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What Legacy Are You Leaving to Your Children?

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What Are You Leaving to Your Children?

Are you planning to leave a legacy to your children? I haven’t thought of it that much because this is a deeply unpleasant subject. It ranks up there with long term care and life insurance. Nobody wants to think about what happens when you get old and die. Normally, I prefer to write about the sweet spot in life between quitting work and death. 😀 However, Lily @ The Frugal Gene mentioned that leaving a legacy was a nonnegotiable condition for getting married. Wowza! That’s very surprising to me because she is young and doesn’t have kids. Leaving a legacy wasn’t on my radar at all when I was her age. Mrs. RB40 and I were too busy having fun to think about our nonexistent kid in our 20s. Inheritance isn’t even a big consideration now. Yes, I’d like to help our son out, but that’s the least of my concerns on my long term personal finance goals. I’m not leaving him with nothing, though. Read on…

My experience with generational wealth

First, let me share my personal experience with generational wealth.

My dad was orphaned when he was just 5 years old. His parents were poor so they didn’t leave him anything. It was a struggle, but he managed to graduate from college on his own. He was a natural entrepreneur and he hustled hard all his life. However, he never had any financial support. He started many businesses, but they rarely worked out because he didn’t have a solid financial foundation. It’s hard to start a business on borrowed money. Also, I think he expanded his businesses too quickly. That usually doesn’t work when you don’t have solid financial backing.

My mom’s side was a bit different. Her family was actually pretty well off at one point. Her parents built a successful fabric business from nothing and sent all 9 kids to college. This was pretty amazing for Thailand in the 60s. Unfortunately, my grandfather made a bad investment in the cinema business and went bankrupt before I was born. I don’t know all the details, but this was devastating for him. He lost everything and didn’t have any money to leave the kids. At least, they were all college educated so they could get good jobs.

Today

Fast forward to today and my parents are older with minimal assets. My dad is still hustling in his 70s to make spending money. This is good for him. He is very restless and if he has too much money, he’ll spend it frivolously. My mom has no income and not much  retirement savings. She lives with us 9 months/year and spends the winter with my brothers in California. My parents won’t have any inheritance for us except a few pictures. That’s fine with me, though. They put me and my brothers through undergraduate studies and I’m very grateful for that*. I graduated with no student loan debt and it was a great starting point in life. That’s a lot better than most kids these days.

*Actually, one of my brothers is a doctor. He had student loan debt when he graduated, but I think that’s almost unavoidable for medical school. Doctors are in school for so long. He got through undergraduate without debt and that’s pretty good.

Our son

As you can see, my experience colors my feelings on legacies. From my point of view, a good college education was what I needed to get a good start in working life. Sure, an inheritance would have helped, but I didn’t need it. I’d prefer they spend money on themselves instead of trying to save something to pass on. That’s why legacy isn’t high on my list. I’m not getting any and our son shouldn’t expect anything either. We’ll take care of ourselves first and consider the ramifications later when we’re on the way out. However, that doesn’t mean I’m not leaving RB40Jr nothing. Let’s see what we’re going to do to help him get a leg up on life.

1. Formal Education

My parents helped me graduate from a college with no debt and I’d like to do the same for our son. If you have children, you already have nightmares about the cost of college. RB40Jr will graduate from high school in 2029 and college will be even more expensive then. I’m planning for about $50,000 per year, which is what public in-state college will probably cost. If he wants to go to an expensive private university, then he’d need to get scholarships or student loans. On the other hand, he would get a nice graduation cash bonus if he chooses to live at home and save some money. I think it’s important for kids to have some choices and deal with the consequences themselves.

529 plan

The good news is that we have a head start on college savings. We saved extra in his 529 plan in the first few years to front load his college fund. The stock market has performed very well since he was born so his college fund is worth $75,000 now. We’ll continue to save about $4,000 per year in his 529 and it should continue to build. By 2030, his college savings fund should be close to $200,000 if all goes according to plan.

If he receives scholarship or other aid, we can always gift the leftovers to our nephews and nieces. I’m not worried about having too much money in the 529 plan.

I think helping RB40Jr graduate from college with no debt is the best legacy we could leave him. This will be our #1 priority as far as inheritance goes. Everything after this is gravy.

2. Personal Finance Education

Okay, I was wrong about the gravy above. Personal finance education isn’t gravy, but at least it won’t cost a lot of money like college. Everyone needs to learn about personal finance. However, most young adults don’t know much about it. The only thing I knew when I graduated from college was how to live frugally and save money. I had to learn about budgeting, investing, debt, passive income, lifestyle inflation, maxing out my 401k, financial independence, and early retirement on my own. I’ll make sure our son learns all about personal finance by the time he graduates from college. Hopefully, we’ll be around to advise him personally after college as well, but you never know what’s going to happen in the future.

3. Retire by 40

Another thing I will leave to my son is this blog. Today, there are over 1,200 posts on Retire by 40 and he’ll be able to learn from my experience. I hope to teach him all I know about personal finance in real life, but it might not stick. You know how hard it is to listen to your parents. I still have a hard time following any of my dad’s suggestions. Reading this blog will be less confrontational and he can learn from all the comments too. I think Retire by 40 will be a nice legacy to our son.

In addition, Retire by 40 probably will continue to generate passive income if he puts some effort into it. He can learn about online advertising and take over at some point. It’ll be a great side hustle for him once I can’t run this site anymore (laziness.) It’ll be Retire by 40 2.0!

4. Not being a burden

This next one hits close to home. As I mentioned, my parents don’t have much retirement savings and we will need to help them out as they age.

My dad

It’s okay right now because my dad is still active, healthy, and independent. He lives in Chiang Mai, Thailand, so the cost of living is relatively low. I’m not sure what we’ll do when he needs more help. We could send money, but that might not be enough if his health declines. There are a few nice retirement communities in the area. We visited one retirement resort in 2016 and it felt like a low key all inclusive resort. Back then, it cost $1,300/month for one retiree. That includes accommodation, food, activities, and first aid care. Retirees pay extra for healthcare if they need to visit the hospital. However, I’m not sure if my dad can handle living in a retirement community. He’s always on the go and I doubt he can slow down.

My mom

My mom lives in the US. She slowed down a lot over the last few years. Recently, the neurologist diagnosed her with mild cognitive impairment (MCI). This isn’t too bad in the grand scheme of things, but she can’t live independently anymore. For example, she puts the laundry in at 2:30 pm and the washing machine takes 45 minutes. She can’t figure out when to go get it. It really sucks because she taught math when she was young. It’s affordable to have her live with us for now. I can take her to the doctors and help with other stuff because I’m not working full time. If I was working, I wouldn’t have time to help out.

Sandwiched

So I’m officially a part of the sandwich generation now. It’s hard to raise a kid and care for my mom at the same time. At least my dad is still independent. That’s where I hope to be when I’m 70. Mrs. RB40 and I will live independently so our son won’t be burdened with much. If we need help, we’ll have enough money to hire helpers or move into a retirement facility. So this will be another gift from us. RB40Jr can focus most of his energy on his family and won’t have to worry so much about his parents.

5. Anything left

We live a modest lifestyle and I don’t think that will change much as we age. If we don’t go bankrupt from medical care, there should be plenty of money left over when we’re gone. See, I knew this was a depressing topic. Well, who knows what the future holds. RB40Jr can have whatever is left provided that he’s a good person. If he turns out to be a jerk, then any money left can go to charity.

A good start in life is more than enough

So that’s why leaving a legacy is low on my priority list. We’ll try our best to help him finish his undergraduate degree with no debt. That will give him a leg up on life and he can make his own fortune after that. It’s better to build wealth on your own so you can appreciate how much work it takes. Winning the lottery or inheriting a fortune sounds nice, but it seems people don’t appreciate it. It’s much easier to squander money that you didn’t work hard for.

What about you? Are you building a legacy for your progenies? What are you planning to leave to your children?  

*Sign up for a free account at Personal Capital to help manage your money. I log in almost every day to check on my accounts and cash flow. It’s a great site for DIY investors. Check them out if you don’t have an account yet.

Disclosure: We may receive a referral fee if you sign up with a service through the links on this page.

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Joe started Retire by 40 in 2010 to figure out how to retire early. He spent 16 years working in computer design and enjoyed the technical work immensely. However, he hated the corporate BS. He left his engineering career behind to become a stay-at-home dad/blogger at 38. At Retire by 40, Joe focuses on financial independence, early retirement, investing, saving, and passive income.

For 2018, Joe plans to diversify his passive income by investing in US heartland real estate through RealtyShares. He has 3 rental units in Portland and he believes the local market is getting overpriced.

Joe highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help every investor analyze their portfolio and plan for retirement.

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{ 77 comments… add one }
  • Mr. Tako May 7, 2018, 12:38 am

    I haven’t planned for it specifically but I think we’ll probably have money left over that’ll go to the kids.

    Probably a lot of it will go to healthcare and nursing home-type costs when I get old. Those expenses aren’t trivial. But whatever’s left I don’t mind sharing with the kids.

    As far as the blog goes, one of the main reasons why I started my blog was to leave a legacy of personal finance and investing knowledge for the kids. I don’t know if blogs will still be around then, but the knowledge is pretty timeless.

    • retirebyforty May 7, 2018, 11:38 am

      I hope we’ll have some money left too, but you never know. Medical care will be crazy expensive in 30 years at this rate.
      We might just go live in Thailand or some other lower cost countries for healthcare.

  • Michael @ Financially Alert May 7, 2018, 1:11 am

    I’m definitely conflicted about leaving my children too much money. I don’t want them to simply “coast” comfortably because it could lead to an unfulfilling life. Rather, I want them to have enough reason to make it on their own. So, perhaps I should adjust our trust to dole out the proceeds of their inheritance to later in life when they’ve already gotten some momentum into their careers.

    I agree with you that an education is something I’d provide freely (both traditional and financial). My parents did that for me and it was much appreciated.

    • retirebyforty May 7, 2018, 11:39 am

      I need to set up a living trust. I think later in life is good. Maybe a set amount at 30 and 40?
      I’ll look into it.

  • Lily | The Frugal Gene May 7, 2018, 2:19 am

    I looooved this post and your mom and dad’s backstory! Your list really made me think because I usually go into this legacy talk from one main angle: we’re healthy / assisted suicide (sorry super dark…) and college (and college costs) no longer exists in the traditional sense.

    My husband didn’t agree with the legacy thing at first because at the time he was 28 and in his words, “it’s just not the American way.” His parents paid for everything, including college. Like you said, they gave all 4 kids a strong building block and base for them to do their thing. When Hippo graduated from university, he was expected to be fully on his own and independent.

    As for me, even if we had the money, I wouldn’t pay for their education at that young age. An education is immeasurable, I totally agree, but I wanted them to have at least 50% of their skin in the game. My parents did the 50/50 cost with me and I took money very seriously after I paid back my loans because the debt was sobering. Nothing like personal finance 101 than to see your net worth as a negative number. *Shudders*

    I have a fear of being a burden to my kids so I’m…(and that’s just my own brand of crazy) was hoping euthanasia becomes legal or more accepted. Death is going to happen, I don’t feel like fighting it once I have hit most of my life goals. Like…hey I’m tapping out, great run, your turn!

    I rather see my kids with the funds, or donated, anything is better than wasting it to prolong my life. That money would go better elsewhere than to medical care.

    Thank you for opening up this conversation Joe! This is very fun! (Or I’m weird). Plusssss, I’m beyond excited for my blog to be passed on too. It would be very cool if Jr retired by 40 too! Now that’s a true legacy! On my blog, they can read moms crazy ramblings! We live in an amazing age!!! =)

    • retirebyforty May 7, 2018, 11:45 am

      I need to make a cast list like your. I agree with your husband for the most part. If they have solid foundation, they can build their own wealth.
      I want our son to have some kin in the game too. We’ll think about it more when he’s a bit older. 50/50 sounds good. We can always help pay off the loan later. I’m very appreciative of my parents for helping me pay for college. I worked too, but didn’t make much.

      Euthanasia is legal in OR. You can just take the train down. 🙂 I wouldn’t want to burn up all our savings in medical care either. We’ll figure out when we get there.

  • Accidental FIRE May 7, 2018, 2:45 am

    If he turns out to be a jerk, then any money left can go to charity.

    Ha! I highly doubt your son will turn out to be a jerk. I think your blog will be an AMAZING legacy! Sure, he might go through his phase where he doesn’t want to listen to his Dad, but I can’t see how all these awesome articles and the comments would not have an impact on him.

    I don’t have kids, but if I ever do I agree with you that I would likely make sure to put them through college if they want to go. I don’t think that should be mandatory for all parents, but for me, coming from Baltimore, it was a lifesaver.

    • retirebyforty May 7, 2018, 11:46 am

      You never know. He’s a bit jerky right now. His emotion tends to get out of control.

  • [email protected] May 7, 2018, 2:51 am

    Great post, Joe! We will likely inherit money from my parents when they pass. They worked tirelessly to give us things they never had and they paid for a substantial amount of my undergraduate degree. We are doing the same for our kids and it has already made a huge difference. Both kids will graduate debt free. But I also know our kids see our work ethic and have picked right up on that. They know that we highly value hard work (and lots of fun.) Health care is our big concern in terms of leaving a legacy. My dad is 87 and in a nursing home at $5000 for very basic care. We assume we’ll have money to leave, but we feel better that we’ve helped our kids start life without debt. We are also FI so we didn’t pay for college without having a solid financial future for ourselves.

    • retirebyforty May 7, 2018, 11:48 am

      $5,000/month. That’s not cheap. I’m sure you’ll have to pay extra for other stuff too.
      It sounds like you’re doing very well. Nice job!
      I’m already looking forward to the day our son graduates from college. It’ll be a huge accomplishment for everyone.
      Thanks for sharing.

  • Good morning Joe,

    Thanks for sharing and opening up the conversation.

    I know of a few people (self included) who say only half-jokingly that our last cheque to the underwriter will bounce…

    I would rather gift that money while I’m around to watch them enjoy it. Besides, if we follow a normal life expectancy, then inheritance won’t likely come until the kids are in their 50s or 60s. It would be much nicer to help them get a good start in life.

    Which brings me to the college thing: I absolutely agree with Lily about the kids having some skin in the game. I think that’s very important and help teaches responsibility and appreciation. As for how much, our plan is to give them just enough so that they still have to work during the summers, apply for scholarships/grants, etc., and live frugally, but can come out debt free if they’re responsible. Costs in Canada are much less but still ridiculous.

    But the money thing aside, teaching your kids to be responsible, contributing members of society with a good sense of financial management is certainly high on my list, like it is on yours.

    • retirebyforty May 7, 2018, 11:50 am

      I should update the main post about having some skin in the game. I need to figure out a plan. 50/50 sounds good, but I doubt kids will be able to cover their 50%. They’ll need to get student loans. I made very little when I in college. My student level income barely made a dent in the cost. I was a TA for a year and that was good because I got tuition deduction.
      Thanks for sharing.

    • David @ VapeHabitat July 25, 2018, 5:17 am

      I leave my experience + self-confidence + creativity + ability to think out-of-the-box

  • Half Life Theory May 7, 2018, 3:44 am

    Wow, very thought provoking for me. Thinking about leaving a legacy for my daughter, i’ve always felt was a given. But i guess i haven’t give solid thought to how i can actually make that happen.

    Paying for college alone, Yikes! By your numbers are kids should be about the same age, $200,000 for college? I think i’m going to spend a lot of time emphasizing starting a business at a young age. With the rate technology is advancing, and entire careers are being automated, maybe college might not be the smartest investment in 2030…. or maybe i’m just cheap.

    Either way, awesome post, i really enjoyed your back story too!

    • retirebyforty May 7, 2018, 11:55 am

      A big part of the problem is the cost of living for 4 years. If they live at home, it’d be more affordable.
      Focusing on entrepreneurship is good too. I like that idea.

  • Firethe9to5 May 7, 2018, 3:49 am

    This is a thought provoking post, I’ve been mulling it over all morning. You are a very generous person to be taking care of your mum with no complaint. I would always take care of my parents if they needed help but it places such a huge burden on the rest of the family, I hope for all our sakes that they can stay independent as long as possible.
    So that made me think, the most important thing I want to give to my children is the freedom from me. If there is enough that I can pay for assisted living or carers if I ever need it, then they can concentrate on their own lives and their own families.
    I wonder what they would say if we asked them?

    • retirebyforty May 7, 2018, 11:56 am

      I try not to complain, but it happens from time to time. It’s okay for now because she can still function for the most part. She just have a lot more questions than she used to. When to go get the laundry, etc…
      Best wishes.

  • Lazy Man and Money May 7, 2018, 3:51 am

    I’ve thought about leaving a legacy, because it’s just one of those things that pops into my head when I think about the distant future. Thinking about the future is something that I naturally do.

    We don’t (yet) have the sandwich situation you do, so it’s easier to focus on the kids. As you say, health is always a wild card, so we won’t know what we’ll leave our kids with. We have a few rental properties and I’ve had it in my head that they’d inherit them. That’s $1000/mo. (that keeps with inflation).

    Education, even in elementary school, is very important to us and we’re spending more on it than any PF blogger I’ve come across. We’re hoping/betting that it snowballs and gives them a leg up later on in life.

    • retirebyforty May 7, 2018, 11:58 am

      I like your strategy of leaving the kids a rental home each. They can learn about investing, passive income, DIY, and a lot of other things.
      Our elementary school is great. If our school was subpar, I’d consider private school too. Anyway, that’s why we live in this expensive area…

  • David @iretiredyoung May 7, 2018, 4:12 am

    I’m completely with you on this one Joe. I’ve tried to bring my kids up with the right values, tools and education so that they can make the most of the opportunities that they wish to follow. If I’ve done it right, then I feel that’s much more important than leaving them money.

    I also look at how I approach the subject with my father. I want him to enjoy his life, and not to miss out on things because he’s trying to leave me something. I suspect (at least, I hope) most children feel this way.

    That said, I suspect there will be something for the kids but, like you, it’s not top of my priority list, and I don’t think it’s top of their mind either.

    • retirebyforty May 7, 2018, 12:00 pm

      Thanks for sharing. We look at it exactly the same way. Great minds think alike. 🙂

  • Darren @ Learn to Be Great May 7, 2018, 4:19 am

    Joe,
    Hopefully the legacy that we leave our children will be to show them how to love and support each other through thick and thin. We’re going to send them to the best possible schools which is why I’ve moved from the Pacific Northwest to the Chicago Suburbs (higher paying job and better ranked schools) and support them (not sure how much yet) through college.
    Like you, anything after that is gravy but we definitely don’t want to be a burden. I have a military retirement and health insurance so as long as I stay healthy (alive), our children won’t have to worry too much about us…I hope.
    Loved this post!
    Darren

    • retirebyforty May 7, 2018, 1:51 pm

      Supporting your sibling is a good objective. My brothers and I were raised that way and we’re there for each other.
      Unfortunately, our son is a single child. He’ll have to learn to love and support his immediate family when the time comes.
      The military retirement sounds okay. Hopefully, the VA will improve at some point. I haven’t heard good things lately.

  • [email protected] May 7, 2018, 5:04 am

    Your dads story sounds incredible!

    I’m with you on not being focused on leaving a legacy. My goal is also to put my sons through undergrad. With that, I’d expect them to find a way to be independent and not need anything from us. Chances are, there will be money left when my wife and I pass away but leaving an inheritance is not at all a goal if mine today.

    Quick question re the 529. Do you ever worry that you’ll save too much in it? When JR goes to school, it could cost $200K or it could be free. Nothing would surprise me anymore. Have you considered cutting back on 529 contributions and saving in a taxable account for the added flexibility?

    • retirebyforty May 7, 2018, 2:01 pm

      Yeah, he had a pretty crazy life. But the struggle left scars. He’s fun to be with for a couple of days, but we can’t live with him long term. He is extremely stubborn and will do everything his own way.
      I don’t worry about having too much in the 529. It’s better to have too much than too little.
      I’m not sure how the 529 affect scholarship. But, I know 6% of the account is figured into FAFSA. I don’t think a big 529 will adversely affect financial aid and scholarship. I could be wrong…

      • jim May 8, 2018, 11:24 am

        529 balances won’t impact eligibility for merit based scholarships.
        And if your kid does get a scholarship then you can pull an equal amount out of the 529 penalty free (but you do pay tax on the earnings and I don’t know how it impacts taxes at the state levels).

        • retirebyforty May 9, 2018, 7:31 pm

          That’s what I thought. I don’t mind transferring the 529 to our nephews and nieces either.

  • Budget On A Stick May 7, 2018, 5:06 am

    My parents have done more than enough for my sisters and me. They’ve got all of us out of college with no debt, handed us a beater car for free, and later helped with getting each of us our first house.

    If I can do at least the first two of those things for my two boys I’ll be happy. I’m not sure what more I can do but get them a solid start to life.

    • retirebyforty May 7, 2018, 2:03 pm

      It sounds like many of us in the PF community had help with our college education. I think that makes a big difference.
      Good luck with your boys!

  • Ms. Frugal Asian Finance May 7, 2018, 5:11 am

    I can really relate to this post. I’m happy to leave our children everything that we have when we die. But we also need to walk the fine line between helping them whenever they are in need and teaching them to be independent and responsible.

    Like you, Mr. FAF and I don’t want to be a burden to our children, so we are building a long term financial plan for ourselves. I would really hate for them to not want to live together with us but feel obligated to do so.

    • retirebyforty May 7, 2018, 2:05 pm

      Right, we all want to help our children, but money isn’t always useful. It’s better to teach them to stand on their own two feet. Extra money will be gravy. 🙂

  • Tom @ Dividends Diversify May 7, 2018, 5:15 am

    Hi Joe, We don’t have any kids. We plan to leave whatever is left over to our niece and 2 universities we attended and helped us get our starts in life. The biggest challenge we have is finding the right balance of spending what we have without jeopardizing a future unknown. Habits formed over 30 years of accumulating wealth die hard. Tom

    • retirebyforty May 7, 2018, 2:06 pm

      Thanks for sharing your plan. I like it. I’m not sure if I want to leave some money to our college. They already got plenty from us when we were students. 🙂 I’ll have to think about it.

  • Legacy wealth is such a tricky thing. The statistics are not good two and three generations out (where 90% of wealthy families have it lost by then). I feel much more strongly about the strong base / safety net like you, but I think there’s a balance between that and too much entitlement. Haven’t quite figured it out yet either.

    • retirebyforty May 7, 2018, 2:08 pm

      Is that true? 90% seems really high. I’ll need to do more research about this. If this is true, then there is not point leaving money to the kids.

      • jim May 8, 2018, 11:02 am

        Here’s a source :

        70% of Rich Families Lose Their Wealth by the Second Generation
        http://time.com/money/3925308/rich-families-lose-wealth/

        “Indeed, 70% of wealthy families lose their wealth by the second generation, and a stunning 90% by the third, according to the Williams Group wealth consultancy.”

        A big part of it is that it gets split up and spread around multiple people. i.e. by the 3rd generation it might have been split up across 4-20 grandkids.

  • Adam May 7, 2018, 6:15 am

    We don’t and most likely won’t have kids, so from our perspective it frees us up to do anything with our bequests without any sense of obligation. But my young godson’s family isn’t exactly raking it in, and no doubt our toddler nephew (and any of his future siblings) could use a hand at some point. Either directly or held in trust if they don’t turn out to be quite as responsible as we’d like.

    Ideally we’d be in a position to part with a good chunk of those funds while we’re still around to see them accepted! I’d love to be able to help them out with college or reliable transportation as needed.

    • retirebyforty May 7, 2018, 2:09 pm

      I think college would be very much appreciated. That’s a big bill.

  • Helen May 7, 2018, 6:44 am

    Joe, this is a great topic. I have been thinking quite a lot about aging and mortality. That’s the reality I don’t like, but have to face it, and plan for it.

    Yeah, health is a wild card. I can only do so much health wise for myself. I hope that, I’m independent both physically and mentally till the last day. I don’t want to be a burden to anyone, and will try to make it happen. To me, my life is more about quality than quantity.

    • retirebyforty May 7, 2018, 2:10 pm

      I don’t want end of life care to drag on either. It sounds so unpleasant.
      Take care of yourself. We need to be healthy to enjoy early retirement longer.
      Best wishes.

  • Mark @ fifreaks.com May 7, 2018, 6:44 am

    I think this is a great topic. I think we owe our kids a few things in addition to the basics of food, shelter, and clothing: An education, the freedom to make their own choices, help when they ask, and letting them know they are loved and supported.

    My kids are only 12 but have been involved in all financial decisions since they were 8 or so. To me, teaching them about FI is more important than leaving them a truckload of cash. If they don’t understand the FI principles, any inheritance will just be blown. I’m planning on teaching them enough so they can manage our finances while we’re alive but maybe not so mentally capable. Since we’re likely to leave our kids a sizeable chunk because of our successes, they should at least know how to manage and care for what they get.

    • retirebyforty May 9, 2018, 7:08 pm

      That’s great. I’m trying to teach our son about personal finance, but it seems hard because he’s just 7. I’m sure he’ll mature very quickly now. Do you have any tips for teaching kids about FI?

      • Mark @ fi May 10, 2018, 6:47 am

        It’s been a fun journey watching them “get it. We started them pretty early, around 3 or 4 years old, with not buying everything they see. Then continued on to saving for a rainy day. Fast forward to now when they’re 12 and we’re talking about diversification and asset allocation. Just this week, one of my kids had a stock-picking challenge at school. They were told to invest $10,000 and were given 7 stocks from which to choose. The only stock he knew was AAPL but instead of spending it all there, he bought equal dollar amounts of each stock. He didn’t win but still knew he did the right thing. He also understood that had the duration of the contest included a downturn, he probably would have won. Proud dad moment.

        I’ve had a post on this subject in draft (err… in my head) for months. Probably time to write it up.

  • Rich May 7, 2018, 7:10 am

    It’s definitely much more than I’ll leave to mine which is only life and a small portfolio when I died if I haven’t spent everything.
    I had nothing when I started and I intent to give nothing to my child – he’ll have to fight for himself like I did for me!

  • Ruth i Virginia May 7, 2018, 7:20 am

    Have you thought about the fact that YOU might die before your parents?
    My son, 57, died of kidney failure at the end of April.
    Don’t assume that you’ll outlive your parents.
    Are you ready with a will, power of attorney that covers both your money
    and your health? You might be in a car crash and become a vegetable;
    somebody’ll have to take care of all that money you’ve gathered, so as to
    be able to live w/o working.
    Just sayin’ !

    • retirebyforty May 9, 2018, 7:10 pm

      No, I haven’t thought of that. Fortunately, I have 2 brothers who could take over. Yes, it’ll be harder on them. We have a will, but not the other things yet. I need to work on that. Thanks.

  • Doc G May 7, 2018, 7:21 am

    I think we are like you. What we really hope to leave our children with is a living example of how to maneuver and succeed in their environment. If they have learned from us how to plan, hustle, And fail appropriately…our job is done.

    Actual money, not as important!

  • [email protected] May 7, 2018, 7:22 am

    I’m with you on this. I have 2 young kids and it’s something that has crossed my mind. I definitely want to help with college costs as much as possible and help them get a head start in life. I wouldn’t want them to take money for granted and think they will always get bailed out. I think teaching them to be financially literate is way more important. But of course as all parents…yea we want to help them out too. But unfortunately, many parents help too much and the kids never grow up and learn to be independent.

    • retirebyforty May 9, 2018, 7:11 pm

      Right, I don’t want to help too much either. The kids need to be able to stand on their own. We won’t be around forever.

  • FullTimeFinance May 7, 2018, 7:25 am

    I have a post coming up on this so I won’t spoil it too much. But I’m largely aligned with you.

    I don’t feel education and personal finance are part of legacy. I view those as my responsibility as a parent. Beyond that ensuring I’m not a burden is my focus.

  • Cindy Brick May 7, 2018, 7:44 am

    One of the most important legacies my father gave me was emphasizing the value of a good reputation. He said that if you had this, it was priceless — and he was right. If your name is good, you can start over…because people trust you. And frankly, you trust yourself.

    He also taught me how to stretch my money. Fortunately, the Brick’s parents also knew how to live frugally, and taught him that, as well. When we married, that was the foundation — and we’ve built on it ever since, even during the years we made $20,000 or less.
    Those are far better gifts than dirty old money.

  • Xrayvsn May 7, 2018, 8:17 am

    This is definitely something I have often gone back and forth on in my line of thinking. I know I will provide for my daughter (who is in 7th grade now) for her college education. She has expressed her desire to become a physician like me. I most likely will let her accrue student loan debt at that point if she does decide to take that course similar to what I had to do. There are so many reports of how the vast majority of generational wealth is lost by the 2nd and 3rd generation. It is mainly because these individuals never had to work for it and never knew the kind of sacrifices needed, and thus it is like found money and spent foolishly. After reading articles like that I am less inclined to sacrifice much when I finally retire so that I can leave a large amount to my child. The best thing I can do is provide an example of how to earn money (I have already taught her the concept of passive income which I think is the true key to happiness) and show her examples of mistakes I made so she doesn’t have to repeat them. That and me being financially well of in my golden years that I would never become a burden to her. But I don’t feel obligation to sacrifice just to provide a larger inheritance anymore.

  • Millionaire Doc May 7, 2018, 9:41 am

    Here is my grand fantasy for a legacy- (I’m nowhere close to it)
    When I retire, I will have a large sum of money. Being cognizant of the saying “shirtsleeves to shirtsleeves in three generations”, I want to leave a legacy of financial education and multi-generational wealth that will go on in perpetuity. But with multiple generations, and hundreds of descendants, that becomes harder and harder. So I’d do an annual one week family retreat for all descendants. A time of family togetherness AND education. Like a medical conference. Mornings are for financial education with the lawyer, accountant, investment adviser, family office planning, investment idea brainstorming, etc. There would be guest speakers and workshops and breakout sessions. Then the rest of the day for leisure. Hopefully, with each passing generation, the family wealth continues to grow and won’t be squandered.

    • Joe May 8, 2018, 5:24 am

      Sounds expensive… like 9 figures of net worth expensive.

    • retirebyforty May 9, 2018, 7:16 pm

      That’s really neat. It’ll be great if you can set it up. Sounds really complicated, though. You’d need to have someone competent take charge of this conference.

  • Ms ZiYou May 7, 2018, 10:13 am

    This is an interesting topic Joe – and I think I will be the lone voice saying that inheritances are perpetuating inequality in society – I understand people want their kids to succeed, but sometimes the bigger is also relevant.

    • retirebyforty May 9, 2018, 7:19 pm

      I don’t like excessive wealth either. That kind of money should go to help improve the world. That’s why I admire Bill Gates and Warren Buffett so much.

  • Revanche @ A Gai Shan Life May 7, 2018, 10:13 am

    Same as you, our biggest concerns are funding an adequate education for our kid and taking good care of ourselves until we die.

    Other than that, I’m of two minds about leaving JB a legacy. I want enough money to sustain zir through mid-20s if we suddenly die, but after that, I want zir to be independent and learn the skills of earning and saving and investing. I don’t want to cripple zir with “easy” money, you can’t pass that down forever, and you can certainly always lose it if you’re really unlucky.

    And like you said, if JB turns out to be a jerk, ze doesn’t get anything anyway! I refuse to give more money to someone who isn’t a good person.

  • Pennypincher May 7, 2018, 10:13 am

    Wow, what a post! My legacy will be leaving all my bad habits!
    The debt free college education is really a great one. Only they won’t realize it right away. Looking back, they will. The best start in life after college, for sure.
    Teaching personal finance is one of the most challenging. It takes years to teach this, and half the time they don’t listen to you anyway-ha,ha. They so have the magic of compounding in their 20’s, but they want to live it up!

  • Joe May 7, 2018, 12:36 pm

    Great take, I agree with everything you said. I am thinking about this very issue.
    There is going to be a lot left for my kid, but I probably won’t leave it all to her. Currently I have her pencilled in to my living trust for $500k when she turns 30. But it’s subject to change depending on her development, she is only 5 now. I have her 529 funded to $80k already.
    I’m pretty sure there’s going to be 8 or even 9 figures left over when I pass, but I want her to be independent, to find her own life and her own dreams, not live off leftover money.

    I grew up parentless and living on food stamps and donations, she won’t have a life like that, but some hardship definitely builds character, resilience, and compassion.

    I’ll leave her enough to not be homeless or starve, but not enough to be lazy or entitled.

    • retirebyforty May 9, 2018, 7:21 pm

      I think a little hardship builds character too. If your life is too easy, you won’t be as resilient.
      We’d like to set up something similar too.

  • freebird May 7, 2018, 1:25 pm

    No kids but nieces and nephews will likely be sharing a significant pot when I’m gone. At my current spending rate, net drawdown will probably be negative (it’ll probably grow faster than what I take out over time).

    Not that they’ll need it– or even want it for that matter. They’re still young but so far they seem to be on track to do what I did without my help. Come to think of it maybe the bequest itself is a burden to them, because by accepting it they can’t claim the “did it all on my own” narrative.

    So maybe I’ll leave it set up in their names and add the written stipulation that I’m very happy if they choose to decline and give their shares to a charity of their choice.

    • stephen August 26, 2018, 4:08 pm

      My parents have opened a donor advised fund. About half of their estate will go there, and we are the trustees that will give it away.

  • Susan May 7, 2018, 1:25 pm

    I grew up very poor. I have 3 adult children and hope to leave them money when my husband and I die. We both weren’t left anything by our parents upon their death. Mine because they didn’t have any and his because his dad remarried and she got it all. that’s a punch in the stomach. So we both vowed to not make our kids feel this way. Our kids are self sufficient, own their own homes with no help from us. I taught them at a young age how to handle money and they aced the class. I can’t wait to leave them some major cash. Well maybe I can wait a bit 🙂

  • Ruth i Virginia May 7, 2018, 1:55 pm

    It’s rather distressing to read so many comments, but not a one talks about
    leaving a legacy that doesn’t involve family. My daughter has a cleaning woman, who
    holds down several jobs. She has a daughter going to community college; it’s a
    struggle, but the mother is determined that her daughter will get a degree. My daughter
    heard about it, got acquainted with the young woman and decided to pay her tuition.
    She demands to see the grades whenever they are given. My daughter has always been
    generous, but not dumb. But to give somebody a lift, when it is most needed is, to me,
    a good way to spend money.
    The old saying:
    “Money is like manure; doesn’t do any good unless it’s
    spread it out to help young things grow”.

    • retirebyforty May 9, 2018, 7:24 pm

      Thank you for sharing. I think lifting someone up is great too.
      I’ll keep this in mind.

  • Dividend Earner May 7, 2018, 11:21 pm

    I would like the online business to be a legacy but not as a here you go, it’s yours now. As they get older, I want them to be part of it and start being owners. It’s a business, after all, they will need to learn how to operate a business (accounting, finance, marketing, research and so on). I would like to bring them onboard with roles, ownership and revenue.

  • Felipe May 8, 2018, 9:46 am

    Your family history does put your blog in perspective. Thanks for sharing it. I like the comment above about leaving something to non-family. I have a very poor, hard-working friend abroad. She works 7 days a week, no vacation in years. Never, ever complains and has a happy life. When my mom dies and leaves me money, I’m going to take a small (to me, but not to my friend) amount and say my mom left it to her. Truth is, that’s not my mom’s will. But my mom is leaving us quite a bit, so I feel like I could share a small amount in a way that wouldn’t hurt the pride of my friend.
    For family, I know of a 25 year old who inherited $50,000. It went up his nose on a cocaine binge. But my grandpa left each of us about $50,000 many years ago. Each of the five of us, though we were in our 20’s, treated it very wisely. One paid student loans from med school, another bought a house, and mine is still invested. Family may or may not do what you hope with it. You can’t control that. It’s their path to take in my mind, as long as they’re adults.

    • retirebyforty May 9, 2018, 7:28 pm

      That’s very admirable. We all need to help our fellow human.
      $50,000 is a huge amount of money in many parts of the world. It ridiculous to use it on drugs.
      Thanks for sharing.

  • FIRECracker May 8, 2018, 10:18 am

    Wow. Very generous of you to provide college costs for your son!

    My parents didn’t pay for my university tuition because they had to support family back home in China. This actually ended up being a blessing in disguise because I got into a engineering program that was 1 year longer but enabled me to work while studying so I could pay my expenses and end up with 0 debt. This is also how I ended up with 2 years experience after graduation and a job offer. If my parents had paid for my tuition, I wouldn’t have been so self-sufficient.

    I don’t have kids yet, but if we end up having any, I’d want them to have skin in the game. So best case, I’d cover a percentage of college costs but they’d have to work to pay for the rest.

    Sad to hear your Dad’s story 🙁 It’s amazing that he persevered despite all the crap that happened. Good for him!

    • retirebyforty May 9, 2018, 7:30 pm

      I think it depends a lot on the kid too. My parents helped me a lot, but I knew they worked very hard. I didn’t waste the money by goofing off too much.
      I’ll make sure our kid has some skin in the game too. Thanks for sharing!

  • Julie @oursabbaticallife May 8, 2018, 5:41 pm

    Even though we have no kids, I find that this topic resonates with my husband and myself. Thanks for raising it here.

    I would definitely agree with those who talk about kids needing to have “some skin in the game.” It doesn’t seem like a good idea to give anybody a completely free ride. If not strictly 50/50, it could be something like offering to pay for the least expensive but still reputable in-state public school, and the child would be responsible for the difference if she/he chose a more expensive school, etc.

    I also come from immigrant parents who will not have any wealth to leave their children, but I’m quite ok with that. In fact, I’m sort of glad that I had student loans to pay off and the knowledge that I was responsible for my future, whatever I was able to make of it. It makes one grow up faster when you know you have to grow up, right?

    Thanks for your perspective and your stories.

  • Financial Orchid May 8, 2018, 9:56 pm

    Thanks for opening up the conversation on this highly sensitive topic. Asians in particular are extremely taboo about talking about anything alluding to end of life -it’s simply avoided altogether even talking about age amongst the elderly.

    At this point of human innovation, we can’t pinpoint the exact moment we’ll die decades in advance yet, so we’re still working off of estimated lifespan for male and female. Cancers and heart diseases are hard to predict as that can occur at any age and the older we become then the closer we are to the end and most of us getting close just want to avoid thinking about it altogether -ideally unbeknowst to us in our sleep.

    Inheritance is really unexpected and should be that way to raise self-sufficient offspring so that they become prodigious accumulators of wealth (x-ref Millionaire Next Door); however, there are arguments that self-sufficient, disciplined independent individuals usually end up being the enablers for the more dependent family members, who become constant recipients of bail out. That’s how a lot of family dynamics play out.

    Agree that simply not being a financial burden is in itself a gift to the future generation.
    In the ancient Chinese feudal era, children were liable for their parent’s debts =/. Talk about lack of economic mobility. That goodness for modern day civilization.

    Regarding legacy it really comes down to the last moment. If the final day comes earlier than anticipated then I suppose the spouse would inherit whatever’s left first then after that the offspring in normal circumstances. If you’re in your 40s now then even in 20 years at least your kid will be out of school and hopefully working.

    The worse case scenario is passing on while dependents are still minors, but with no debt, and a well funded nest egg, the remaining spouse should get along fine even with minimal work and leaner times.

    Sorry, hope this wasn’t too morbid, not wishing death upon anyone, but these are necessary considerations for future family planning to ensure surviving kin is properly taken care of as painful as it is to think of such scenarios. Since you have a life insurance post from 2012 then clearly you have that taken care.

    Thanks again for being able to bring up even difficult topics to reflect the integrity of your writing.

  • My Early Retirement Journey May 9, 2018, 6:38 am

    Non-issue for a kidless wonder like me! I saw that post from Lily too. In general, I wish more people would be intentional about child-rearing BEFORE the fact!

    [side note: nonexistence* >> nonexistent]

  • Allen May 9, 2018, 1:32 pm

    Doing the same thing, I have too many friends who ended up inheriting expensive homes and ended up fighting with their siblings or became alcoholics/drug addicts.

  • Financial Sloth May 9, 2018, 10:45 pm

    Love this topic pretty hard. We (wife and I) are of the same mind and a bit obsessive about this. We want to leave it all for the future, not just the kids. I am totally going to do a post about this someday soon, but as I have gotten older and experienced a bit more of life, it is painfully obvious how money and class effect your ability to make your own decisions and make a difference in the world. Money is not the only way to make change, but it is a pretty common element in change makers.

    To anyone reading this, please save any hate for my blog when I do the post. At least that way I’ll get some traffic in exchange for the hate 🙂

    My point is that if my wife and I are frugal, save, invest, and pass the majority to the kids, then teach them how to do the same, we can create real wealth in just a few generations. I would die more than happy knowing that my grandchildren or great grandchildren were in a position to make substantial change in the world. And if they just wanted to lounge, that’s ok too, so long as they lounge on the interest, get a decent job doing something, and add something to the principle. Then, the next generation will have the same opportunity and then some.

    You’ve got me all excited to write this post! I really enjoy being a part of these communities and think like this with like-minded people.

    Great post! – FS

    (PS – Are we ALL in the PNW or general West Coast?)

  • stephen August 26, 2018, 3:57 pm

    Good thoughts, and it was nice learning about your family.
    My wife and i went to Duke in the early 80’s. My diehard duke fan kids ended up at UNC. They even got into Duke, but i wasnt paying $250000 for college.
    I told them I have 5 goals
    1) That they finish college debt free. I’d be ok with some modest loans, but i think the biggest risk to their future in the current world is debt.
    2) That their mother and I are able to take care of ourselves forever. That at least financially we would not be a burden to them.
    3) That i want to be debt free when I retire. Which i did at 52.
    4) We want to be citizens/neighbors that contribute to the well being of our community. Financially, time, energy…. Life is more than just caring for yourself and your own. Or more accurately, expanding who you consider to be valuable.
    5) This is the trickle down. I could not guarentee paying off private school loans. Or anything else. If after 1-4 there is more, we will use it to help them. For me that may include helping to fund retirement accounts, grandchildren college savings, family vacations…. All specific for each child. And maybe even unspecified cash gifts. But not in an amount that removes their agency. Or that enables irresponsible living.
    For me this is the best inheritance. My mother inherited at age 76. I will probably be the same. Inheriting in your 70’s does nothing to help with lifes tough spots. For me if i do it right, they will not inherit much. In fact i might skip a generation but I will have the joy of seeing the impact while i live.

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