One of the concerns about entering the decumulation phase is that you may end up spoiling your adult children. If you give your grown children that much money, it can take away their motivation to work!
Being able to make your own money and provide for your family creates one of the most satisfying feelings ever. What a shame to take away such a great feeling by giving your grown children everything.
The fear of spoiling our adult children with money
Here are a few comments left in my cumulative post that encapsulate the concerns of a financially responsible parent. If you’re a parent who’s been reading Financial Samurai for over a year, you probably are.
I want to give my kids a head start. But not enough to get a “silver spoon” scenario that can kill their motivation to improve themselves.
I want to leave my kids with enough money to do SOMETHING, but not enough to do NOTHING.
As a parent of two young children, I am concerned that not having traditional jobs could distort their reality. Since they haven’t seen their dad leave for work at 5am and come back after 7pm for 13 years, they might think that working from home 3-4 hours a day is enough!
So I have to find a way to show them that most people have to work very hard for a very long time before they have the opportunity to work at a slower pace. Luckily, I can easily show my kids what I’m doing because I’m home all the time! The same is true for many parents who can also work from home.
If my kids want to play, I tell them to give me some time to finish the work first, even if the work is not urgent. This way they are always reminded of the importance of work. They will also practice delayed gratification and develop some grit.
But here’s the thing. Maybe parents like me don’t have to worry about spoiling their kids or grown children at all. We can give them a lot of money once they get out of the house without fear of turning them into ungrateful degenerates.
The reason is obvious once you accept the following real-life scenarios.
Why most parents don’t have to worry about spoiling their grown children
The average parent begins to taper off after age 60, as most people retire after age 60. With the median age of first-time mothers around 26, the median age at which an adult child receives significant financial support from a parent is therefore over 34 (60 years). – 26).
And for those parents who want to provide an inheritance upon death, the average age for an adult child to receive an inheritance could be around 54 (80 – 26)! After all, the average life expectancy is around 80, but it is increasing.
So if you get an inheritance between the ages of 34 and 54, it shouldn’t spoil you, because you’ve been on your way for a long time.
As a 45 year old this year there is no amount of money my parents can give me that will change my lifestyle or my money habits. I have already arranged food, clothing, transportation, shelter and education costs. It is very difficult to break my habit of saving and investing for an unknown future.
Further, if you end up getting richer than your parents, then it is hard for your parents to make a big financial impact.
More appreciation for money in your mid-thirties
At 34 years old, you have not studied and worked in high school for 16 years. Few able-bodied people still live at home with their parents at the age of 34. That said, the median age for a first-time homebuyer is around 34. At this age, the financial help from parents can be huge.
But by your thirties, you should be much more appreciative of all the financial help your parents provide because you realize how hard it is to build your own fortune.
You’ve probably changed jobs at least twice, been abandoned by a coworker at least once, broke up with at least one love interest, and made a lot of investment mistakes. Furthermore, you may be under tremendous pressure as first-time working parents to reconcile both work and family life.
Therefore, by age 30, you are probably most grateful for receiving financial aid from your parents. Because you are especially proud, you may have asked for money for a long time.
I know plenty of adults who would rather have three jobs and sleep on their boyfriend’s couch than ask their parents for money after college. Most people are thoughtful and want to give something back to their parents after 18-22 years.
Since you are so grateful, you will do everything possible to honor your parents by working hard to repay your parents. You also keep more contact with your parents if they offer financial help.
A wonderful scenario for parents
If you are the parent who provides financial assistance, you will surely appreciate more phone calls and more visits from your adult children. In turn, you will feel that they value your help more than less.
You’ve taken a step aside for so long to let your kids live their own lives. You’ve been told to get out of the way so they can fly and crash themselves.
But secretly you would like to be more involved in your children’s lives because you love them so much! You’ve always dreamed of being their best friend when they’re all grown up. That they want to spend more time with your empty nesters is a dream come true.
Related: A Mass Transfer of Generations Is Why Everything Will Be Okay
Less appreciation for receiving money in your 40s and beyond
If you start receiving money from your parents when you’re 40 and older, chances are you don’t appreciate monetary gifts as much as you did when you were younger. As a result, there is no question of being spoiled for money.
Think back to the time when you got a sharp $5 bill for your 10th birthday. What a joy! Now think back to when you were a teenager given a $20 bill or maybe even a $100 bill. Amazing! But as time goes by, that joy fades as you get used to the monetary gifts.
More importantly, by your 40s, you have already earned a significant amount of money. For example, at age 40, you should have between $250,000 – $1,000,000 in your 401(k) according to my 401(k) Savings Guide by Age.
Hopefully, you’ll also be generating a decent amount of taxable passive income to give you more options as well. Ultimately, it is your taxable investments that are the source of your passive income streams.
Peak earning years
Your 40s are also when you are close to or in your top earning years. You may be lucky enough to have earned six or even seven figures by age 40. Therefore, an inheritance or financial aid may not mean much.
What you would prefer is more quality time with your parents. And if you have kids, you’d love for your parents to get to know their grandkids a little better. So in terms of money, the best financial gift may be a big family vacation.
If you’re 40, 50, and 60, you’re probably also thinking about giving away more money. After all, the best age for decumulation is somewhere between 40 and 60 years. Therefore, receiving money from your parents that cut down later than recommended will not change your daily habits.
The Riskiest Ages to Give Too Much Money to Your Kids
Basically, most parents shouldn’t worry about spoiling their grown children by giving them money. Maturity, pride and honor make most adult children appreciate any financial gifts that come their way.
Financially responsible parents teach their children about delayed gratification, a strong work ethic and investing during childhood. By the time their children are in their twenties, they will want to try to create their own wealth without help.
The only age group where too much money is given is at risk between the ages of 5 and 27. From about 5 years, children begin to understand the concept of money. It’s not good to spoil them early with no matching work. Giving money to adult children between the ages of 18 and 27 can take away their incentive to see what they can do for themselves.
About five years after college or ten years after high school, adult children will have experienced enough misery to truly appreciate financial aid. Furthermore, at the age of 25, neuroscientists have determined that the brain is also fully developing.
Therefore, parents who want to shower their adult children with money should feel more comfortable from the age of 28. But hopefully by then their grown children will be doing so well that it’s no longer necessary.
Related posts about money and children:
How to convince your parents to buy everything for you as an adult child?
The right amount to leave our children
The Bank of Mom & Dad Strategy for Buying a Home and Having a Family
Readers, is the fear of spoiling our grown children with money exaggerated? Hasn’t your appreciation of money increased as you get older? When do you think is the right age to start helping our adult children financially?
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