Generational wealth. What's behind the obsession?

[Anonymous]

Anonymous wrote:not in this position myself by goal is for each generation to be in a better spot financially than the one before.

I've seen that passing down enough such that later generations don't have to work has led to a lot of issues.

Even if kids work it leads to issues, because kids who are used to luxury lifestyle often cannot earn nearly as much as to sustain anything similar. So, they dip into their funds to supplement and money disappears. The only families that preserve generational wealth are the ones where kids take over some lucrative family business and grow it, invest well to actually grow money, not just preserve the principal. Among several kids/grandkids you simply cannot preserve wealth, as there will be some who would not succeed in growing or preserving it. It's beyond just working and not living large off trust funds.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I think we all need to pause and define what is "generational wealth"?

I am not leaving trust funds for my children so that they can afford to never work in their lives. Because that will mean an eventual decline of my family. Also, I am not that rich.

My idea of generational wealth is mainly providing for
- costs of modern age childhood,
- college until employment,
- shelter until the child/adult wants to live on their own and the math works,
- medical insurance till they are eligible and I have employment that covers it
- My own retirement and financial solvency so that my child is not burdened financially in taking care of me.

Because of my own culture, I will not consider the child launched until they are married. So let me throw in the following -
- Kid's wedding (Depending on my economic condition, it will be a wedding I can afford, not what my kid dreams about!)
- Car (because public transportation is not well-established in this country)
- Set up for a professional life - basic furnishings for an apartment, professional wardrobe

And if I was really doing well financially, I would throw in
- Help with some downpayment of a condo/apartment
- Help with childcare - labor or money.

If I have some more financial bandwidth, I will also add
- Family vacations where I covered some or all costs

And if I was quite rich
- Education for my grandkids

Super rich?
- Trust funds.
- Real estate and other assets.

I don't agree with this framing. My parents, and my spouse's parents, were all public teachers - the textbook definition of middle class. They did all of the bolded. And while not entirely financing their grandkids' educations, they have made not insubstantial contributions to their 529 accounts, to the extent they are able.

No one in their right mind would say that they have generational wealth. Paying for your kids' college is just expected.

When I think of generational wealth, I think trust funds. Not necessarily at a "never have to work again and become a profligate dipsh!t like Paris Hilton" level, but something that kicks off income, and can be tapped for large expenses (tuition, substantial downpayment, etc.) without cleaning it out. I don't have a particular value in mind, it's more of an attitude.

This. What PPs describe is called middle class taking care of their kids providing financial security and ensuring they don't end up on skid row if they fail to work to survive. Also making sure their kids aren't born into poverty where you work full time for mere survival hand to mouth. That's not "generational wealth"

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Have you guys seen the current fertility rate and it's trend lol? Many of you will be lucky if your kids have kids. Many don't want to.

Estimates indicate a 12-percentage point drop in the number of 18-year-olds entering college from 2025 to 2030.

Let that sink in.

I believe in Japan more adult diapers are sold than baby diapers.

By 2050 births will probably come to a halt in the US.

Yes people should absolutely build generational wealth, but do keep in mind that YOU are probably not even going to have grandchildren.

In the years to come a lot of this wealth will end up with charities. Marriage is on the decline. Please don't tell me about all the folks in your family getting married every weekend lol. You stats 101 so you understand data, outliers etc

College grads still earn more than non college grads. Less and less men are avoiding college while more and more women are going to college. It's as if we are telling women go to college and men go to do something else I don't know the reasons. I see it with my own kids. My daughter doesn't even think about all options outside of college for her it's one way college. My son talks about various routes.

And women tend to marry men who make as much or more than men. There is a reason more and more women in their 30s are single. It's not that they don't want to get married or having kids. The reason is simple. There are not enough men to choose from. The ones available make less are underemployed etc. the ones that make more are also the ones in high demand. As a result more and more women in prime fertility years are not married. This is why the fertility rate is declining.

This is why I think a lot of this generational wealth will end up with charities etc.

The charities will spend the money on supporting families where parents are not concerned about bringing kids into poverty or financial insecurity. In other words, we are moving towards paying people to have and raise kids. People will have kids because this will be a paid job and mostly all they would be able to do.

[Anonymous]

Why do you say “obsession”?
Is the question why do people want money and want to pass on to their kids?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Have you guys seen the current fertility rate and it's trend lol? Many of you will be lucky if your kids have kids. Many don't want to.

Estimates indicate a 12-percentage point drop in the number of 18-year-olds entering college from 2025 to 2030.

Let that sink in.

I believe in Japan more adult diapers are sold than baby diapers.

By 2050 births will probably come to a halt in the US.

Yes people should absolutely build generational wealth, but do keep in mind that YOU are probably not even going to have grandchildren.

In the years to come a lot of this wealth will end up with charities. Marriage is on the decline. Please don't tell me about all the folks in your family getting married every weekend lol. You stats 101 so you understand data, outliers etc

College grads still earn more than non college grads. Less and less men are avoiding college while more and more women are going to college. It's as if we are telling women go to college and men go to do something else I don't know the reasons. I see it with my own kids. My daughter doesn't even think about all options outside of college for her it's one way college. My son talks about various routes.

And women tend to marry men who make as much or more than men. There is a reason more and more women in their 30s are single. It's not that they don't want to get married or having kids. The reason is simple. There are not enough men to choose from. The ones available make less are underemployed etc. the ones that make more are also the ones in high demand. As a result more and more women in prime fertility years are not married. This is why the fertility rate is declining.

This is why I think a lot of this generational wealth will end up with charities etc.

The charities will spend the money on supporting families where parents are not concerned about bringing kids into poverty or financial insecurity. In other words, we are moving towards paying people to have and raise kids. People will have kids because this will be a paid job and mostly all they would be able to do.

Also, to the PP's point about men going into trades or foregoing college and women focusing on college, it's party nature and physiological differences between sexes. Women are far less likely to take on hard physical work or deal with things men in trades to to make successful businesses. Women also cannot work many hazard jobs that pay well. Their only hope for any upward mobility is a college degree, usually a grad degree for a higher paying profession (law, medicine, finance). Or at least ensuring that their lower pay jobs are at least cushy (office jobs, email jobs, teaching with summers off and benefits, non profit jobs, etc) vs. hard physical labor or service jobs women without degrees have to resort to. There are far fewer options for women without degrees than for men.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I'm trying to understand the obsession behind generational wealth. If your retirement is on target, your kids college education funded and you own a home then why are you obsessively stressing over the generation beyond your kids?

I'm not obsessed, but there is only SO MUCH money I can spend. As we have gotten older our expenses are less and less. I do not get joy from buying things. At 48 I have the furntiure I need, I only gain and lose the same 10lbs so my clothes fit, we only travel with 3 often just 2 of us, and we are sitting at a very low interest rate and payment for a house that is now probably too big for us. I'm not going to just spend money becuase we have it. We just have a bunch of money left over each month and continue to dump into the market and occasionally buy a rental property when the right deal pops up.

I'm not looking to leave my kids money, I'm looking to give it to them when they need it most when they are starting their own adult lives.

You are a minority. Most people love to spend to get more luxuries and the sky is the limit. We would not have immense greed we have now with people accumulating insane wealth and still not wanting to pay more taxes if people were like you. I could find lots of ways to spend, there is always a problem to tackle, a service to outsource, improvement to be made beyond furniture A nicer car, a nicer vacation in a nicer resort, 1st class travel, spa visits, nicer gym membership, home improvements (unless it's already perfect, but somehow people buying multimillion dollar homes always get work done), 2nd/3rd home that are always money pits, etc. There is a level of wealth where all this is no longer aspirational and is a given. But I highly doubt you are at this level of wealth.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:“fly first class or your kids will”

And yes to all the PP’s, if the kids never get a job and no outside income ever comes in, you can blow through a lot of money very fast.

My parents are very frugal and also fairly wealthy. They pay for all grandkids private schools but live modestly. I wish they would spend more on their lives but they won’t. Don’t get me wrong—they travel to Europe, have 2 homes, but they could definitely spend more. I guess it’s good for the generations. I’ll fly first class.

Why are your parents paying for your kids private school? Don't you guys have income? Or just put them in public school.

My parents pay for private school because it’s generational wealth and a way to pass down money without tax implications. We have incomes.

+1000

We plan to do the same. Paying for our own kids colleges and grad schools. They all know their kids will have education covered (K-college if needed but they also know we would rather pay for a house in a great public school area if they want. Huge benefits to that as well)

[Anonymous]

Anonymous wrote:

Anonymous wrote:I don’t understand OPs question. If you work and live below your means, you accumulate wealth and pass it on. This is just simple math and not an obsession. Teach good hardworking values to your kids.
Everyone should work, even if part-time. Gives you a sense of purpose, meaning, social outlet and keeps the mind sharp.

I no longer need to work for money even though I still have 2 kids who haven’t started college yet and I plan to pay for it. But I love my job in healthcare and love helping others. I would be depressed if I didn’t work.

3 generations from now, I have no idea if they’ll blow the money but that doesn’t mean I should blow it now.

Where exactly do you find these satisfying part time jobs? Most part time work is in service sector where you are working for close to minimum wage and under the foot of of the supervisors and customers in your face. Not always pleasant or keeping your mind sharp. Driving uber or doing uber eats is a bit more pleasant if you like driving around and going places. The rest if the jobs you make for yourself, and to get there, you usually have to invest a lot of years of hard full time work. To grow some private practice, to establish yourself as a consultant, start a business where you don't have to show up every day, etc. Most of it is hobby stuff anyway. Reality of working for vast majority of people is grind.

Well our kids know they can be a social worker/teacher/work at non profit/etc in an ears they love and know they don't have to worry about the lower incomes associated with those. They can choose a career they love and know they can have a higher lifestyle than it will normally afford. Thereby allowing them to do what they love.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm trying to understand the obsession behind generational wealth. If your retirement is on target, your kids college education funded and you own a home then why are you obsessively stressing over the generation beyond your kids?

I'm not obsessed, but there is only SO MUCH money I can spend. As we have gotten older our expenses are less and less. I do not get joy from buying things. At 48 I have the furntiure I need, I only gain and lose the same 10lbs so my clothes fit, we only travel with 3 often just 2 of us, and we are sitting at a very low interest rate and payment for a house that is now probably too big for us. I'm not going to just spend money becuase we have it. We just have a bunch of money left over each month and continue to dump into the market and occasionally buy a rental property when the right deal pops up.

I'm not looking to leave my kids money, I'm looking to give it to them when they need it most when they are starting their own adult lives.

You are a minority. Most people love to spend to get more luxuries and the sky is the limit. We would not have immense greed we have now with people accumulating insane wealth and still not wanting to pay more taxes if people were like you. I could find lots of ways to spend, there is always a problem to tackle, a service to outsource, improvement to be made beyond furniture A nicer car, a nicer vacation in a nicer resort, 1st class travel, spa visits, nicer gym membership, home improvements (unless it's already perfect, but somehow people buying multimillion dollar homes always get work done), 2nd/3rd home that are always money pits, etc. There is a level of wealth where all this is no longer aspirational and is a given. But I highly doubt you are at this level of wealth.

There are many, many, many people worth 50mm and significantly more who own one home under 5mm and do not own a sports car, things you consider a “given.” Rich people (high NW, not only high income) become rich by pinching pennies somewhere. The need to spend more hedonistically and to chase status is a YOU problem that you are projecting, a lot of people grow out of wanting to sit at the Cool Table in HS.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don’t understand OPs question. If you work and live below your means, you accumulate wealth and pass it on. This is just simple math and not an obsession. Teach good hardworking values to your kids.
Everyone should work, even if part-time. Gives you a sense of purpose, meaning, social outlet and keeps the mind sharp.

I no longer need to work for money even though I still have 2 kids who haven’t started college yet and I plan to pay for it. But I love my job in healthcare and love helping others. I would be depressed if I didn’t work.

3 generations from now, I have no idea if they’ll blow the money but that doesn’t mean I should blow it now.

Where exactly do you find these satisfying part time jobs? Most part time work is in service sector where you are working for close to minimum wage and under the foot of of the supervisors and customers in your face. Not always pleasant or keeping your mind sharp. Driving uber or doing uber eats is a bit more pleasant if you like driving around and going places. The rest if the jobs you make for yourself, and to get there, you usually have to invest a lot of years of hard full time work. To grow some private practice, to establish yourself as a consultant, start a business where you don't have to show up every day, etc. Most of it is hobby stuff anyway. Reality of working for vast majority of people is grind.

Well our kids know they can be a social worker/teacher/work at non profit/etc in an ears they love and know they don't have to worry about the lower incomes associated with those. They can choose a career they love and know they can have a higher lifestyle than it will normally afford. Thereby allowing them to do what they love.

But if you disinherited them or spent the money, they could be a product manager in FAANG or a banker

[Anonymous]

Since my parents passed $ down to me rather than just blowing it on whatever. I will do the same for my kids. Now we are not talking about enough money that they do not need to work...but enough to ensure they can deal with what life throws - a medical crisis, a natural disaster , a divorce.

[Anonymous]

If you have Marriott money or the like, great…generational wealth application approved! It is completely delulu and foul to be running up and down narrow stairwells like you are God’s gift knowing full well that that old money is spent…the equity has left the building. All you have left is your own designated circle in the barrel park. It’s time to humble yourselves.

[Anonymous]

Anonymous wrote:If you have Marriott money or the like, great…generational wealth application approved! It is completely delulu and foul to be running up and down narrow stairwells like you are God’s gift knowing full well that that old money is spent…the equity has left the building. All you have left is your own designated circle in the barrel park. It’s time to humble yourselves.

Huh?

[Anonymous]

Anonymous wrote:It's not an obsession, it's a general frame of mind.

My family are European aristocrats (titles, castles, etc) and we have genealogical records that go back to the 10th century. It's always been impressed in the minds of new generations that you don't just think about yourself. You are one individual in the family line. Your job is to accept your family history (warts and all), raise your kids as best you can, try and sustain yourself economically and teach them that they, too, have to maintain financial stability. Castles are extremely expensive to maintain, and since they're full of family lore, no generation wants to be the one to let them go. Over more than a thousand years of our history, some generations have been extremely wealthy and successful, and some have been dirt poor. A lot of my relatives are now middle class. Cycles are inevitable and depend on world wars, economic recessions, changes in the tax system, etc.

The idea is not to accumulate and transmit wealth at all costs. It's to leave behind something worthwhile for future generations.

It would be sad indeed to be the 14th Duke of St. Albans, when the 12th Duke sold most/all of the family seats, and the 13th dug the hole even deeper ;(

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don’t understand OPs question. If you work and live below your means, you accumulate wealth and pass it on. This is just simple math and not an obsession. Teach good hardworking values to your kids.
Everyone should work, even if part-time. Gives you a sense of purpose, meaning, social outlet and keeps the mind sharp.

I no longer need to work for money even though I still have 2 kids who haven’t started college yet and I plan to pay for it. But I love my job in healthcare and love helping others. I would be depressed if I didn’t work.

3 generations from now, I have no idea if they’ll blow the money but that doesn’t mean I should blow it now.

Where exactly do you find these satisfying part time jobs? Most part time work is in service sector where you are working for close to minimum wage and under the foot of of the supervisors and customers in your face. Not always pleasant or keeping your mind sharp. Driving uber or doing uber eats is a bit more pleasant if you like driving around and going places. The rest if the jobs you make for yourself, and to get there, you usually have to invest a lot of years of hard full time work. To grow some private practice, to establish yourself as a consultant, start a business where you don't have to show up every day, etc. Most of it is hobby stuff anyway. Reality of working for vast majority of people is grind.

Well our kids know they can be a social worker/teacher/work at non profit/etc in an ears they love and know they don't have to worry about the lower incomes associated with those. They can choose a career they love and know they can have a higher lifestyle than it will normally afford. Thereby allowing them to do what they love.

But if you disinherited them or spent the money, they could be a product manager in FAANG or a banker

So your implication is they are not smart enough to work at FAANG or be a banker?

Actually my kids have better paying jobs. Because they chose Business for one and STEM for the other (engineering). Because that is what they like and are good at. But they could have chosen other areas if that's what they wanted.