What is "Generational Wealth" ?

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TXAGFAN
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In reply to YouBet • 10:48a, 10/5/21
AG
YouBet said:
TXAGFAN said:
YouBet said:
We don't have kids and have already set our estate up to ultimately go to 3 nephews and 2 nieces between my brother and wife's sister.

The other thing you could do is funnel a portion of your estate to a school, charity, organization, etc.
Not to pry, but did you exclude your siblings intentionally? My sister is not great with money, but feel leaving her money to get to my nephew isn't the right answer. I assume it's in a trust arrangement of some kind?

No idea about charity, but agree that's the other option. I can't imagine leaving even 6 figures to a charity, but maybe will change my mind as I age.
Embarrassingly, I need to go pull the documents and look at exactly what we did. I'm totally blanking on this for some reason. We did it about 5 years ago. Out of town but will look when I get back.

I have the same concern though. Brother is good but my SIL is a bipolar dumbass so I think we protected it from that.
No need to check, just want to confirm I'm not as big of an ass as I think I am sometimes.

My dad is not in my current will since I'd roll over in my grave if his second wife ended up with my money (ie I die young and dad doesnt outlive her which is a sure thing). Estate goes to my mom and I know she'd help him out if he ever needed anything.
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YouBet
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In reply to TXAGFAN • 10:55a, 10/5/21
AG
TXAGFAN said:
YouBet said:
TXAGFAN said:
YouBet said:
We don't have kids and have already set our estate up to ultimately go to 3 nephews and 2 nieces between my brother and wife's sister.

The other thing you could do is funnel a portion of your estate to a school, charity, organization, etc.
Not to pry, but did you exclude your siblings intentionally? My sister is not great with money, but feel leaving her money to get to my nephew isn't the right answer. I assume it's in a trust arrangement of some kind?

No idea about charity, but agree that's the other option. I can't imagine leaving even 6 figures to a charity, but maybe will change my mind as I age.
Embarrassingly, I need to go pull the documents and look at exactly what we did. I'm totally blanking on this for some reason. We did it about 5 years ago. Out of town but will look when I get back.

I have the same concern though. Brother is good but my SIL is a bipolar dumbass so I think we protected it from that.
No need to check, just want to confirm I'm not as big of an ass as I think I am sometimes.

My dad is not in my current will since I'd roll over in my grave if his second wife ended up with my money (ie I die young and dad doesnt outlive her which is a sure thing). Estate goes to my mom and I know she'd help him out if he ever needed anything.
Ha. You're not. I'm of the mind that any excess money goes to family over anyone/anything non-family but that doesn't mean you don't have to worry about family as well.

Family gets greedy, evil, and stupid when money enters the equation. I saw it happen in some of my extended family and we've recently lived it with my SIL. Money is a cancer for some and they lose their mind over it.
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TXAGFAN
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In reply to YouBet • 11:00a, 10/5/21
AG
Agree. My cousins were AWFUL after my paternal grandmother passed away, lots of misplaced frustration about how she allocated funds to her children, daughters-in-law (two of my uncles are deceased), and the children of deceased uncles (my cousins). Was stupidity because she did a great things for my cousins giving them money to buy houses and college education for their kids rather than give it to their mothers who would have just hoarded it. My cousins thought it was disrespectful.

My single childless aunt watched it all and I'm sure she took them all out of her will.

Meanwhile my dad inherited his full share and when he dies will go to his second slightly younger (nothing scandalous) wife ha. We said nothing because whatever, that was her decision.

It's so messy.
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YouBet
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In reply to TXAGFAN • 11:10a, 10/5/21
AG
When my great uncle(?) died, we literally watched his immediate family loot his home and large woodworking garage. We left his funeral and all met at his house for what we thought was a family reception.

Instead that part of the family proceeded to steal everything they could as soon as people arrived. People literally running from house to car and back with his belongings. Watched his SIL drive his riding lawn mower from garage right up a ramp into back of his truck and drive off with it.

He had been in grave about 30 min. Most disgusting thing I've ever seen and it really impacted me. I was around 15 and wanted to go fight everyone.
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Ulrich
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11:45a, 10/5/21
I've heard two definitions of generational wealth. The one that I subscribe to is something like "enough money that subsequent generations can live off the proceeds without ever having to contribute, work themselves, or even touch the principle."

The other one is basically "anything at all". Maybe the kids inherit enough to remodel the dining room, or parents pay for a kid's college.

Generational modifies the term wealth. Wealth, in my mind, is financial independence at an unusually high standard of living. Therefore generational wealth is enough wealth to give financial independence to multiple generations at an unusually high standard of living. Lumping the middle class in with the trust fund set seems to me to devalue the term altogether.

The conspiracy theorist side of me suspects the definition is being expanded on purpose as our lawmakers are working to take more taxes from anyone who gets a few steps ahead in life by conflating them with the 1% or whatever the term du jour is.
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In reply to YouBet • 11:48a, 10/5/21
YouBet said:
When my great uncle(?) died, we literally watched his immediate family loot his home and large woodworking garage. We left his funeral and all met at his house for what we thought was a family reception.

Instead that part of the family proceeded to steal everything they could as soon as people arrived. People literally running from house to car and back with his belongings. Watched his SIL drive his riding lawn mower from garage right up a ramp into back of his truck and drive off with it.

He had been in grave about 30 min. Most disgusting thing I've ever seen and it really impacted me. I was around 15 and wanted to go fight everyone.

Oh yeah, my BIL's family just dealt with something similar:

Quote:
Mary George did not distribute funds as dictated by grampa's will. So the whole family has gone no contact with her.

I sent her a letter saying she will always be part of my family, love you, blah blah blah. She never responded.

Come to realize this was her plan for the past 30yrs.

Yeah. It just really sucks because I don't feel stolen from and was hoping to continue having a relationship with her. But she decided to trade my relationship with her for money.

Gramps would have burned that money and the house down if he knew it was going to cause this to happen after his death.
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In reply to Ulrich • 11:50a, 10/5/21
Also why I subscribe to generational knowledge being invaluable, where "wealth" physical can be stolen/destroyed.

If you can pass on the rules of the games of life to the next generation, they'll be far more successful than inheriting things.
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Ogre09
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12:59p, 10/5/21
AG
I plan to stop working when I've accumulated enough to be self sufficient for the rest of my life. If there's anything leftover as I near end of life, I'll decide what to do then. My kids will probably get most of that, but I don't want them planning on it.
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In reply to Ogre09 • 1:06p, 10/5/21
Enough assuming what level of inflation/cpi increases?

So many if my elderly customers retired and now are having to work the last decades of their life because they didn't expect inflation to be so bad, barely scraping by.
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Ogre09
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2:19p, 10/5/21
AG
I usually use a 3% annual inflation rate for rainy day forecasting. But I also have 20 years and 75% of my goal to go, so not too worried about getting it dead on right now. But if I'm still working at 70 because I need to, I will have failed miserably somewhere along the way.
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In reply to Ogre09 • 3:16p, 10/5/21
Ogre09 said:
I usually use a 3% annual inflation rate for rainy day forecasting. But I also have 20 years and 75% of my goal to go, so not too worried about getting it dead on right now. But if I'm still working at 70 because I need to, I will have failed miserably somewhere along the way.

I'd change that % to 10% at least to be safe...
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Ogre09
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4:34p, 10/5/21
AG
You think the cost of things is doubling every 8 years? If that were true you would never be able to accumulate anything and you should just spend everything now.
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In reply to Ogre09 • 5:41p, 10/5/21
Before the pandemic there was 4T in the M1, now there's $20T. No telling how much more will be printed before we finally default.

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QuantumNoodle
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In reply to administrative errors • 5:52p, 10/5/21
Tweets can be scary, but that M1 change was mostly from the Reg D change that allowed banks to count savings/money market as transaction accounts.

Basically a lot of M2 money got reclassified as M1.

https://fredblog.stlouisfed.org/2021/05/savings-are-now-more-liquid-and-part-of-m1-money/
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In reply to QuantumNoodle • 5:56p, 10/5/21
Fair enough. I'd just hate to continue to estimate 3% when the rules of the game change so quickly now.
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cjsag94
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6:46p, 10/5/21
AG
I'd say what OP is describing isn't wealth at all, much less generational wealth.. it was simply 1 generation cash flowing everything and ingraining that behavior in their children apparently. It's just a pay it forward mentality that is incredibly easily broken by rising costs or one weak link.

In my opinion, generational wealth, as stated before, is accumulation of enough to support multiple successive generations beyond their own means. In my opinion, that doesn't mean basic needs but actually an enhanced lifestyle.

For those who wish to leave nothing behind, good for you, but I hope no one ever leaves you a dime. If they did, you are just really self centered. I'm a fan of using trusts to leave assets behind in a way that enhances multi generational wealth, but defends against the spend it all crowd, or divorces, deaths, etc.

ETA:. Reread OP and I either didn't read it all at first or got sidetracked from ask the comments. I'm a huge fan of what OP describes as "over saving". But not excessively at the expense of enjoying some of it yourself. A happy medium is really nice here.
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Ogre09
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9:36a, 10/6/21
AG
Savings has an exponential growth. It varies year to year, and can run negative, but it should average an exponential growth. I think 1.08 is a little conservative, and 1.05 would be very conservative.

Your annual drawdown once you start using it has another exponential growth. That one may vary some, but shouldn't fluctuate as much as the market. I think 1.03 is a decent approximation.

If your drawdown exponent is 1.1, your savings exponent can't keep pace with that, and your savings will erode quickly if you stop contributing. Your options in that case are to work until you are die (or are very close to it) or find a way to knock it out of the park on your savings returns (put it all on black).
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cjsag94
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In reply to Ogre09 • 10:24a, 10/6/21
AG
Ogre09 said:
Savings has an exponential growth. It varies year to year, and can run negative, but it should average an exponential growth. I think 1.08 is a little conservative, and 1.05 would be very conservative.

Your annual drawdown once you start using it has another exponential growth. That one may vary some, but shouldn't fluctuate as much as the market. I think 1.03 is a decent approximation.

If your drawdown exponent is 1.1, your savings exponent can't keep pace with that, and your savings will erode quickly if you stop contributing. Your options in that case are to work until you are die (or are very close to it) or find a way to knock it out of the park on your savings returns (put it all on black).


That feels like a really complicated way of saying something that is probably very simple....
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5:01p, 10/6/21


My point @ogre
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Ulrich
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In reply to cjsag94 • 5:26p, 10/6/21
cjsag94 said:
Ogre09 said:
Savings has an exponential growth. It varies year to year, and can run negative, but it should average an exponential growth. I think 1.08 is a little conservative, and 1.05 would be very conservative.

Your annual drawdown once you start using it has another exponential growth. That one may vary some, but shouldn't fluctuate as much as the market. I think 1.03 is a decent approximation.

If your drawdown exponent is 1.1, your savings exponent can't keep pace with that, and your savings will erode quickly if you stop contributing. Your options in that case are to work until you are die (or are very close to it) or find a way to knock it out of the park on your savings returns (put it all on black).


That feels like a really complicated way of saying something that is probably very simple....

Your investments should grow faster than you need to use them.
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Ogre09
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6:13p, 10/6/21
AG
8th grade math is hard…
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In reply to Ogre09 • 6:13p, 10/8/21
Ogre09 said:
You think the cost of things is doubling every 8 years? If that were true you would never be able to accumulate anything and you should just spend everything now.

More reasons to overestimate that 3% [you'd have to have blinders on at this point]

***
Coming soon:
AE Ventures - sooner than soon
*Psychedelic Retreats
*Physical and mental exercises
*Addiction services

Step 3: property found

Step 4: set date

Step 5: plan agenda for participants, food, logistics etc, integration and counseling post-experience

Step 6: long-term planning

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insulator_king
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2:46p, 10/10/21
AG
Buying my rice and beans now.

The variety and amount of food available to all Americans is amazing compared to 80 years ago.

Certainly the costs of eating out have been and will rise a lot, but just eat at home, and it is 1/10 the cost of a restaurant.

I'm also still driving my 2008 Scion so there's that.
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halfastros81
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9:37a, 10/27/21
AG
Getting kids thru their bachelors degree with no debt was always my goal. Not putting a financial
Burden on them when me and my wife are near the end is the other goal.

Anything more than that left to the kids as a legacy is lagniappe/gravy.
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In reply to Ogre09 • 8:34a, 11/10/21
Ogre09 said:
You think the cost of things is doubling every 8 years? If that were true you would never be able to accumulate anything and you should just spend everything now.

You started spending everything now, yet?
***
Coming soon:
AE Ventures - sooner than soon
*Psychedelic Retreats
*Physical and mental exercises
*Addiction services

Step 3: property found

Step 4: set date

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Step 6: long-term planning

I am amped.
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Bradley.Kohr.II
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7:13p, 11/21/21
AG
Under current tax schemes, "generational wealth," is all but impossible.

However, providing seed capital/education/funding a Roth and HSA as much as possible while they're young, can help.

Practical education, work ethic, and connections, are the most valuable asset, and, so far, DC has not found a way to confine those to cronies.

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In reply to Ogre09 • 3:06p, 11/30/21
Ogre09 said:
You think the cost of things is doubling every 8 years? If that were true you would never be able to accumulate anything and you should everything now.

Bumping again for recent Powell comments. "Remove transitory from transitory inflation"
***
Coming soon:
AE Ventures - sooner than soon
*Psychedelic Retreats
*Physical and mental exercises
*Addiction services

Step 3: property found

Step 4: set date

Step 5: plan agenda for participants, food, logistics etc, integration and counseling post-experience

Step 6: long-term planning

I am amped.
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azul_rain
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4:03p, 11/30/21
In the long run I would like to form a conglomerate that takes over the different industry sectors, and then to buy water rights
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Bradley.Kohr.II
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8:54a, 12/3/21
AG
Coconut just went up 30%, as an FYI. Most of my inputs are up 20-60% for the year.
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Duncan Idaho
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In reply to YouBet • 2:44p, 12/3/21
All wealth, including "generational" is relative and compoundable.
Like the op said, 4 years of college can be life changing and can go a long way to ensuring financial success.

Generational wealth can take all kinds of forms. It doesn't have to be inheriting enough money that that I never have to have a job.

A refugee fleeing to America with nothing but the clothes on their backs is in a sense creating generational wealth by giving his kids and increased likelihood of financial success just from being in America. So is someone that lives in a smaller house in a better school district.

Paying for a kid's college to make sure they're not in debt when they get out, has nothing but financial upside for the kid. I remember when I took finance in college and they show the compounding table where if you invested $1,000 a year for 7 years and stopped investing completely you would have more money than if you started on the 8th year and invested $1,000 going forward (note interest rates for a hell of a lot higher back then)


I've never heard of negative generational wealth before but I absolutely love the concept.

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Duncan Idaho
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3:20p, 12/3/21
I've told this story before but I had a drinks one night with the daughter of a billionaire. When I finally figured out who her father was, she made a comment along the lines of "we are comfortable but not really what I would call rich."
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SpreadsheetAg
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2:04p, 12/4/21
AG
My current plan is to pay for my kids college and then give each of them $1MM as a graduation gift.

This should leave enough for me to retain my primary home and my 2 summer homes, plus some vacation money for the annual trips to Bora Bora and Disney World (with tour guide) and my annual Platinum donor to the 12th Man Foundation.

(In my dreams)
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Sully Dog
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6:52p, 12/5/21
  • Pay for their college. (they each have $30K in a 529)
  • I will match them to help with a down payment on a house
  • If they start their own business I will invest (not gift) in that business
  • I will invest in their kids' 529
  • They will inherit our families land.




Deplorable Neanderthal Clinger
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whoop1995
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8:11p, 12/5/21
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At age 10 I figured out I had to do it myself - parents were always spending money that they didn't have and arguing about it - started mowing lawns and got a paper route and then once I purchased my own car (Chevy caprice classic station wagon) I went into the working world in the restaurant business. (Arby's, friendly,s) - sorry grew up in Connecticut but got here as fast as I could.

Graduated high school in 1988 and figured out my parents couldn't help me with college and I was not talented enough sports wise so I needed cash.

I joined the army (infantry 11b) saw the world did my part in desert storm. I didn't need to spend very much money in the army to live although there were plenty of temptations. Went to blinn for a year and then finally got accepted to a&m. I was smart but with working so much my grades suffered and that's why I couldn't directly get into a&m.

While at blinn and a&m worked three jobs - bookstore, intramural referee, and outback steak house and had g.I. Bill. Graduated in 95 with no debt and able to take the low paying job that gave a lot of experience. Worked my way into other jobs with other companies and now own a small franchisee that provides for my family.

My son now is at Texas a&m as a freshman and we are paying cold hard cash because I do not want him to be in debt when he graduates - he is in the engineering program with eventual hopes to be a chemical engineer - he didn't get a dime for scholarship money even though his sat was 1440 and grades and extracurriculars were way above board as an athlete, band and Eagle Scout.

I tell him everyone one has a chance in this world to do what ever they want as they just have to put their mind to it and work hard and smart - don't expect a handout like these other people, apathy is not your friend and you will be better off for it in the long run.

I was given the same opportunity as everyone else in the United States with a high school education and the opportunity to join the military.

It takes work looking for opportunities and working those opportunities - something everyone can do - in my mind anyway.

My kids and I have three of them will have college (hopefully they go to a&m) paid for and a little chunk of change when I pass.
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GE
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In reply to Duncan Idaho • 8:50a, 12/8/21
AG
Duncan Idaho said:
I've told this story before but I had a drinks one night with the daughter of a billionaire. When I finally figured out who her father was, she made a comment along the lines of "we are comfortable but not really what I would call rich."
Ha, awesome. I've heard similar things from people in all strata. Rich usually just means "wealthier than I will ever be".
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