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Old 05-20-2019, 10:13 PM
10,819 posts, read 8,079,355 times
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Originally Posted by MI-Roger View Post
There is an article on the MSN Money page today regarding retirees and pre-retirees giving sums of money to their children for home purchases. I am substituting "Kick-Start" as the terminology in place of "home purchase" because funds transferred may have been used for homes, student loan debt repayment, initial funds for retirement savings investments, etc.

So how many of us have done this, or considered doing it and decided to not do it, and why?
We paid for college and 1st cars; nothing for weddings or home purchases.

A couple of years ago, after much discussion, analysis, conversations with each other, our sons, and with our accountants and attorney, we decided we'd start now giving an annual amount (less than the gift tax exclusion) to our sons now rather than wait and leave it all to them when we die.

No strings attached & no questions asked as to how they use/spend it.

Why? Because we can afford it without jeopardizing our present or future needs, because our sons although hard-working can use the funds now, and there will still be some for them to inherit. We're very sure that if the situation were reversed, i.e., if their financial situations were rock solid and we were the ones lacking, they'd be right there helping us.
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Old 05-20-2019, 10:25 PM
3,423 posts, read 877,721 times
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Originally Posted by StealthRabbit View Post
and parent funded edu does NOT hold students or Profs OR EDU institution to DELIVER content or value...

My kids and myself all teach in Higher EDU PT, and it is pathetic what gets by as 'Educational VALUE'. My kids always commented that by paying out of their own pocket, they had a lot of leverage / expectation of Profs, and they let them know if they were getting ripped off. (Taught by teacher aids / grad students instead of Prop... or if Prof was outdated in technology or content.)
Some of it, you'd swear it was adult babysitting, because otherwise >50% would be sitting in their parents' living rooms doing nothing.
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Old 05-20-2019, 10:39 PM
Location: Miami-Jax
6,319 posts, read 6,987,783 times
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Interesting to see the different answers and possible effects. I can only reply to this as the child who received and as a parent planning to give, but relatively far from the time to give.

I am very fortunate. My parents provided me with a very large sum of funds that were mostly earmarked for education. They didn't really intend for that sum to be a particular number, it was simply invested and benefited from some explosive growth. When I went to college it was enough to cover 4 full years at the most expensive colleges/universities in the US at the time, plus a little bit more for one or two years worth of grad school. Ultimately, I/we decided that of the "good" colleges I was accepted to, none of them were worth the price tag so I settled for the state university that happened to offer me three different types of significant scholarships. After all my undergrad was completed, including room and board, study abroad, and two summer programs, I probably walked away maybe $5k in the black, though it was spent on other miscellaneous things. I did end up going to grad school and also purchased a car, so that the sizable fund given to me was a little less sizable. And then it sat there. I did not plan on doing anything with it, and about three years after grad school it came in super handy when I launched a business. I probably could not have done it without that funding, or at best it would have been much much slower and tougher to succeed. So my parents have really provided me with a serious advantage (not to mention all the other expenses they had growing up for me to have lots of opportunities not available to many kids). They also kicked in a large chunk for our wedding, which was apparently less expensive than the average (the average cost is INSANE!) so their gift easily covered more than half the cost of the event.

I feel a bit guilty as I do not plan to provide the same level of benefits to my kids. I think we will be able to give them quite a few opportunities/experiences/advantages as they grow up, and we expect to be able to provide them with college expenses, but I am not sure it will be enough for five years at an elite private university. Those college costs have doubled since I was a student and it is astronomical! Also note the fact that I was an only child, whereas we already have two kids and likely will have more. Lastly, my wife had the opposite experience. Her parents couldn't afford to provide her with anything more than basic survival and a strong work ethic, and I guess the greatest gift was bringing her to America. So she really doesn't see the need to offer to pay for their college educations, although she has eventually come around to the idea of doing so. But I know she would much rather provide them seed money to start a business INSTEAD of going to college lol.
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Old 05-20-2019, 10:45 PM
Location: Sacramento
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We paid for our kids college educations at state schools, including all peripheral costs. We also gave them small amounts of money to get started, and decent gifts when they got married.

They are now in their late 30's and doing very well on their own. They make far more than I ever did.
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Old 05-20-2019, 11:15 PM
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Originally Posted by CLfan1977 View Post
We paid for our 2 sons’ college education. Both were private schools, so not a small item

We also bought their first used cars.

Since then, we’ve helped at random times with emergencies. Also, when an inheritance was larger than expected, we shared by giving each of them 15% of the amount.

No regrets. It’s similar to what my parents did for me.
Same here.

All worked out great.
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Old 05-21-2019, 04:33 AM
Location: Ypsilanti, MI
2,455 posts, read 3,675,134 times
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Originally Posted by M3 Mitch View Post
Hey, it's *your* money, provided you are robustly situated to be able to make such gifts, it's no more nuts than any other discretionary expenditure. Now, if your financial advisor was saying you are "nuts" to do this because you are not really in a good position to do it, OK, maybe you are nuts. You may very well be nuts to pay the guy and then not take his advice.
We only gave what our retirement portfolio could safely provide. Actually, we initially identified an amount we wanted to give, then he crunched the numbers which revealed that was possible without damaging our own planned retirement, and then he laid out the plan on the means to do so.

I don't know if his reluctance was driven by he and his wife having 4+ kids in college themselves at the time, whereas our children had already passed that phase.

You are correct that assisting your children can be great, but not at the expense of your own future! Otherwise your gift to them includes a major future expense of funding their parent's retirement as well as their own.
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Old 05-21-2019, 05:20 AM
Location: Philadelphia/South Jersey area
2,886 posts, read 1,410,797 times
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I never understand why parents helping their children at any age is so controversial.

My parents help me financially, emotionally and a few times physically until the day they died. The way I repaid their generosity was by being the best human being that I could.

I will do the same for my sons. Helping someone does not mean enabling them. Parents are quite capable of figuring out if a financial gift will do harm or good.

My kids got college tuition, I also gift my nieces and nephews. I am proud of the young adults they are turning into.

If I am able to contribute to helping them get their first home and it does not compromise my retirement I will be more than happy to do so.
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Old 05-21-2019, 06:24 AM
2,134 posts, read 734,936 times
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Originally Posted by Mightyqueen801 View Post
When I was older and getting married and seeing other people my age buying houses, I started to ask "Where did you get a down payment?" Most of the time, parents were giving a chunk of change toward the down payment. I was shocked that it was so prevalent. This was back in the 80s.
I really don't know what I would have done for DS if I'd stayed in NNJ. When we left in 2003 I sold a nice little 3-BR cape, no updates because I couldn't afford them (OK, it did have a swimming pool) in a very good school district for $550,000. Siblings who had come out of my wedding to second DH thought I was nuts to list it for that amount but I had multiple offers. Realtor.com now values it at $830K. How can a young couple with kids buy a house like that without parental help? Even if they get the 20% down payment from parents they have a mortgage pf $600K+ and the property taxes to go with it. Instead, DS and DDIL live in a house that cost them $170K and it's larger and nicer than the one in NJ.

In retrospect it was a blessing that my job started to go sour after 9/11, opportunities in the NJ/NYC area dried up and I took an offer in the Kansas City area. There's no way I could have helped him buy a house in NJ without risking my own retirement savings.
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Old 05-21-2019, 07:34 AM
Location: Tennessee
23,651 posts, read 17,632,423 times
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Originally Posted by FiveLoaves View Post
Daydreaming wistfully about the good ol' days, it's important to remember that College cost about 10 grand -- for all four years. And graduates had their choice of good jobs with full health bennys and pensions -- not these unpaid internships and entry level contract employment.

I gave my kid a Kick Start because she earned it with good grades and study habits all through her schooling.
Even looking back more recently, the cost of college continues to increase at a faster than probably everything other than maybe medical expenses.

When I started college in 2004, I got something like $5,200 annually in government scholarships through the state lottery program, and some smaller academic scholarships. I ended up actually get cash back after all my expenses were paid.

By the time I graduated, I had to take out a small student loan. The expenses increased, but the aid didn't.

Today, that same education is about twice as expensive as it was in 2004.
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Old 05-21-2019, 07:59 AM
1,020 posts, read 309,953 times
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Originally Posted by ddm2k View Post
It is. By me.

All this "rollover money" is driving up tuition, rents, and home prices. There are enough students receiving regular assistance from their parents (or for most big ticket items) that housing, education, and weddings are priced accordingly. So long as people desire to one-up their friends and accept money that is above any beyond what they're really earning at this stage in life, the market will continue to price goods and services at such levels that place the same lifestyle out of reach of people who were not given the option of receiving any parental assistance and had to finance their education.

I wonder what sort of economic effect (and side effects) would result if everyone was brow-beaten into saving 30% off the top, compulsively, to either hold or invest (in something slightly less volatile than we tend to place the 15% we are coached to set aside).
Actually, it was the rise of private and government student loans that drove up prices

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