How Much of an Inheritance is Too Much for Kids

[Anonymous]

Anonymous wrote:

Anonymous wrote:I am figuring out some aspects of my estate and retirement planning, and I'm curious how much people think is appropriate to leave as an inheritance for your kids. Is there an amount of inheritance that would level that would be too much for each kid? I plan to max out Roth IRA contributions until retirement and not touch this money to leave it as an inheritance for my kids. This means our Roth IRAs will likely have a total inflation-adjusted value of around 3-6 million when I turn 80.

Here's a summary of my projected retirement situation for context.
4,000 monthly pretax pension
2,000 monthly social security (assuming SSI benefits are cut substantially due to current funding issues. The actual amount will likely be around 4k between me and my spouse assuming a 20% cut in benefits)
$5,000 monthly pretax from 401ks (assuming a 4% withdrawal rate and worst historical returns from Cfiresims calculator)
Brokerage account
$2500 a month from our brokerage account (minimum estimate, will likely be more but inflation-adjusted value of brokerage account will certainly exceed 1M in retirement)
A few rental properties (combined value of around 1.4M. I am unsure about the amount of after-tax income so I'm ignoring them for retirement purposes)


Primary residence is worth around 850k, and the mortgage will be paid off before retirement.

In conclusion, if things go very badly, my kids will split an inheritance of at least 8M. However, if market returns are closer to historical norms (25th-50th percentile returns), they will inherit 15M+. I am only going to have 2 or 3 kids, so I am somewhat hesitant about whether this is an appropriate amount to leave my kids or if it is too much.

Then why are you even asking the question, OP?

If you're young enough that you don't have kids, you have no idea what lies in store for your life. Maybe you won't have that money to leave to your kids. Maybe you won't have kids.

You're ridiculous.

This. Maybe the money is hypothetical, too?

[Anonymous]

Since you don’t yet have kids, you need to be aware that not all kids are born healthy and not all kids will be able to live independent lives.

My aunt and uncle are quite wealthy because of a medical device that my uncle invented and the company he started with that initial windfall. They will be able to leave plenty of money to their children. However, one of my cousins is severely disabled and they have had to set up trusts to cover his considerable expenses for the rest of his life. If they only had the kind of money that you are talking about, there would be little left for the other children.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I am figuring out some aspects of my estate and retirement planning, and I'm curious how much people think is appropriate to leave as an inheritance for your kids. Is there an amount of inheritance that would level that would be too much for each kid? I plan to max out Roth IRA contributions until retirement and not touch this money to leave it as an inheritance for my kids. This means our Roth IRAs will likely have a total inflation-adjusted value of around 3-6 million when I turn 80.

Here's a summary of my projected retirement situation for context.
4,000 monthly pretax pension
2,000 monthly social security (assuming SSI benefits are cut substantially due to current funding issues. The actual amount will likely be around 4k between me and my spouse assuming a 20% cut in benefits)
$5,000 monthly pretax from 401ks (assuming a 4% withdrawal rate and worst historical returns from Cfiresims calculator)
Brokerage account
$2500 a month from our brokerage account (minimum estimate, will likely be more but inflation-adjusted value of brokerage account will certainly exceed 1M in retirement)
A few rental properties (combined value of around 1.4M. I am unsure about the amount of after-tax income so I'm ignoring them for retirement purposes)


Primary residence is worth around 850k, and the mortgage will be paid off before retirement.

In conclusion, if things go very badly, my kids will split an inheritance of at least 8M. However, if market returns are closer to historical norms (25th-50th percentile returns), they will inherit 15M+. I am only going to have 2 or 3 kids, so I am somewhat hesitant about whether this is an appropriate amount to leave my kids or if it is too much.

Then why are you even asking the question, OP?

If you're young enough that you don't have kids, you have no idea what lies in store for your life. Maybe you won't have that money to leave to your kids. Maybe you won't have kids.

You're ridiculous.

This. Maybe the money is hypothetical, too?

It is. OP is "planning" to max out Roths until retirement and not touch that money, which will be the inheritance for these imaginary kids. This is all very theoretical and it's adorable that OP thinks "assuming worst market returns" is planning for the worst case scenario.

But I ran a million stupid scenarios through cfiresim when I first found it too, so the only thing I can judge is the fact OP is putting these musings into the universe and treating them as certainties.

[Anonymous]

Anonymous wrote:Since you don’t yet have kids, you need to be aware that not all kids are born healthy and not all kids will be able to live independent lives.

My aunt and uncle are quite wealthy because of a medical device that my uncle invented and the company he started with that initial windfall. They will be able to leave plenty of money to their children. However, one of my cousins is severely disabled and they have had to set up trusts to cover his considerable expenses for the rest of his life. If they only had the kind of money that you are talking about, there would be little left for the other children.

Also do you have long term care insurance? Old age can be very expensive,

[Anonymous]

I would plan on spending down to HELP your children get started in life. Aka: pay for college/graduate school, provide a down payment/mortgage help, help fund your kid's own retirement accounts. All while you are still alive.

And then yes, you should be giving substantial amounts to charity. Not in splashy ways, but every month all the time.

[Anonymous]

You have limited things you can do with your estate.

If you really hate your grown children, give it to a charity so they can blow your money on things that no one ever needs. If you want to see this on display, visit any charity in the DMV with the Cafritz name on a building. (I don’t know anything about this family’s estate plan other than all the unrelated fat cats who brag about spending their money).

Or, you can raise decent children into adulthood and leave it to them. If you taught them how to manage money or they learned it themselves, then that amount of money won’t have any material impact on their lifestyle. You’re doing fine but that’s not life changing money imo. I’m an old Millennial for age reference.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Since you don’t yet have kids, you need to be aware that not all kids are born healthy and not all kids will be able to live independent lives.

My aunt and uncle are quite wealthy because of a medical device that my uncle invented and the company he started with that initial windfall. They will be able to leave plenty of money to their children. However, one of my cousins is severely disabled and they have had to set up trusts to cover his considerable expenses for the rest of his life. If they only had the kind of money that you are talking about, there would be little left for the other children.

Also do you have long term care insurance? Old age can be very expensive,

No I am not going to buy LTC insurance. This insurance market is likely to fail. Because millions of Americans are getting genetic test results about Alzheimer’s risk from direct to consumer testing websites. It only takes a small fraction of these people that test positive for two copies of the APOE gene (40-50% lifetime risk of Alzheimer’s) enrolling in the LTC to make the insurance carriers insolvent. Most of the LTC insurance carriers don’t ask about genetic test results and some states have made it illegal to ask or genetic test results or to consider genetic information for pricing LTC insurance.

[Anonymous]

Anonymous wrote:I would plan on spending down to HELP your children get started in life. Aka: pay for college/graduate school, provide a down payment/mortgage help, help fund your kid's own retirement accounts. All while you are still alive.

And then yes, you should be giving substantial amounts to charity. Not in splashy ways, but every month all the time.

I’m already planning on doing that. My family (and in laws) paid for
college and provided a downpayment for our house. I will do the same for my kids and my sisters kids.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I am figuring out some aspects of my estate and retirement planning, and I'm curious how much people think is appropriate to leave as an inheritance for your kids. Is there an amount of inheritance that would level that would be too much for each kid? I plan to max out Roth IRA contributions until retirement and not touch this money to leave it as an inheritance for my kids. This means our Roth IRAs will likely have a total inflation-adjusted value of around 3-6 million when I turn 80.

Here's a summary of my projected retirement situation for context.
4,000 monthly pretax pension
2,000 monthly social security (assuming SSI benefits are cut substantially due to current funding issues. The actual amount will likely be around 4k between me and my spouse assuming a 20% cut in benefits)
$5,000 monthly pretax from 401ks (assuming a 4% withdrawal rate and worst historical returns from Cfiresims calculator)
Brokerage account
$2500 a month from our brokerage account (minimum estimate, will likely be more but inflation-adjusted value of brokerage account will certainly exceed 1M in retirement)
A few rental properties (combined value of around 1.4M. I am unsure about the amount of after-tax income so I'm ignoring them for retirement purposes)


Primary residence is worth around 850k, and the mortgage will be paid off before retirement.

In conclusion, if things go very badly, my kids will split an inheritance of at least 8M. However, if market returns are closer to historical norms (25th-50th percentile returns), they will inherit 15M+. I am only going to have 2 or 3 kids, so I am somewhat hesitant about whether this is an appropriate amount to leave my kids or if it is too much.

Then why are you even asking the question, OP?

If you're young enough that you don't have kids, you have no idea what lies in store for your life. Maybe you won't have that money to leave to your kids. Maybe you won't have kids.

You're ridiculous.

This. Maybe the money is hypothetical, too?

It is. OP is "planning" to max out Roths until retirement and not touch that money, which will be the inheritance for these imaginary kids. This is all very theoretical and it's adorable that OP thinks "assuming worst market returns" is planning for the worst case scenario.

But I ran a million stupid scenarios through cfiresim when I first found it too, so the only thing I can judge is the fact OP is putting these musings into the universe and treating them as certainties.

The reality of it is that it doesn’t really matter what the market does in my situation. As long as the US government does not collapse, I will get a minimum of 7-8k a month (inflation adjusted) in retirement. So I will mostly live off of this and not touch my Roth IRAs. So 401ks will be enough even if the inflation adjusted return is basically zero until retirement.

[Anonymous]

OP, please understand the difference between SSI and Social Security retirement benefits. Start there. And then focus on your imaginary money and your make-believe kids.

[Anonymous]

OP, I have thoughts on your actual question but am not going to provide them. Your premise and calculations make no sense, and you also sound like a terrible person.

[Anonymous]

OP is clearly in a scarcity mindset about finances. Fix your mind, fix your finances.

[Anonymous]

Anonymous wrote:OP, I have thoughts on your actual question but am not going to provide them. Your premise and calculations make no sense, and you also sound like a terrible person.

I’m curious what you think. I open to feedback even if you dislike me. Sometimes the people like this actually give you the best advice.

[Anonymous]

Anonymous wrote:OP, please understand the difference between SSI and Social Security retirement benefits. Start there. And then focus on your imaginary money and your make-believe kids.

Sorry the abbreviation was confusing. SSI in my context was referring to social security income. Not Supplemental security income. I didn’t realize that this is an acronym for the disability insurance program.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, I have thoughts on your actual question but am not going to provide them. Your premise and calculations make no sense, and you also sound like a terrible person.

I’m curious what you think. I open to feedback even if you dislike me. Sometimes the people like this actually give you the best advice.

My guess is that you think I’m a terrible person because I’m not charitably inclined??