Should Boomers Spend Their Wealth or Give it to Their Kids?

There’s always a lot of discussion about how parents should handle giving money to their kids and over the last few years, that has started to center around Baby Boomers. Should they give their kids money early on? Give it to them when they die? Some of them think they shouldn’t give their kids anything at all. For example, this is from an article centered around Boomers in Australia, although it applies here, too:

Boomers are embracing a movement called SKI or spending kids’ inheritance, where parents actively set out to spend all their money so there is nothing left for their children.

While this seemingly cruel mindset will anger lots of Gen Zers whose only hope of getting on the property ladder might be inheritance, others say that the problem is with young people.

Trudy Wertheim says that there needs to be a mindset shift among younger generations who expect to get something for nothing.

Speaking to Yahoo, she said: “There is a whole generation of kids being raised, who perhaps their careers didn’t instill in them from an early age, that if you do work hard, you can have everything you want out of life and more.

“There are generations coming through that just don’t expect to work. They expect to inherit or be given or bought a family home by their parents.”

Wertheim is a single mum and said she worked extremely hard for decades to support her family.

She is now in her 50s with children in their 30s and she’s started to think about her retirement.

We spend our children’s inheritance traveling around the world, people call us ‘selfish’ but we don’t care.

She says her children are supportive of her SKI policy.

“They’ve never said to me, ‘We expect you to not spend your hard-earned savings, because that’s ours,’” she said.

On the other hand, there are also kids who seem to feel more than a little entitled to the money their parents earned. Via the Daily Mail:

My inheritance is being drunk through a straw in a coconut in the Caribbean! Am I selfish for resenting my boomer parents for burning through money that should be mine?

'We've booked a villa with a pool,' my mother tells me, scrolling through online photos of a beautiful old Italian farmhouse overlooking olive groves. My mind does the maths.

'For just the two of you?' I ask. 'Or are some friends joining you to … share the cost?'

...It is not a pleasant thing to admit, but the fact is their dream holidays are draining my inheritance.

As an impecunious 34-year-old millennial in an impossibly expensive property market, I am relying on, at some stage, a handout from them. But all I can see is my money receding into the distance on a long-haul trip to Bali.

With many of my friends in a similar position and the cost-of-living crisis still at full throttle, the question troubling us over the generational divide is this. Who is being selfish? Us for wanting them to save their money so we can one day have it? Or them, for splurging it all so freely on themselves?

...I'm not alone in agonizing over where my parents' hard-earned money is going. According to a survey by an online wealth management advice firm called Moneyfarm, two in five adult children feel their 'blood boiling' at the idea their parents are blowing their inheritance on luxury holidays.

Among adult children aged between 35 and 50, 40 percent thought their parents should provide them with an inheritance (compared with 25 percent aged over 65) — and 20 percent had already argued with them about what was going to be left.

Most coldly, almost half of them wanted the money while their parents were still alive.

Our modern media seems to have a knack for creating infuriating, ultra-simplistic takes like the ones you’ve just read on complicated issues – and this is a complicated issue.

As a beginning point, a lot of people don’t necessarily have anything to give to their kids other than their possessions or their house in which they’re living. Maybe they can chip in a few hundred dollars here or there in an emergency, but realistically, when they die, the kids may get some money from selling the house, but that’s it.

You may think this only applies to “poor” families, but there are plenty of middle-class and even families that APPEAR wealthy in a similar spot. They have a nice-looking house and car but owe a ton on both. They’re wearing nice clothes, going on vacations, and looking like they’re living the life, but it’s on borrowed money. Once the debts are paid, there may not be much to give to their kids.

Of course, even if you do have money, there are still lots of questions. The average man in America lives to about 75 while the average woman lives to about 80. However, the top of the human life span is far beyond that. So, what if you overshoot your expected range and live to 100? You need to have money set aside to finance that. On top of it, what if you’re ill at the end? Even if Medicare handles your medical bills, having a helper live in your home or living in a rest home can get really expensive, really fast. $50k+ per year is common and if you need a lot of medical care, it may be more than $100k. Unless you have Kardashian money, which almost no one does, that can eat through any money you’ve saved up in a hurry.

On top of all that, it’s worth keeping in mind that a lot of people have a goal of “doing all the things they always wanted to do” after they retire. Is that a good idea? Probably not, because you never know what your health, money, and relationship situation is going to look like after you’ve retired. If you’ve always wanted, more than anything, let's say to go to Athens, Greece, it’s a better idea to save money and do it earlier rather than wait until you’re 65+ and find that you can’t because you’re broke, your health’s bad or you can’t for some other reason. Even if you are able to do it, depending on how many things you’ve “always wanted to do,” you may burn through a lot of money in a hurry – and on the one hand, why shouldn’t you? It’s your money. You earned it, right?

On the other hand, most human beings have a biological urge to provide for their children. We take care of them when they’re young, we want them to do well in life and most people like the idea of being able to leave something to their kids. Granted, it is possible to do so much for your kids that they turn into spoiled brats, but most people just don’t have enough money to ruin their kids that way.

So, should you leave them something? Yes. Also, if you have the means, it’s probably a good idea to give them a little help when they’re younger, too. The money for a down payment on a house or buying a used car means a lot more for most people at 30 than it does at 65. Can everyone afford to do that for their kids? Nope. Does every kid need that? Nope. But, if your kids could use that and you can afford it, it’s likely to be money well spent.

At the end of the day, you don’t “owe” your kids an inheritance, but most people WANT their kids to have one. In an ideal world, all of us would do our best to have something worth passing on to our heirs.

---