Generational Wealth

[Anonymous]

Anonymous wrote:We have 3 kids, school age and are in our mid to late 40s. We have a net worth of a bit under $40M, all self earned. I would not call that generational wealth.

I think you would need hundreds of millions to be generational.

I don't think you understand what "generational wealth" is. Or you have an outrageously out-of-control lifestyle to where you foresee spending every dime of that 40 million asap.

[Anonymous]

Anonymous wrote:My great grandfather, along with his brother, founded a business in 1917 that, according to his obituary in 1939, was making "several million dollars yearly." Then my grandmother and her sister inherited money. I remember in the late 90s I was staying at my grandparents' house helping out because my grandfather had dementia. A not-so-great boyfriend came and stayed for a bit and he snooped into my grandmother's ledger which was sitting in the den and told me all wild-eyed that there was 3 million in the one account he looked at. When she died, she ended up leaving about 1 million to each of her three children, including my mother. When my mother died, my sibling and I got under $500k -- but each of us had had college and professional school paid for. I don't have kids, but my sibling's kids have school paid for as well. But the money has gone down with each generation. Eventually it peters out.

This! That's why most people with sustained generational wealth give their kids a private education experience rather than a larger pile of money. Then the kid is more likely to make that money grow rather than dwindle. I educate my kids about this fact too!

[Anonymous]

Anonymous wrote:We have 3 kids, school age and are in our mid to late 40s. We have a net worth of a bit under $40M, all self earned. I would not call that generational wealth.

I think you would need hundreds of millions to be generational.

Well, no of course it is not generational wealth because you earned it. It wasn’t passed down. You however have the potential to do the right thing and create generational wealth for future generations if you are smart about managing your money and set up trusts, etc. Where it is 1 million or 100 million has nothing to do with it.

[Anonymous]

There are obviously extreme views on the phrase “generational wealth” with one extreme meaning any inheritance and another extreme saying $40MM doesn’t meet the definition.

I don’t adopt any extreme. To me, I think generational wealth means being able to live in luxury in my older years, leaving my children and grandchildren enough to pay for their educations without having to take out loans, being able to help with down payments, and even having some sort of trust to help pay for living expenses.

I don’t think generational wealth means not having future generations need to work. I want my children and grandchildren to work. My hope is that we leave them enough money for them to work in an area that is personally meaningful for them, even if it is low paying, and they can use our money to pay for their children’s educations and living in a nice area.

[Anonymous]

I'm trying to build it now and continue to do so for the next 40 years hopefully. For my immediate family, it's million and up because we spend so little.
I live a very comfortable life with $80k a year.
I can see a future generation going out and buying a home with the million or whatever it has grown into and be broke again. Home is to be bought only if there's enough investment income to support the home expenses and adults are working.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We have 3 kids, school age and are in our mid to late 40s. We have a net worth of a bit under $40M, all self earned. I would not call that generational wealth.

I think you would need hundreds of millions to be generational.

I don't think you understand what "generational wealth" is. Or you have an outrageously out-of-control lifestyle to where you foresee spending every dime of that 40 million asap.

I’m the poster in my mid to late 40s. I think we are rich and we could live lavishly for the rest of our lives. But I don’t think it’s generational at this level. It’s not enough for our children to also live lavishly and certainly there would be little to nothing left if they didn’t work at all and lived an upper class lifestyle.

Generational means that multiple generations don’t have to work and continue to stay upper class living an upper class lifestyle in an expensive city.

[Anonymous]

Extreme Generational wealth rarely lasts longer than 3 generations as some of the examples given here prove. Modern wealthy have it drilled into them to never touch the principle, only the interest in order to preserve the wealth as long as possible.

It has had an effect on our economic system. I think it was the son of Vanderbilt? who put all of his money into bonds in order to avoid any Fed taxes at the time. So one of the wealthiest men in America paid no taxes. This led to changes in the tax code to affect bonds.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Generational wealth means that the oldest generation leaves behind assets for the next generation to inherit and so on and so on. In other words successive generations dying with more than 0.

I understand that is a literal reading, but I don't think that's what people mean. My grandparents leaving a $200k home to be split between their 6 kids did not create generational wealth. My ILs paying for college for grandkids arguably would, because it frees up money in my (parent) generation and launches the next one (grandkids), giving both generations a significant boost.

Wrong. $33k is the difference between generational wealth and not. Many people don’t see an influx of $33k ever.

[Anonymous]

Anonymous wrote:

Anonymous wrote:There isn't a particular number to this.

I inherited about 500k my mother, and my DH inherited about the same from his mother, and thanks to what we've done with that money we won't ever have to worry about money and will likely leave a pretty decent-sized pile of money behind. We have made plenty of money of our own as attorneys, but we are gov, not BigLaw.

Generational wealth is just money passed from one generation to another -- with the definition of "wealth" being something DCUM could argue over 24 hours a day, 7 days a week, for 100 years and never agree on.

OP here. I know there isn't a particular number that everyone will agree on. I guess the question could more appropriately be framed as what number or amount comes to mind when you hear the term used?

It also depends on the year and how you invested your money.

Ex: real estate was much more doable in the 90's, for the (real) middle class, in this area.

[Anonymous]

Does anyone recall a semi-recent thread where the poster asked about people in their 30s and how common it was to help parents and older generations? Generational wealth is the opposite of helping your parents, grandparents, and siblings financially. It’s literally anything passed from one generation to the next.

Anyone who argues about $1M vs $5M is out of touch with most of America. Most generational wealth comes from home equity gained from home ownership and the mortgages interest deduction. That’s why generational net worth differs so much by race.

From Motley Fool “ In 2022, the median net worth of white Americans was $284,310. The median net worth of Black Americans and Hispanic Americans was more than $200,000 less than that. The median net worth of Black Americans in 2022 was $44,100, and the median wealth of Hispanic Americans was $62,120.”

From Yahoo Finance “ At least 53% of Americans admit they don’t have an emergency fund, according to a recent poll conducted by CNBC and Momentive. That figure skyrockets to at least 74% for those with a household income below $50,000 per year.”

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Generational wealth means that the oldest generation leaves behind assets for the next generation to inherit and so on and so on. In other words successive generations dying with more than 0.

I understand that is a literal reading, but I don't think that's what people mean. My grandparents leaving a $200k home to be split between their 6 kids did not create generational wealth. My ILs paying for college for grandkids arguably would, because it frees up money in my (parent) generation and launches the next one (grandkids), giving both generations a significant boost.

Wrong. $33k is the difference between generational wealth and not. Many people don’t see an influx of $33k ever.

This.^^ "Generational wealth" doesn't mean enough money for the next generation to be wealthy without working or something. It's just one generation leaving enough to the next generation to ease things a bit. It tends to help keep the next generation out of poverty -- not keep the next generation in Louis Vuitton.

[Anonymous]

Generational wealth can end pretty fast. You have to be savvy and know that paying for things like paying for private school and grandkids 529 and all that is a great tax saving investment. Giving gifts during your lifetime is also smart. You build good helping with grandkids major medical expenses or specisl needs therapies. If you do what my parents did and hoard it, then the predators-related and unrelated come out as you lose your mind and slowly, but surely it all goes away. Good luck getting it back.

[Anonymous]

The best generation wealth is money education. Setting that up something that lasts multiple generations is kinda stupid, esp. considering that your grandkids and beyond don't really give a sh*t about you. You are only paying the banks to manage the trust.

Here are things you can do for your next generation, and to some extent, grandkids. Do what you can from this list to the best of your ability.
- Down payment on a house
- Front load each grandkid's 529 to the max; In fact, double this so they have money left over for their own kids.
- Pay for grandkids' private school
- Gift to maximum extent possible each year
- Pay for their vacations and big purchases
- Set up an irrevocable trust that pays out a certain % each month such that it runs out by the time they hit 90 (pick a number); If you have enough money, maybe set one up for each gradkid too, managed by their parents.
- Most importantly, educate them on what you did and ask them to do the same for their next generation. Some will, some won't and you are none the wiser because you'll be gone. At least you've helped the ones you really cared about, your kids and grandkids. Beyond that, C'est la volonté de Dieu.

[Anonymous]

Different things to different people but in general it just means that you're able to pass on wealth to the next generation - e.g. your parents wealth will make it down to their grandchildren.

[Anonymous]

Anonymous wrote:I thought it meant you were able to ease the way for your kids and grandkids - pay for college, help with down payment, help with private school - during your life. Wealth beyond just inheriting the family home and a bit of cash.

This is our family. Trusts pay for both children and grandchildren college, bought houses for children and tuitions not. The kids have money from the start in a trust, not a college fund. It’s only four grandchildren and they each will have trusts from a generation skipping family trust. The grandfather is still alive and children and grandchildren both get monthly checks.

I’m glad my children won’t have to worry about being homeless, I only hope they can keep it going for their kids.

The big generational wealth like the Kennedy’s amazes me. When’s the last time someone made big money in that family but it keeps going.