm weather areas, so it has to be our magnetic personalities and toys laying around. Or perhaps grandchild sitting?
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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by smitcat » Thu Sep 12, 2019 8:51 am

RickBoglehead wrote:
Thu Sep 12, 2019 5:10 am
Bacchus01 wrote:
Wed Sep 11, 2019 2:15 pm

- Lastly, we’ve told our kids that we would like them, and their families someday, to go on vacation with us once per year, completely paid for by my wife and I. This is an activity we’d like to do for life.
Sounds generous, until you consider that many can only take a vacation once per year, maybe twice, and that these are usually family vacations, i.e. parents and kids. Your offer basically puts them in a no-win situation. Free vacation, but with grandparents. Don't accept, and feelings get hurt.

We often visited relatives during the holidays or perhaps summer. Most visits were a few days. Our vacations were sking with the family at places we picked. Grandparents would have not fit in with our trips - brown bagging ski lunch, dinners on the fly, lounging in room after a hard day skiing doing nothing, sometimes using the hotel's cocktails and munchies as dinner...

I would not put that on a kid who is just entering college. Just something to think about.


We got our kids to fund their IRAs early. Taught them basics of investing. Paid for college and grad school. Now they live their lives with advice - if they ask for it, not money.
We like the yearly free vacation offer as well and will continue to use it over time. In our case we will continue to advise and also be able to give extra funds over the years. Sometimes this can work out well , it does for us.

NotWhoYouThink
Posts: 2639
Joined: Fri Dec 26, 2014 4:19 pm

Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by NotWhoYouThink » Thu Sep 12, 2019 9:09 am

Not Law wrote:
Wed Sep 11, 2019 11:27 am
"But if I were a parent of teens or twenty somethings (and was financially able to do so), I would also consider funding Roth IRA up to their wage compensation or the annual IRS limit whichever is smaller - at least through HS and college. This would hopefully reinforce good savings habits and get them off to a good financial start."

This is what I started doing with my teenage grandchildren. I told them that I would give them a million dollars - they just have to wait until they are 60 to get it! Any touching of the contributions, without our permission will result in no more gifts. Of course they being teenagers have no concept of what I am doing and how it works.
I am a retiree and boglehead and have no concept of what you are doing and how it works. Maybe your discussions with your grandkids are more specific.

Are you giving them the money now, in UTMAs, with the understanding that you will keep giving if they keep not spending it? Did you give them one lump sum that you believe will grow to be $1M by the time they are 60? Are you giving them multiple gifts that will add up to $1M? Are you certain this won't affect their college aid, or that it won't matter?

Giving is great, giving with as few strings as possible is, to me, even better.

Bacchus01
Posts: 3122
Joined: Mon Dec 24, 2012 9:35 pm

Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by Bacchus01 » Thu Sep 12, 2019 11:22 am

RickBoglehead wrote:
Thu Sep 12, 2019 5:10 am
Bacchus01 wrote:
Wed Sep 11, 2019 2:15 pm

- Lastly, we’ve told our kids that we would like them, and their families someday, to go on vacation with us once per year, completely paid for by my wife and I. This is an activity we’d like to do for life.
Sounds generous, until you consider that many can only take a vacation once per year, maybe twice, and that these are usually family vacations, i.e. parents and kids. Your offer basically puts them in a no-win situation. Free vacation, but with grandparents. Don't accept, and feelings get hurt.

We often visited relatives during the holidays or perhaps summer. Most visits were a few days. Our vacations were sking with the family at places we picked. Grandparents would have not fit in with our trips - brown bagging ski lunch, dinners on the fly, lounging in room after a hard day skiing doing nothing, sometimes using the hotel's cocktails and munchies as dinner...

I would not put that on a kid who is just entering college. Just something to think about.


We got our kids to fund their IRAs early. Taught them basics of investing. Paid for college and grad school. Now they live their lives with advice - if they ask for it, not money.
I don't follow any of your advice. Sorry.

First, I never said it was a week. Second, it almost always would be around a holiday. We go to the Carribean every year for Christmas. We do not sit at home. Also, we are extremely active. Our idea of a vacation is exactly what you said about skiing. I have no idea why you think that wouldn't fly with grandparents.

just1question
Posts: 69
Joined: Thu Mar 21, 2019 1:36 pm

Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by just1question » Thu Sep 12, 2019 1:15 pm

Because the second part of your question is directed to NW, there is a 17-page (or so) thread from earlier this year (maybe last year) on when is NW enough to retire. Kind of goes hand-in-hand with NW being enough that you can gift money (instead of retire). I strongly recommend trying to find the thread. It's actually my favorite thread on this forum. The range of answers is astonishing, especially the person who needed more than $10M and explained why.

Edit: Here it is: viewtopic.php?f=2&t=224799

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