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Article today identifying how much a person or couple needs to earn, assuming a 15% savings rate, and starting to save at different ages, in order to amass $1M by age 65. And $1M may not provide much toward living costs in 25-40 years either.
Our kids are 39 and 37, darn close to the 40 age marker, and I don't think the older couple has started saving yet. We have even scheduled meetings between them and our Financial Planner. They meet once or twice but don't follow-through with any of the other data collection/submittal tasks. Our younger son has started saving but I don't know how much and I don't know about his wife (she has become less frivolous with money - buy a Cruze not a Regal - so there is hope there).
Education is not the issue (two Lawyers, a MD, and a PhD at an Investment Bank).
Wages are not the issue.
They just don't/won't believe they need to sacrifice now to support themselves later!
Learning by observing Mom & Dad obviously didn't help much either, and we deliberately did not exclude the kid's from our financial decisions so they could learn from observation. Oh well...........
Article today identifying how much a person or couple needs to earn, assuming a 15% savings rate, and starting to save at different ages, in order to amass $1M by age 65. And $1M may not provide much toward living costs in 25-40 years either.
Our kids are 39 and 37, darn close to the 40 age marker, and I don't think the older couple has started saving yet. We have even scheduled meetings between them and our Financial Planner. They meet once or twice but don't follow-through with any of the other data collection/submittal tasks. Our younger son has started saving but I don't know how much and I don't know about his wife (she has become less frivolous with money - buy a Cruze not a Regal - so there is hope there).
Education is not the issue (two Lawyers, a MD, and a PhD at an Investment Bank).
Wages are not the issue.
They just don't/won't believe they need to sacrifice now to support themselves later!
Learning by observing Mom & Dad obviously didn't help much either, and we deliberately did not exclude the kid's from our financial decisions so they could learn from observation. Oh well...........
Here you have laid out the distinct terms 'earning' and 'saving'. The difficulty at their ages is to convince them that the gravy train will not necessarily last forever. Saving is a mindset that isn't taught by medical or law schools. I know plenty of them at mid-career who due to one reason or another have to take a pay cut (say from $700k down to $300k) and suddenly can't afford their lifestyles.
The best way for educated high earners to learn to save more is to look at their spending budget and project what their annual needs are during retirement so they can set the savings goals they need to amass that wealth. Having a real number to plan towards really helps keep them on track.
Taught my four 30 something kids well. They all started with 10% into their 401K's after college. Split any wage increases between their pocket and the 401K and they are now at 15% and that is before any company match. I gift each of them a $5,000 Roth contribution every year. My late father said "there is nothing sadder than an old poor person. When you are young and poor you can get a better job or a second job. Old and poor even Walmart doesn't want you."
The kids see the retired lifestyle my wife and I are living and they aspire to have the same. Used cars, clothes off the clearance rack, same home for 30 years, debt free, fully funded IRA's and 401K's and a pension added up to quite a nest egg. Just back from a river cruise and a golf trip to Scotland. Taking the kids and their significant others to an all inclusive resort in March.
I'm 65 and figure I have 15 years to "actively travel" before its "wrap around sunglasses and depends".
Taught my four 30 something kids well. They all started with 10% into their 401K's after college. Split any wage increases between their pocket and the 401K and they are now at 15% and that is before any company match. I gift each of them a $5,000 Roth contribution every year. My late father said "there is nothing sadder than an old poor person. When you are young and poor you can get a better job or a second job. Old and poor even Walmart doesn't want you."
The kids see the retired lifestyle my wife and I are living and they aspire to have the same. Used cars, clothes off the clearance rack, same home for 30 years, debt free, fully funded IRA's and 401K's and a pension added up to quite a nest egg. Just back from a river cruise and a golf trip to Scotland. Taking the kids and their significant others to an all inclusive resort in March.
I'm 65 and figure I have 15 years to "actively travel" before its "wrap around sunglasses and depends".
Someone may have read The Millionaire Next Door (!).
My wife, when she worked for a giant national bank, was a credit analyst for professionals ie doctors, attorneys, etc. So many times she'd tell me about someone who lived in a $1MM+ home in Scottsdale and yet their net worth was a fifth of ours. Big holes, big shovels...lots of money in/lots of money out.
Hopefully, none of them end up divorced since that makes the situation that much worse.
Mine figured it out when I stopped giving them money. I still give gifts but make it constructive - groceries, new shoes or a coat, auto repair, etc. One Christmas before I announced the change I paid off son's credit card to give him a clean start and daughter got an equal amount of cash. He didn't like that much but I think it was a good eye-opener for him.
It's a relief to me that we don't have to do that anymore. Of course I'm still here and would never let either of them flounder but the reasons have to not be of their own making and they know that. They're old enough, experienced enough and have had enough help to know what the good decisions are.
In my opinion neither of them are planning well enough for their senior years but at this point it's no longer my business. It's too much work at my age to try to run my adult children's lives. I'm just here to give the emotional support.
In my opinion neither of them are planning well enough for their senior years but at this point it's no longer my business. It's too much work at my age to try to run my adult children's lives. I'm just here to give the emotional support.
Touche' And yes, the parental gifts have stopped. It appears the gifts were doing more harm than good - in the long run.
Article today identifying how much a person or couple needs to earn, assuming a 15% savings rate, and starting to save at different ages, in order to amass $1M by age 65. And $1M may not provide much toward living costs in 25-40 years either.
Our kids are 39 and 37, darn close to the 40 age marker, and I don't think the older couple has started saving yet. We have even scheduled meetings between them and our Financial Planner. They meet once or twice but don't follow-through with any of the other data collection/submittal tasks. Our younger son has started saving but I don't know how much and I don't know about his wife (she has become less frivolous with money - buy a Cruze not a Regal - so there is hope there).
Education is not the issue (two Lawyers, a MD, and a PhD at an Investment Bank).
Wages are not the issue.
They just don't/won't believe they need to sacrifice now to support themselves later!
Learning by observing Mom & Dad obviously didn't help much either, and we deliberately did not exclude the kid's from our financial decisions so they could learn from observation. Oh well...........
This reader thinks you have a boundary problem. I’m not sure how your adult children choose to manage their money is any of your concern.
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
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Do the 'couples' have double income? (Both working high end pay?) They make mtns of money, and may not need to save (as we did). My kids made more their first yr out of college than we ever had for our single income family.
They took on a couple 'saver' tenancies. but listen to me?? (never). They've BTDT and learned a better way.
I advised them to forget saving for retirement and replace their wage income (sooner the better) with an inflation protected cash flow source, and go enjoy life. I could have been doing that since age 25 had I heeded my own advice.
While I started them in Roths at age 12 and matched their wages 100% into the Roths until age 18... I have no idea how they are continuing that (but assume they still are meeting 100% Roth. Neither have a company plan (self employed & Start-ups).
They have been on their own well before and since age 18 (cars, college, substance, apartments, homes....) (they built their own homes during Jr High). No inheritance for them. 100% of our wealth went to charity while we were in our 30's, but we have enough to 'get-by-fine'.
What they can learn from me is... "do it much different". And they are complying well. That was one reason we had them design and build their own houses. That was not much fun for them, That kept them in school and permanently 'profession focused' to avoid having to run a shovel, hammer for bread and butter the rest of their lives.
They are very involved with community service and contributing to the needs of others. That is good enough for me.
They'll figure out retirement just fine (as they did finding and paying for a car, college, community to engage with and call home).
By the end of 8th grade, you have done your part with your kids, they have formed their ideals / learning and contribution styles and will pursue them. (in spite of, or to spite you)
Done deal. They (and we) live with the consequences.
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