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Anyone ever think about legacy?
Posted on 1/25/15 at 3:27 pm
Posted on 1/25/15 at 3:27 pm
The "Where did you turn the corner" thread from the other night made me reflect a little this weekend.
My dad retired making less than $35,000 household income. I still have 30 good working years, and our household income is three times that. When he dies, he'll leave a house worth about $75,000 and probably around $15,000 cash split among three kids.
Using a modest return, at age 65, we should have around $5MM. I'm going to leave that kind of money to my kids. That's one generation of change. If my kids invest that $5 MM wisely, it could easily be $100 MM to their kids after 40 years.
I know it never works out the way you plan it, but there will be significant difference. I save around 25% of my income and live well below my means. I don't see that changing.
My dad retired making less than $35,000 household income. I still have 30 good working years, and our household income is three times that. When he dies, he'll leave a house worth about $75,000 and probably around $15,000 cash split among three kids.
Using a modest return, at age 65, we should have around $5MM. I'm going to leave that kind of money to my kids. That's one generation of change. If my kids invest that $5 MM wisely, it could easily be $100 MM to their kids after 40 years.
I know it never works out the way you plan it, but there will be significant difference. I save around 25% of my income and live well below my means. I don't see that changing.
6
Posted on 1/25/15 at 4:30 pm to anc
So how do you talk to your children about money? Some saver parents do a wonderful job of transmitting their money values to the kids. Others, not so much. It takes more than luck to grow a family fortune. Once the cash is in their hands, they may feel no obligation to steward it for the next generation....or even see it as a good idea to accumulate more. How much is enough? When does it become a burden rather than an opportunity? How does philanthropy enter into the picture?
If you really, truly don't want them to spend down the principal, start planning now.
If you really, truly don't want them to spend down the principal, start planning now.
Posted on 1/25/15 at 6:20 pm to anc
quote:
If my kids invest that $5 MM wisely, it could easily be $100 MM to their kids after 40 years.
To go from 5 to 100 in 40 years requires an 8% annual return, and that assumes they never touch either principal or interest the entire way - in other words, they'd still better have decent day jobs until they retire to pay the bills. Keep inflation in mind as well.
A more realistic value might be $15-20 (in inflation-adjusted dollars) - still pretty good though.
Posted on 1/26/15 at 9:19 am to anc
quote:
Anyone ever think about legacy?
I honestly think that is the only reason I save. Sure, I want to stop working as soon as possible and enjoy life, but more importantly for me I want to leave something for my kids, who will hopefully leave most of it for my grandkids, and so on. And I know Dave Ramsey is not popular around these parts, but I also want to "live like no one else, so that later I can give like no one else" and I want my kids to be the same.
I am nowhere on pace to have $5MM, I am thinking if we hit $1MM we will be doing great.
Good topic and this is something I think about all the time.
Posted on 1/26/15 at 9:51 am to anc
I'm still a little young to fully grasp legacy concerns, but I don't make decisions with the intent to hand down wealth. My parents are entering into retirement and they should enjoy the fruits of their labor. They helped me make it this far (early 30's) and that's plenty.
If I end up wealthy in my old age, I may have to reconsider.
If I end up wealthy in my old age, I may have to reconsider.
Posted on 1/26/15 at 9:59 am to OnTheBrink
quote:
Sure, I want to stop working as soon as possible and enjoy life, but more importantly for me I want to leave something for my kids, who will hopefully leave most of it for my grandkids, and so on.
I work in philanthropy, so my daily work is with people thinking about legacies. For those of you who are legacy-minded, I urge you to talk to an estate planning professional. As I mentioned upthread, merely leaving a surplus to your children is no guarantee it will be preserved for future generations. Your children will grow up to make their own choices; the world changes dramatically in a couple of decades. Things you regard as extravagance become to seem necessary (think of cable, high speed internet, cell phones--none of which my grandmother ever paid for). If you want the bulk of the funds perserved and passed on, you NEED to consider a trust arrangement.
You also need to communicate directly and clearly with your children about your plans and wishes. Too many families avoid any discussion of money. Ultimately, when you are no longer around, they're going to have control...and that control may involve frittering away your hard earned dough.
The inability of potential heirs to steward $$ with good sense causes some wealthy folks to give it away while still living. They'd rather see it endow a scholarship, landscape a park, build a new building than to think of an ungrateful son-in-law persuading his wife to buy himself a new Porsche.
Posted on 1/26/15 at 10:57 am to anc
quote:
Using a modest return, at age 65, we should have around $5MM. I'm going to leave that kind of money to my kids.
I'm not leaving my kids zero dollars. Ideally im dead broke the day I die.
Posted on 1/26/15 at 12:36 pm to anc
"Where did you turn the corner" thread
I did a search, and didn't find anything for this thread, but this is a subject that I am interested in.
I did a search, and didn't find anything for this thread, but this is a subject that I am interested in.
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