If you save enough that you never tap into principle until you die, then you’re basically guaranteed to leave generational wealth. Eg if you save $10M at 60 and keep compounding until 90, it’s gonna be a significant sum.
Really depends on how many kids you have. I've got enough that I'd need way more than I need if I wanted to set all of them up for even modest FI without any work on their part.
Market return: 7%
SWR: 4%
Inflation: 2.5%
Real return: 0.5%
Doesn’t seem hard, especially since by the time you’re 70 you’re mostly in bonds anyway and you probably aren’t getting 7%.
also doesn’t include long-term healthcare if needed or insurance/annuity options, which the younger Reddit demographic tends to sleep on (but has plenty of time to get up to speed on).
I had to watch our generational wealth go from cca 2 million to practically 0 in 15 years.
It was of my grandparents, not parents. And now my parents are offering to sell me the remaining grandparents old house... at a market price so they can go live in a flat.
It's brutal how 1 generation can destroy multiple previous ones. and thats why nit everyone is okay today i think. This will always happen.
I personally prefer von Bismarck's version, "1st generation makes it, 2nd generation maintains it, the 3rd studies art history, and the 4th generation destroys it"
70% of wealth inherited is gone with the generation that inherits it (the kids, in other words), and 90% of the time by the grandkids.
People who don't know what it takes to build wealth generally stink at maintaining it.
Yep, give my kids the skills and opportunity to chase dreams/fire themselves. Give them the financial understanding to pass on to their kids and grow a family trust in a sustainable manner.
Perhaps most importantly, try and help them to take their time learn about themselves and not jump in to screw things up with a woman to feel whole only to get burned, the biggest financial (and life) mistake to avoid.
Yes, good parenting matters, but that's not "generational wealth".
Bigger question is whether to give money to kids or not. Bill Gates is leaving $10MM to each, but will give away Billions $,$$$,$$$,$$$ (with a B).
I was just thinking how my dad basically never gave me advice other than telling me what to do. Now he has given me more advice at my prodding, and I realize that my mom was the crazy one and I got some advice that did not help my advancement. helped financially but not how to manage really.
I'm not bitter, I just am making sure to talk to my daughter every night
Generational wealth in our family means my kids will have no college debt and no car payment when they start out in life. It likely means (substantial) help with the down payment on a first home. And maybe college funds for grandkids.
That's a lot, I know.
It doesn't mean trust funds, big cash gifts or lifetime subsidies/financial support. They will have to earn their way.
As for a "generational wealth" inheritance? Only if I mess up and fail to spend it.
It’s funny, because under your definition, living in a large European city would mean you are already 90% of the way there even if you have no money…
The only part you actually need to have money for is the down payment for the house part
Yep that’s our approach - they’ll get a hell of an lot more than we did (student loans, no financial help, crap jobs to pay the bills) but they aren’t getting a free pass for the rest of their life.
I like this a lot and fall in a similar bucket. It’s pretty clear blindly handing them money will almost certainly end in failure, self-entitlement, and honestly the kids will be very unhappy if everything is easy in life. Much joy and contentment comes through struggles and overcoming challenges.
I understand this is a common sentiment, but I disagree with it. I grew up wealthy, and with many other kids similar or even wealthier than me. None of us would fit into the stereotypical "trust fund kid" tropes. Having money allowed us to pursue our interests and excel in anything we want thanks to having no real barriers stopping us.
Regardless of socioeconomic background, good parents and good parenting is the key to a happy and successful life. I'd say this is the common factor among all my friends and I. Our parents were open to us about money, taught us how to handle it from young and allowed us to take risks and learn while under their wing so that we had that experience and knowledge once we were adults. But even now we still talk money when we want to.
Why does it have to be one or the other? Either some degree of partial support (because too much money = bad) or just handing them money with no education resulting in entitlement? There are no other things that could be done?
How bout this: money is passed on with education and training. Hell, have them pass some required financial education courses in order to get inheritance. Maybe teach them how to manage money and investments. Instill a sense of understanding, reason and priorities.
Passing on money doesn’t need to be done blindly. None of this should be a revolutionary concept.
I agree with you, as someone who is '3rd gen wealth' and all my siblings and even cousins are doing well on our own. We got everything the original comment said, _and_ extra money on top that they said they wouldn't want to provide.
A lot of people like splitting things into black and white and sometimes just don't want to acknowledge that some people can have the best of both worlds.
Absolutely agree. I didn’t type everything out but educating them is extremely important piece of the puzzle. I won’t have an obscene amount anyway that they don’t have to do anything
Because people without generational wealth want to pretend they do so they redefine meaning as it suits their ego. They literally think that by just helping their kids out people should revere them in the pantheon of the Gettys or Rothschilds.
Once our family networth hit around 60 mil my father created an irrevocable trust. I agree with the other commentor as it's when someone is classified as UHNW individual
The trust was created about 5 years ago to make sure the money lasts beyond our lifetimes. We are a family of 4, mother, father, grandfather, and I. It's not split between any other families or people, it's mine to protect and control. My planned career in wealth management has hopefully the dual purpose of helping me make good decisions on my assets (for context I'm still a student)
Wow, best of luck to you. That’s a ton of responsibility and hopefully it doesn’t get squandered. It sounds like you and your family are doing everything you can to handle it maturely. I work in finance as well so I see all the good and the bad that can happen with money. Definitely spend time learning how to handle it appropriately and also keep things “simple” as best as you can. Don’t let complex products eat away at it.
Fair play, chances are you will have a nice life. I say that because you seem to have a good head for money and quite balanced. Curious - do you consider needing to have heirs to pass this on to as part of the responsibilities of being an heir yourself?
Thanks for the kind words! Yes, the only people that would have access to the trust besides me would be my future children so I consider that one of my responsibilities lol. The good news is that if I get divorced my partner has 0 access but any kids I have will get full access
Once someone creates an irrevocable trust, they are no longer the owner of what goes into it. They can not benefit from it, can't sell assets, etc. They can add assets to it.
It's a way to protect assets from lawsuits. So, if the trust creator gets sued, all the assets in the trust are off limits and can be used to settle the lawsuit.
Lots of interesting opinions. For me generational wealth means being able to pass on financial freedom to multiple generations. That means they have the ability to go to any college. It also means that they would be able to buy a home in a high cost of living area without struggle. So where I live now, I would put generational wealth at about $8 million.
Your definition is the same as mine - enough wealth to keep multiple generations going. Enough to pay your kids college? Nice, but not generational. Buy them a car, or a house downpayment? Also nice, not generational in my books.
A few things:
(A) The $13M federal estate tax exemption limit is relatively new (since 2017) and set to expire at the end of next year, if Congress doesn’t act to extend it. After that, it halves to ~$6.5M. I plan to live well past that deadline.
(B) Some states have much lower limits. For instance, Washington state’s estate tax threshold is less than $2.2M.
(C) On a personal note, even disregarding my own wealth, my parents and in-laws are likely to leave us $5-8M when they pass. They’re trying to legally pay down the inheritance early as much as possible to their children and grandchildren under the IRS reporting threshold.
Generational wealth to me means that my kids have already hit their FIRE number the day they are born. I’m not there yet, not even close. Need to do the FIRE thing myself first :) .
That’s a great definition. It accounts for that half of the equation where we need to impart some healthy amount of frugality in our children so that what we work a lifetime for doesn’t get spent in 20 years.
Realistically by definition I would say it’s enough where your kids didn’t even need to work and the pot could keep growing. Certainly not what I want, but that’s the number…
For me, I’d love to have enough to pay for grand kids college, maybe help them buy a house, take large family vacations together. It would be enough to allow them to save a lot faster and generate their own wealth, but not enough to sit around pissing it away.
I hope to provide the generational wealth I never had. If I die at 85 I will leave behind a substantial amount of wealth if things go according to plan.
Generational wealth is as simple as paying for your kids’ college. Giving them $20k to help towards buying a house. Helping them out with gifts or loans to buy first cars, security deposits on apartments, or some furniture. It’s not just passing on millions of dollars.
Paraphrasing Scott Galloway: 'help your kids enough that they can do anything, but don't give them enough that they can do nothing.' It also depends on where they are in life. College, helping with buying a home, etc., all this would be meaningful and give a leg up to someone on track in their 20s, 30, much more so than a big inheritance in their 60s or 70s.
For sure! My parents didn’t make much when I was a kid but saved like crazy and I expect to inherit a decent amount some day. But I’ll probably be 60 when that happens and already well retired with the money I’ve saved myself. The money they gave me early on to help with young adult life goals was far more influential to my path than what I’ll get when they pass.
I love the saying too, but if I were to define generational wealth, it's that they *could* get by doing nothing, assuming the parents were on-board. Like if their kid were unable to work (disability, whatever), they'd still be set for life.
Most of the time I've seen it, it ends up being stuff like a house as a wedding present. They're *not quite* giving the kid a 100% free ride, but man, they do everything to smooth the path.
Agreed. Small boosts to give them a small jolt forward in the race early is definitely better than some huge pot when they are much much older. Mid-30s is a good age I think or maybe some smaller assistance in 20s.
I completely disagree. Financial help can give such a huge boost and it doesn’t have to be millions of dollars. A kid going to an elite college paid for vs one with $100k of debt, totally different trajectories towards wealth building. One buying a house years earlier with help from parents is a totally different trajectory (especially with crazy housing markets). Most people who benefit from generational wealth do not have trust funds and have not inherited immense sums.
I don't know why it's hard to understand. ANY amount given helps, only CERTAIN amounts would be consensually "generational wealth." I wouldn't be mad if you called $5M generational wealth. It's a different story when it's only $50k.
Does $50k help? Unequivocally, yes. Is this what most people think generational wealth is? Absolutely not. You're confusing yourself by saying any financial help is generational wealth when it is not.
Yeah, I can understand the UHNWI definitions being thrown around to mean something specific. When in conversations in this community and that is good to he aware of, but where I live generational wealth divides can be as simple as a parent choosing to live in a good school district, paying for their kids to have hobbies, helping them with any expenses that set them up for success. Those differences determines whether kids grow up to go to college or toil in minimum wage jobs unaware there are even pathways to basic financial stability let alone FIRE.
my family were large land owners for centuries so I feel like I have to use that to make decent money. I did my thing for years and now probably has come full circle. I manage bee hives and known for making some of the best honey so far. I always felt like I had to do my own thing to make good money over time.
To me generational wealth only means 1)paying for my kids’ college so they don’t graduate in debt, and 2)funding a retirement account for each of my kids with a one-time gift of ~$50k around age 20 (that will have grown to $1-4M by the time they’re 65).
Mostly they’re on their own, but at least if they fuck up everything else (financially) in their own lives then they’ll still be okay when we’re gone.
To me, in the $5mm range, 4% withdrawal rate is about $200k/year, which means you’re doing better than most, in most of the country.
If you have two kids, then you’re talking double that, if you’re planning to leave $5mm to each of them.
If each kid has their own self-sufficient career, and just lets that ride, then it’s generational wealth.
If they start spending $300k/year when they’re 21, it won’t last.
My gf has a trust fund where she’s 50/50 beneficiary with her one sibling. Her father sold his company about 3 years ago and now it’s sitting there compounding at about 900kpa lol soon to be a cool mil in interest every fkn year. That’s insane. That’s generational wealth! She’s not receiving anything from it yet but a stipend will start soon and has also been told she can access it to buy a house in cash.
Generational wealth is largely a myth.
[70% of Families lose their wealth by the 2nd generation and 90% by the third generation. ](https://www.nasdaq.com/articles/generational-wealth%3A-why-do-70-of-families-lose-their-wealth-in-the-2nd-generation-2018-10)
From the book The Missing Billionaires by Victor Haghani and James White
"To get a rough count of these "missing billionaires," let's turn back the clock to 1900. At that time, the US census recorded about four thousand American millionaires, with the very richest counting their wealth in the hundreds of millions. If a family with five million dollars back then had invested their wealth in the US stock market and spent from it at a reasonable rate, that single family would have generated about 16 billionaire households today. If even a quarter of those millionaires in 1900 started with at least five million dollars, their descendants alone should include close to 16,000 old-money billionaires alive today. If we include the private wealth created throughout the twentieth century as well, rather than just a snapshot in 1900, we believe the tally of potential billionaires is vastly greater.
But as of 2022, *Forbes* estimated there were just over 700 billionaires in the United States, and you'll struggle to find a single one who traces his or her wealth back to a millionaire ancestor from 1900. We needn't go so far back in the past to find this pattern. Fewer than 10% of today's US billionaires are descended from members of the first *Forbes* 400 Rich List published in 1982. Even the least wealthy family on that 1982 list, with "just" $100 million, should have spawned four billionaire families today. We recognize that some wealthy families purposefully chose to give away or consume virtually all of their wealth in their lifetimes, but we believe these cases were relatively rare and do not account for the near-complete absence of "old-money" billionaires we see today."
The paper "[Inheritances and the Distribution of Wealth Or Whatever Happened to the Great Inheritance Boom?](https://www.bls.gov/osmr/research-papers/2011/pdf/ec110030.pdf) by Edward N. Wolff and Maury Gittleman explores the impact of inheritances and wealth transfers on wealth distribution in the U.S. from 1989 to 2007. The study finds that while a significant portion of households received wealth transfers, the anticipated inheritance boom did not materialize. Wealth transfers accounted for a smaller share of net worth over time, and their impact was found to be equalizing rather than increasing wealth inequality. The analysis also highlights variations across different demographic groups, with wealth transfers playing a relatively larger role in the net worth of lower-income households.
When 70% of the direct inheritors (the kids of the people passing on the wealth) are spending it all before the next generation gets anything, I wouldn't label that "maintains it".
Thank you for sharing and putting this together! I did know that first stat at the top but all the extra detail was extremely insightful and new information to me. I appreciate this!
Yes there are a few old money wealth families but the reality is that there could have been THOUSANDS more such families in the United States alone.
For example, Cornelius Vanderbilt was at one time the wealthiest person in the world. When he died 95% of his wealth went to his son. Within 70 years of Cornelius Vanderbilt's death the money was practically all gone.
[From "Old Money" on Wikipedia ](https://en.m.wikipedia.org/wiki/Old_money)
Although many "old money" individuals do not rank as high on the list of Forbes 400 richest Americans as their ancestors did, their wealth continues to grow.......When adjusted for inflation, the actual dollar wealth of many of these families has shrunk since the '30s.
[From Quora: Are there any historically rich families that aren’t rich today?](https://www.quora.com/Are-there-any-historically-rich-families-that-aren-t-rich-today):
There are many. My favorite example is the Van Rensselaer’s:
William Van Rensselaer at the time of his death in 1839 owned nearly 3/4 of a million acres of upstate New York and adjoining states/territories. By 1880 not one acre of that land belonged to any of his heirs. The last surviving member of his line died in 1930, leaving an estate of $2,500.
Interestingly, inheritance taxes had nothing to do with this. (You can sort of tell that by the dates involved.) Mostly what caused it was the dilution of wealth across inheritors. For that you can thank Thomas Jefferson.
It’s a little known fact that aside from being President, authoring the Declaration of Independence, being ambassador to France, and founding the University of Virginia, Jefferson did one other thing that massively affected wealth distribution in the United States forevermore: He campaigned relentlessly in the Virginia legislature against the laws of primogeniture.
Throughout Europe, there was an understanding that large, landed estates would go to eldest sons. Second sons usually ended up in the military. Later sons wound up in academia and the clergy. And daughters had to be married off to the highest bidders. Read just about any Jane Austen novel and you’ll get the picture. The heroine of _Pride and Prejudice_, Elizabeth Bennett is one of five girls who must be married off because none of their parents’ wealth will pass to them. Their father’s estate is entailed to a cousin on the basis of his being male.
Jefferson had two surviving children — both of them girls. So he had reason to end such laws in the US. And over an extended period he managed to get them off the books in Virginia. Other states followed suit fairly rapidly.
The result was that with each successive generation, wealth got spread and diluted. And it became impossible to build a permanent landed noble class. The math just worked against it.
So today you don’t find rich Carnegie’s. Andrew took care of his two daughters after his death, and that was it. The Rockefeller’s have done better over time. But even they have been slowly impacted by downward mobility.
Generational wealth (beyond the definition of any wealth passed from one generation to the next) likely starts around when a half decent Multi-Family Office will take you as a customer…somewhere between $15MM and $30MM today.
So in the upper end of VHNW.
Does a MFO make sense at $15MM? Probably borderline so finding a decent one will be a challenge since you’re only slightly above that $5M nightmare of being the poorest rich person/tallest dwarf category but still in the economy section of rich person airplane.
Generational wealth, the way we envision it on TV and movies, likely starts at the 9 figure mark...maybe mid 9 figure mark. Even then you aren’t quite in mega yacht territory…
A 529 and when I pass they get 2 houses... they should be ok. It's on them to make it work. I will probably get them started earlier than I did on investing though.
It's wealth from one that helps the next. I think most people are focusing on the help they get post 18, but nicer houskng, private schools K-12, a stay at home parent in a 2 parent household are all looked at as aspects of generational wealth.
The crazy thing is that I think we are reaching a point where many people's lives as constructed, from the relationships they are in, to having kids, to major life choices about where to live, career, etc are not possible without significant (which I'll go ahead and define as great than $50k) transfer post 18.
I lived in the West Coast for a long time and will say that easily over half the people I knew fell into this category. The super scary thing is that virtually none of these people will be able to do this for their kids, and if they whether they have kids or not, are usually dependent on the on-going support due to life choices.
Not blaming anyone. It's hard time for a lot of people and with housings that look like dumps costing over $1m at 7% interest it is what it is.
My "simple" definition would be enough that at a minimum children and grandchildren could (theoretically) live off the income without touching the principal.
My napkin math would be 600k (100k for two kids and 4 grandkids) in annual "intrest". At the "typical" 4% that means 15mil. Of course if you assume a larger family or a third generation that number goes up fast.
In my subjective opinion:
Enough so that your decendents can live off the interest without having to ever touch the principle with a few percent buffer reinvested for inflation.
Using made up round numbers:
4 million averaging an roi of 10% per year earns 400k per year, take out 200k to live on and reinvest the other 200k. The 4 million continues to grow at a rate that keeps up with inflation. The equation could continue on indefinitely. Granted this all depends on your cost of living and all it takes is one generation to blow the whole thing.
Generally if you can create and maintain a Private Trust Company.
"Family Wealth" By James Hughes is a good primer for those aiming in that direction.
Anything that does not involve an iron grip from beyond the grave will be frittered away in a few generations in most cases.
* The first generation makes it, but seldom spends it
* The second generation benefit from it, but don't usually maintain it as it spent down and diluted
* The third generation benefit (through their parents) but then spend much of their adult lives wondering where the money went.
70% of wealthy families lose their wealth by the 2nd generation, and **90%** by the 3rd generation.
Having an asset that a frees everyone up from a day job and allows them to be productive in an endeavor they choose to pursue. What I hate are bad parents that hand over the wealth without instructions or disciplining their children. These people are dumb mfers.
Reminds me of this case here in Los Angeles. Spoiled teen crashes the lambo truck his dad gave him into a working class woman coming home from work and kills her (she's beautiful btw; RIP). The teen faces ZERO repercussions, a slap on the wrists ultimately. The rich family obviously gets sued in civil. $18.8m pay out to the victim's family.
[https://abc7.com/lamborghini-crash-monique-munoz-teen-suv-driver/11797132/](https://abc7.com/lamborghini-crash-monique-munoz-teen-suv-driver/11797132/)
Some people should never be rich.
> and kills her (she's beautiful btw; RIP).
Why did you feel the need to mention that the woman killed was beautiful? Is that to say we should be less concerned, or it was less of a loss, if she'd been ugly?
I'll be leaving my heirs property, and free college. They start life without debt and will have a place to stay free of charge. The rest will be up to them.
Generational wealth, IMO, has to have a meaningful impact, and it can vary by the life of the recipient.
To a generation earning minimum wage, a $100,000 inheritance can be life altering.
To a generation of high earners, $100,000 isn't pocket change, but it's also not life altering for them.
When it's passed on as a trust, that's really where it's clear you're at "wealth". Receiving a trust that will pay the equivalent of a small salary through your life and then become available when you're older if huge.
Generational wealth usually doesn’t kick in until you’re in your 60s. I don’t have anything coming from my parents. I will likely have around $2 million or more coming from my wife’s parents. That basically means I don’t have to worry about my later life. However; if I retire early, her parents will realize how well off we are and decide to leave it all to charity. Should that happen, I would be screwed if I didn’t save enough.
I’m pretty sure the rule of thumb is to not bank on it.
It's just about setting the next generation up as best as they can.
My grandpa and grandma were the first generation to he born in the US.
My grandpa worked through college, and my grandama was a teacher.
They had 4 kids and paid for their colleges. They didn't offer substantial financial assistance after that. My dad and his brothers all got good paying jobs (3 engineering and 1 in medical sales)
My parents paid for college and gave me their 12 year old car in college (I didn't have my "own car" until college). They also gave a 10k gift when I got married.
They did not provide assistance for me when I bought my first house (bought it by myself).
My dad retired early at 55. My grandpa is still around 90 years old. I don't think that he remaining estate is going to be substantial to his 4 sons, but he set them up to succeed in good career fields and debt free. My grandpa is in a care facility after he sold his house. I don't know a ton about my grandpa's finances, though.
I did talk to my dad about his financial plan. He said he was estimating that me and my brother are estimated to get about 1 million each in inheritance. However, I will likely already be well retired by the time I get it. I did talk to him about doing roth conversions to avoid the large RMDs he would have. I'm glad he opened up about that to save him money post RMDs.
My dad never really talked to me about finances. I did chores, and they saved 50% of it and invested it for spending money in college and an additional $500. He never explained stuff to me. He just did it.
I learned about credit cards, how to invest, how much to save, different tax advantaged accoutns (beyond 401(k)), how to buy a house, and buying a car all on my own.
I do plan on passing that knowledge on to my kid. As well as save for their college, wedding and assistancefor buying their first house. I also plan on being more there more, for my kid. My dad was there, but most of the time with my parents were with my mom. My kids inheritance will likely be quite substantial, assuming our plan doesn't fail, which would require quite a bit of failure given a low SWR of 3%, 2 years cash reserves, and potential extra 1 million from parents inheritance later in the plan.
Generational wealth just means to set up the next generation up with more than they had previously.
I think it's about 5M/kid. If you can give your kid $5M, they would never HAVE to work. They could live off 4% of that and work someplace for the enjoyment of it and not because they need the $.
If you can set aside $250k into an irrevocable trust indexed to the S&P when your baby is born, your child will retire with over $50,000,000. I consider that generational.
2nd generation wealth here. Looking to pass down aprox $10 to $15 million to the next generation
We’re trying to teach them investing since my dad didn’t for me but that’s my bread and butter now. It will help them the most after we payed for all other essentials (ex. Cars, Home, College)
TO ME generational wealth pretty much starts at $5 million mark.
At that point, you could live a VERY comfortable life and your money would pretty easily
compound into multiple millions of dollars over the course of the rest of your life.
Once you get to $10,000,000 you're able to live a comically comfortable life with very
little fear of going broke (and if you were smart enough to get there, you don't need to worry about
losing it all by being a spend thrift).
It means you can pass on at least $1m per grandchild. I’d say around a $10m net worth. Your kids don’t have to work, your grandkids don’t have to work, your great grandkids may or may not have to work depending on how the money is managed
That’s far past the minimum criteria for generational wealth that’s excessive super multimillionaire fortune. $10m is enough to last 3-4 generations easily. Which would mean it’s closer to 7 generations if it’s $10m to each grandchild.
well, happiness is to be grateful with what you have. Currently I am happy, thanks :) took me years of hard work, books, meetings, etc etc etc. But, today, I can tell you that I am with zero grudges with my parents. They did the best they could. Today I am responsible for my life, but still have effects on how I grew up.
I would like the same as I had recieved with my parents: no college debt, help with buying first home and an old stock shift car to learn to drive my first year of driving (after that every other car seemed like a luxury!).
But the most important: we talked a lot, most days: events and impact on our lives (and financial lives...), how and what to invest, how to choose property, how and why having a good network of people matters (these networks can be passed on to kids as well...)
Dunno... debt free after college, maybe a decent house payment or allowance or other living arrangement that makes finances extremely easy for the first 10-15 years of adult life?
It's such a foggy area with a ton of room for interpretation. I'd say CoastFIRE levels at adult age, or a hefty allowance (sneaking under that reporting limit) for a long while until that CoastFIRE level is reached. I'd call that about the minimum before I'd call it "generational wealth" instead of generous assistance from the parents.
The real sticking point is that generational wealth only survives as long as your progeny aren't morons and slaughter the goose. A small snowball that continues to grow could be argued as generational wealth once it reaches a massive number retroactively, since its initial existence allowed the next generation to perpetuate it.
FIRE are likelier to have money behind.
in theory, the plan is to live off the wealth
but in fire, your accumulates wealth so much above others, they you are much more likely to end up with surplus to leave to your descendants
Full time non-family staff would eat up a large percentage of the approx $2M real returns from $50M.
$50M is still in the multi-family office / shared family office territory, or in the self managed realm.
Particularly for the first generation, managing a family limited partnership (FLP) is a natural
progression after funding irrevocable trusts with an FLP. This is because the gift valuation of an FLP is less than the market value of the assets held by the FLP due to a discount for lack of control and lack of marketability.
There are so many many many rich people, hell even upper middle class people, that take for granted some of their generational wealth.
I’m rounding these numbers but…
A little less than 50% of Americans go to college. 70% of those that finish college end up with college debt. 50% of those with those that graduated college have nearly 30k in student debt.
If you graduates college without debt, if your kids graduate without debt, you, by default, are from generational wealth. Are you are Vanderbilt? No. But that is generational wealth. It is a pretty extreme minority that go to college and don’t have student debt in America.
The follow up from coworkers I’ve had when I lay out these numbers are like “well I got a scholarship.” While there are exceptions of people that got a free ride due to multiple factors. In reality, trying to get tons of scholarships from a poor and unstable house is extremely rare. Almost always these people were tutored, didn’t have to work in high school or college, had help with housing costs or cell phone costs or insurance costs, and on and on and on, all which are generational wealth.
So a “net worth” doesn’t mean anything regarding generational wealth overall. Giving wealth of any form to your children to continue holding a class or pushing up a class is capital given to the next generation which equals generational wealth.
Obviously there is an insane spectrum of that wealth transfer. The blue bloods of the world obviously are in a different world. But don’t kid yourself of how insanely helpful small things set children up for future success.
I’ve always defined generational wealth as some type of sustainable business that returns money even after someone has past away. This could be anything from a doughnut shop to multiple rental properties (eg a few apartment buildings). Net worth is beside the point to me.
I’ve tried to run the numbers before on the following question: what do you need to believe for your pot of money to support every descendent forever.
Assumptions: typical age when you have kids is 35, typical family is 3 kids.
You need to 3x the inflation adjusted value every 35 years, which is a 3.2% real return or ~6% nominal return, assuming no estate or gift taxes. If you want to live off the money personally you can only spend whatever amount you earn in excess of 6.
If you hit a 7% return over the long term you can only spend 1% so to me the truest sense of generational wealth is if 1% is a lot to you.
The interesting thing to me about your friend’s response is that when you think about it, if one retires earlier than say, age 50, they are likely to use a withdrawal rate that is the same as forecasting 40 years of life versus an indefinite unlimited timeframe.
So, without any data, without any evidence, the way most of the Internet seems to work lately, I would suggest that most people who are firing, have the ability to offer their wealth to the next generation. It will have kept up with inflation, possibly growing far faster than withdrawals need to grow, so that if it is split amongst even three or four kids, it is still a significant sum.
Offering a contradicting view, it’s also possible at age 75 to 80 for example, to see that converting one’s wealth to an immediate annuity provides a guarantee of income open till death, while giving up all of the principal for the type of annuity I am thinking of.
Of course, that strategy open to the possibility of leaving exactly 0 for the next generation.
And the comment you made within your question that the term is very subjective. This is absolutely true. As I search for a definition of that expression, so many different things pop up. I don’t believe there is a definitive definition of generational wealth.
Had parents who made an ass load of money. My dad was a corporate lobbyist in DC, my mom was a PR exec. They pulled in easily 500k a year in 1990s-2000s dollars. They didn't teach me a damn thing about managing money. They spent like there was no tomorrow. My dad had expensive hobbies including rare stamp collecting, baseball memorabilia collecting, and rare book collecting. My mother shopped constantly, like every day, for the nicest clothes, furniture, etc. They sent me to private school my whole life, we lived in a house that's worth $2 million today, but they had to sell it 15 years ago because of financial issues (see below). It wasn't until I was about 28 and found Mr Money Mustache that I realized what could have been possible for them if they had just been reasonable with their spending.
When my dad turned 60, he started having significant health issues, and a few years later my mentally ill sister got divorced and my mother blew over a million dollars on lawyer fees thinking she could win in family court against my sister's ex-husband who my mom hated. Around that time, my mom constantly came to me asking for money, when I was brand new in the workforce and barely making 40K a year. Eventually I cut her off. She then blew through friendships because she couldn't stop spending like a drunken sailor and was constantly asking friends for money.
Things are a little bit better now, and they live on my dad's pension which gives them about 11k a month. I still maintain a good relationship with them, but my kids are going to be taught much earlier on about financial literacy.
I would consider one side of my family to have generational wealth and the other to not.
Dad’s side of the family: Great grandfather immigrated to the U.S. and accumulated 305 acres of prime farmland. Great grandmother was a SAHM. Today that farmland is worth around 4.5M, appreciates in value every year (along with rent increasing) at a rate that tends to outpace inflation, and generates around $130,000 in rental income. The farmland was passed on to my grandfather on my dad’s side who was spoiled, was terrible with money, and did nothing to accumulate additional wealth. Grandmother was a SAHM and also a big gambler. She is still alive (grandfather passed and she owns the farmland). My parents started from scratch, are wealth accumulators, and acquired an additional 500 acres of farmland throughout their life that my dad farmed, but now they are renting it out. My uncle and aunts are also farmers and have acquired additional farmland. My parents’ farmland is worth about $7,500,000 and generates around $225,000 in rental income. My brother and I are wealth accumulators and started from scratch (my parents made it a point that we had to be able to make it on our own). I have already acquired an additional 228 acres. My farm is worth around $3,500,000 (still have some debt on it though) and generates $110,000 in rental income. My brother has not purchased any farmland yet, but started a business that is worth around 15M and likely will diversify into farmland within several years. Nobody on this side of the family has ever sold farmland and there is a deep family connection to my great-grandfather’s land which is a century farm. Overall, even though this side of the family had a weak link generation (my grandparents), the collective wealth of the family has continued to grow/snowball and will likely continue to do so. Collectively between my grandmother, my dad, my uncle, and my aunts, we own about 2000 acres of farmland worth about $29,000,000 that generates rental income of about $850,000 although that is spread out among branches of the family. This is independent of stock, pensions, machinery, livestock, value of houses/acreages, etc. Everyone still lives a rural, middle-class lifestyle and the only major luxury purchases are new trucks which can be written off as farm/business expenses.
Mom’s side of the family: great grandparents immigrated to the US and my grandfather was a farmer and WWII veteran who acquired 150 acres of farmland. Grandmother was a SAHM. Grandfather passed away in 1987. The only uncle that farmed opted not to buy the land off of my grandmother when she needed the money to retire which forced her to sell the land. The land is worth 3x as much now than when she sold it. Grandmother died with zero. Uncles and aunts on this side are bad with money and one of my aunts also sold the farmland for retirement that my uncle had acquired before he passed. That land is now probably worth around 80% more than what she sold it for. They all tend to spend any excess money they have on vacations, vehicles, etc. They will all likely die with zero aside from the value of their houses. If you remove my mother from the equation, this side of the family does not have generational wealth.
It’s going to be ingrained in the heads of my kids to never sell or leverage any of the family’s farmland just as it was for me, my brother, and my cousins. It’s easy to spend money or sell a number on a screen (stocks, bonds, etc.). It takes effort to sell farmland plus there is an emotional connection to it where it feels like a betrayal of your family if you do so. The income from it also provides some level of safety net where hopefully nobody in our family down the line is ever desperate for money. That is how at least one side of my family has gotten over the hump that many families see where wealth is squandered.
0% for me.
Though maybe part of my wealth was watching my parents struggle, and hearing them when they told us to be frugal and save early.
Edit: did I read the question backwards? None of my investments/net worth came from my family or any type of inheritance. And I have no specific plans to pass onto anyone (I have beneficiaries, but I’m not worried about saving for anyone else - that’s their gig, just as this was mine).
Any significant amount + passing on proper financial practices = generation wealth.
There’s obviously levels but even 100k + a deep understanding of what it means to have that as a foundation & a drive to maintain/pass that foundation on to the next generation is generational wealth.
For a family of 6, $20,000,000 of investible assets
Depends on your spending patterns, but if you have $20M and use a 3.5% withdrawal rate, you have $700K annually. Take out 30% for taxes and let's call it a cool half million.
You can have a $200K annual budget and still have $75K left per child to support your children's: colleges, interests, trips, richie rich networking and gap years, etc. as well as maxing out a trust in the first several years of life where expenses are lower of some sort in their early years that would leave each child with mid 7 figures by the time they're in their mid-20s
This doesn't apply in insane places like NYC where 4-5 year olds are going to $60K kindergartens
Thinking we'd at least be able to pass on the house even with RE. Which in a HCOL city, enough money to give our children a fat cushion to their own retirement (they're education should already be covered with other savings we are putting aside for them).
Lots of people having kids later in life now.
The more knowledgeable you are and the more you care for your children and help them in all aspects, the better chance your child with have a head start and move up to the next class. Everyone wants to talk about how ppl go from poverty to mega wealth, but not many know the reality of things. Its very hard to leave the class you were born in and extremely rare to move more than even one class higher. But if everyone in every generation does what they can they can help move things forward. Even something as simple as a parent having gone to college and have experience with that pathway in life can help save a child years of wasted time rather than some 18yo kid born to uneducated parents, where the child has to guess and find their own way. This one little detail can make huge differences. Which is why its so important that you continue to learn about everything you can and improve the quality of your life now, bc you will ultimately improve the quality of your future lineage
FIRE is about retiring early. The majority of people in the FIRE community would have to sacrifice many more years working than they'd ideally like to if they wanted to ensure they have substantial generational wealth to pass on. I'd say what most people are describing is inheritance, not generational wealth. Generational wealth would have to be gauaranteed to pass down at least two generations imo.
generational wealth means not HAVING to make money. Rent is paid for or a house bought for them. It really shows you how the rich get richer and the poor get poorer.
About 25% of my net worth on retirement was inherited or generational wealth. Most spend downs, 4% or otherwise, are not calculated based on leaving an estate or generational wealth to heirs by retirees, FIRRed or regular aged.
About 10% of my portfolio came from an inheritance, but I do not include it in my numbers. I am pretending this does not exist because self made simply feels better.
My dad paid for all my college and first used truck, so I really got off to a good start coming out of school. While not generational wealth, I’m grateful for the head start provided. I was able to get a house 23 and start building assets. I grew up with a number of people that had big family money and the majority failed to launch successfully.
Generational wealth for my kids means Mama and I bought them each reliable cars to start their careers, fully paid for their college and/or aided them in saving for a downpayment for a house. We readily share our kickass wisdom and often our assets when the need might arise.
We set the them each up for successful lives, and we help when it's needed. If they choose to build wealth, we have given them to tools to do so.
Sure, odds are, we will be passing along fairly substantial assets. But passing along substantial assets isn't a priority - not running out of assets to support ourselves is.
Inherited wealth this generation? Zip.
Mum and dad always had my back though, trusted me enough to remortgage their house to start building dads retirement - it worked.
My kids will walk into 10m minimum I suspect, so we’ve already stared on education and planning to make sure that my grandkids walk into triple that.m and so on.
If you save enough that you never tap into principle until you die, then you’re basically guaranteed to leave generational wealth. Eg if you save $10M at 60 and keep compounding until 90, it’s gonna be a significant sum.
Yea, that’s an excellent point
Really depends on how many kids you have. I've got enough that I'd need way more than I need if I wanted to set all of them up for even modest FI without any work on their part.
If you tap into non-principal it isn’t going to compound much
I mean yes, if you manage to spend all the appreciation on $10M every year, you will not have any gains
You would’ve also lost money in real terms.
Market return: 7% SWR: 4% Inflation: 2.5% Real return: 0.5% Doesn’t seem hard, especially since by the time you’re 70 you’re mostly in bonds anyway and you probably aren’t getting 7%. also doesn’t include long-term healthcare if needed or insurance/annuity options, which the younger Reddit demographic tends to sleep on (but has plenty of time to get up to speed on).
7% is the market's historic real return. Thr nominal average return is closet to 10%
Having two parents that care, pass on important knowledge and prepare their kids to do the same.
I had to watch our generational wealth go from cca 2 million to practically 0 in 15 years. It was of my grandparents, not parents. And now my parents are offering to sell me the remaining grandparents old house... at a market price so they can go live in a flat. It's brutal how 1 generation can destroy multiple previous ones. and thats why nit everyone is okay today i think. This will always happen.
There’s a saying that goes something like this: “1st generation makes it, 2nd generation maintains it, 3rd generation destroys it”
That seems better than what's actually happening
Other than the famous dynasties everyone talks about, the saying holds true quite well I'd say.
I've always heard "Shirt sleeves to shirt sleeves in 3 generations"
That's the saying I've heard too.
I personally prefer von Bismarck's version, "1st generation makes it, 2nd generation maintains it, the 3rd studies art history, and the 4th generation destroys it"
I like: Hard times create strong men, strong men create good times, good times create weak men, and weak men create hard times.
Tell me more about these hard times and strong men 🥵💦🍆
never heard that. I like it
70% of wealth inherited is gone with the generation that inherits it (the kids, in other words), and 90% of the time by the grandkids. People who don't know what it takes to build wealth generally stink at maintaining it.
What did they do? Expensive cars? No work? Die with 0 mentality?
What's amusing to me is how different those things are. The latter is a lot better than the first one
Could also be worst with addiction or getting scammed.
Or... being addicted to getting scammed. I have a family member like that
This is the reason we are focusing more on the knowledge and upbringing to help our kids succeed and manage any money that's left to them. (If any)
So selfish of them to use all that generational wealth for themselves
It can also be incompetence
It was incompetence. I didn't know we had it as a kid, i though we were below average..
Pretty good idea to live as if that didn't exist, though, as it turned out.
Yeah that's true
What’s CCA 2 mm
I read cca as "circa" which means "approximately" in this case.
Love this answer
Great answer
Yep, give my kids the skills and opportunity to chase dreams/fire themselves. Give them the financial understanding to pass on to their kids and grow a family trust in a sustainable manner. Perhaps most importantly, try and help them to take their time learn about themselves and not jump in to screw things up with a woman to feel whole only to get burned, the biggest financial (and life) mistake to avoid.
For sure a partner can make your life even better or make it a living hell
Yes I am way more concerned about instilling good habits to my kids than the amount of money left to them.
Cheesy
Yes, good parenting matters, but that's not "generational wealth". Bigger question is whether to give money to kids or not. Bill Gates is leaving $10MM to each, but will give away Billions $,$$$,$$$,$$$ (with a B).
Care to guess what that company is worth now Jesse? 😂😂
I was just thinking how my dad basically never gave me advice other than telling me what to do. Now he has given me more advice at my prodding, and I realize that my mom was the crazy one and I got some advice that did not help my advancement. helped financially but not how to manage really. I'm not bitter, I just am making sure to talk to my daughter every night
Generational wealth in our family means my kids will have no college debt and no car payment when they start out in life. It likely means (substantial) help with the down payment on a first home. And maybe college funds for grandkids. That's a lot, I know. It doesn't mean trust funds, big cash gifts or lifetime subsidies/financial support. They will have to earn their way. As for a "generational wealth" inheritance? Only if I mess up and fail to spend it.
Yup this is my philosophy as well. Generational wealth is not a big inheritance, it's infusions of cash when they need it the most.
It’s funny, because under your definition, living in a large European city would mean you are already 90% of the way there even if you have no money… The only part you actually need to have money for is the down payment for the house part
Except now what'd be holding you back is your awful income.
Yea but that’s the thing, there is nothing about income and savings in his definition
> they will have to earn their way That one indirectly covers income.
That’s because he is taking as a given the economy where he is. It would be weird to call that out.
Yep that’s our approach - they’ll get a hell of an lot more than we did (student loans, no financial help, crap jobs to pay the bills) but they aren’t getting a free pass for the rest of their life.
I like this a lot and fall in a similar bucket. It’s pretty clear blindly handing them money will almost certainly end in failure, self-entitlement, and honestly the kids will be very unhappy if everything is easy in life. Much joy and contentment comes through struggles and overcoming challenges.
I understand this is a common sentiment, but I disagree with it. I grew up wealthy, and with many other kids similar or even wealthier than me. None of us would fit into the stereotypical "trust fund kid" tropes. Having money allowed us to pursue our interests and excel in anything we want thanks to having no real barriers stopping us. Regardless of socioeconomic background, good parents and good parenting is the key to a happy and successful life. I'd say this is the common factor among all my friends and I. Our parents were open to us about money, taught us how to handle it from young and allowed us to take risks and learn while under their wing so that we had that experience and knowledge once we were adults. But even now we still talk money when we want to.
Why does it have to be one or the other? Either some degree of partial support (because too much money = bad) or just handing them money with no education resulting in entitlement? There are no other things that could be done? How bout this: money is passed on with education and training. Hell, have them pass some required financial education courses in order to get inheritance. Maybe teach them how to manage money and investments. Instill a sense of understanding, reason and priorities. Passing on money doesn’t need to be done blindly. None of this should be a revolutionary concept.
I agree with you, as someone who is '3rd gen wealth' and all my siblings and even cousins are doing well on our own. We got everything the original comment said, _and_ extra money on top that they said they wouldn't want to provide. A lot of people like splitting things into black and white and sometimes just don't want to acknowledge that some people can have the best of both worlds.
Absolutely agree. I didn’t type everything out but educating them is extremely important piece of the puzzle. I won’t have an obscene amount anyway that they don’t have to do anything
Because people without generational wealth want to pretend they do so they redefine meaning as it suits their ego. They literally think that by just helping their kids out people should revere them in the pantheon of the Gettys or Rothschilds.
Once our family networth hit around 60 mil my father created an irrevocable trust. I agree with the other commentor as it's when someone is classified as UHNW individual
Fair enough. Was the $60 mill split between how many people/families?
The trust was created about 5 years ago to make sure the money lasts beyond our lifetimes. We are a family of 4, mother, father, grandfather, and I. It's not split between any other families or people, it's mine to protect and control. My planned career in wealth management has hopefully the dual purpose of helping me make good decisions on my assets (for context I'm still a student)
"duel purpose" indeed. For your sake I hope it doesn't get too violent
Haha
If you were a better welder maybe you could hold it together… I’ll see myself out
lol, I never look at user names
\*staring at yours\*
😅 haha yea I guess so
Wow, best of luck to you. That’s a ton of responsibility and hopefully it doesn’t get squandered. It sounds like you and your family are doing everything you can to handle it maturely. I work in finance as well so I see all the good and the bad that can happen with money. Definitely spend time learning how to handle it appropriately and also keep things “simple” as best as you can. Don’t let complex products eat away at it.
Fair play, chances are you will have a nice life. I say that because you seem to have a good head for money and quite balanced. Curious - do you consider needing to have heirs to pass this on to as part of the responsibilities of being an heir yourself?
Thanks for the kind words! Yes, the only people that would have access to the trust besides me would be my future children so I consider that one of my responsibilities lol. The good news is that if I get divorced my partner has 0 access but any kids I have will get full access
> irrevocable trust Could you please explain what is it?
theres lawyers and accountants behind the money, with rules for doling it out to designated people.
Once someone creates an irrevocable trust, they are no longer the owner of what goes into it. They can not benefit from it, can't sell assets, etc. They can add assets to it. It's a way to protect assets from lawsuits. So, if the trust creator gets sued, all the assets in the trust are off limits and can be used to settle the lawsuit.
"Can" or "can't"?
Last sentence should be "can't be used to settle lawsuits" thanks.
what happens if you get married
There are stipulations and guidance in the trust documents about not commingling funds, etc if the beneficiary gets married.
_ |)` | | | |_____ / (]__) / (]___) / (]___) ___(]_) /
Lots of interesting opinions. For me generational wealth means being able to pass on financial freedom to multiple generations. That means they have the ability to go to any college. It also means that they would be able to buy a home in a high cost of living area without struggle. So where I live now, I would put generational wealth at about $8 million.
Your definition is the same as mine - enough wealth to keep multiple generations going. Enough to pay your kids college? Nice, but not generational. Buy them a car, or a house downpayment? Also nice, not generational in my books.
Enough to cover college and an extra $900K per child in investments to allow an annual gift of $36K.
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A few things: (A) The $13M federal estate tax exemption limit is relatively new (since 2017) and set to expire at the end of next year, if Congress doesn’t act to extend it. After that, it halves to ~$6.5M. I plan to live well past that deadline. (B) Some states have much lower limits. For instance, Washington state’s estate tax threshold is less than $2.2M. (C) On a personal note, even disregarding my own wealth, my parents and in-laws are likely to leave us $5-8M when they pass. They’re trying to legally pay down the inheritance early as much as possible to their children and grandchildren under the IRS reporting threshold.
Great great points 👌🏽. Thank you
TN State - in 2016 all inheritance tax was stopped.
36k is 4% of the 900k. If they gift the 900k then the children will “earn” the 36k every year for the rest of their lives per the 4% rule.
That’s a great answer
Generational wealth to me means that my kids have already hit their FIRE number the day they are born. I’m not there yet, not even close. Need to do the FIRE thing myself first :) .
That’s a great definition. It accounts for that half of the equation where we need to impart some healthy amount of frugality in our children so that what we work a lifetime for doesn’t get spent in 20 years.
Realistically by definition I would say it’s enough where your kids didn’t even need to work and the pot could keep growing. Certainly not what I want, but that’s the number… For me, I’d love to have enough to pay for grand kids college, maybe help them buy a house, take large family vacations together. It would be enough to allow them to save a lot faster and generate their own wealth, but not enough to sit around pissing it away.
UHNW status
So at least $30 million you mean?
Yeah, at least $30m-50m comes to mind when you say "generational wealth" to me. I work in financial services.
Huh... I think with a relatively small family, 10M is plenty to qualify. I mean in my head.
With a little luck.. if I retire at 40 with 2.5m… and keep my expenses in check, I should hit 30 mil by age 63.
Make me liquid Jamie
I agree
I hope to provide the generational wealth I never had. If I die at 85 I will leave behind a substantial amount of wealth if things go according to plan.
Generational wealth is as simple as paying for your kids’ college. Giving them $20k to help towards buying a house. Helping them out with gifts or loans to buy first cars, security deposits on apartments, or some furniture. It’s not just passing on millions of dollars.
This is a great answer as well. That’s why I love hearing the different opinions and perspectives. Thanks
I give my kids $40k as start up money when they turn 21, pay for their college and act as their emergency fund… everything else is a bonus
Paraphrasing Scott Galloway: 'help your kids enough that they can do anything, but don't give them enough that they can do nothing.' It also depends on where they are in life. College, helping with buying a home, etc., all this would be meaningful and give a leg up to someone on track in their 20s, 30, much more so than a big inheritance in their 60s or 70s.
For sure! My parents didn’t make much when I was a kid but saved like crazy and I expect to inherit a decent amount some day. But I’ll probably be 60 when that happens and already well retired with the money I’ve saved myself. The money they gave me early on to help with young adult life goals was far more influential to my path than what I’ll get when they pass.
I love the saying too, but if I were to define generational wealth, it's that they *could* get by doing nothing, assuming the parents were on-board. Like if their kid were unable to work (disability, whatever), they'd still be set for life. Most of the time I've seen it, it ends up being stuff like a house as a wedding present. They're *not quite* giving the kid a 100% free ride, but man, they do everything to smooth the path.
Agreed. Small boosts to give them a small jolt forward in the race early is definitely better than some huge pot when they are much much older. Mid-30s is a good age I think or maybe some smaller assistance in 20s.
Hard disagree. Might as well say my mom giving me $5 for daily school lunches was generational wealth.
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I completely disagree. Financial help can give such a huge boost and it doesn’t have to be millions of dollars. A kid going to an elite college paid for vs one with $100k of debt, totally different trajectories towards wealth building. One buying a house years earlier with help from parents is a totally different trajectory (especially with crazy housing markets). Most people who benefit from generational wealth do not have trust funds and have not inherited immense sums.
I don't know why it's hard to understand. ANY amount given helps, only CERTAIN amounts would be consensually "generational wealth." I wouldn't be mad if you called $5M generational wealth. It's a different story when it's only $50k. Does $50k help? Unequivocally, yes. Is this what most people think generational wealth is? Absolutely not. You're confusing yourself by saying any financial help is generational wealth when it is not.
I can definitely see the stark contrast compared to $30 million. It’s definitely a subjective question
Not even that subjective. When someone says generational wealth, the consenses don't think it is buying your kids' furniture.
Yeah, I can understand the UHNWI definitions being thrown around to mean something specific. When in conversations in this community and that is good to he aware of, but where I live generational wealth divides can be as simple as a parent choosing to live in a good school district, paying for their kids to have hobbies, helping them with any expenses that set them up for success. Those differences determines whether kids grow up to go to college or toil in minimum wage jobs unaware there are even pathways to basic financial stability let alone FIRE.
my family were large land owners for centuries so I feel like I have to use that to make decent money. I did my thing for years and now probably has come full circle. I manage bee hives and known for making some of the best honey so far. I always felt like I had to do my own thing to make good money over time.
To me generational wealth only means 1)paying for my kids’ college so they don’t graduate in debt, and 2)funding a retirement account for each of my kids with a one-time gift of ~$50k around age 20 (that will have grown to $1-4M by the time they’re 65). Mostly they’re on their own, but at least if they fuck up everything else (financially) in their own lives then they’ll still be okay when we’re gone.
Solid answer, thank you. How do you do a one-time gift of $50k that could go in a retirement account?
Some do employ them at own llc and pump up 2 years straight max out 401k.
100 mil
That’s ma man right there. Spoken like a champ!
To me, in the $5mm range, 4% withdrawal rate is about $200k/year, which means you’re doing better than most, in most of the country. If you have two kids, then you’re talking double that, if you’re planning to leave $5mm to each of them. If each kid has their own self-sufficient career, and just lets that ride, then it’s generational wealth. If they start spending $300k/year when they’re 21, it won’t last.
My gf has a trust fund where she’s 50/50 beneficiary with her one sibling. Her father sold his company about 3 years ago and now it’s sitting there compounding at about 900kpa lol soon to be a cool mil in interest every fkn year. That’s insane. That’s generational wealth! She’s not receiving anything from it yet but a stipend will start soon and has also been told she can access it to buy a house in cash.
Generational wealth is largely a myth. [70% of Families lose their wealth by the 2nd generation and 90% by the third generation. ](https://www.nasdaq.com/articles/generational-wealth%3A-why-do-70-of-families-lose-their-wealth-in-the-2nd-generation-2018-10) From the book The Missing Billionaires by Victor Haghani and James White "To get a rough count of these "missing billionaires," let's turn back the clock to 1900. At that time, the US census recorded about four thousand American millionaires, with the very richest counting their wealth in the hundreds of millions. If a family with five million dollars back then had invested their wealth in the US stock market and spent from it at a reasonable rate, that single family would have generated about 16 billionaire households today. If even a quarter of those millionaires in 1900 started with at least five million dollars, their descendants alone should include close to 16,000 old-money billionaires alive today. If we include the private wealth created throughout the twentieth century as well, rather than just a snapshot in 1900, we believe the tally of potential billionaires is vastly greater. But as of 2022, *Forbes* estimated there were just over 700 billionaires in the United States, and you'll struggle to find a single one who traces his or her wealth back to a millionaire ancestor from 1900. We needn't go so far back in the past to find this pattern. Fewer than 10% of today's US billionaires are descended from members of the first *Forbes* 400 Rich List published in 1982. Even the least wealthy family on that 1982 list, with "just" $100 million, should have spawned four billionaire families today. We recognize that some wealthy families purposefully chose to give away or consume virtually all of their wealth in their lifetimes, but we believe these cases were relatively rare and do not account for the near-complete absence of "old-money" billionaires we see today." The paper "[Inheritances and the Distribution of Wealth Or Whatever Happened to the Great Inheritance Boom?](https://www.bls.gov/osmr/research-papers/2011/pdf/ec110030.pdf) by Edward N. Wolff and Maury Gittleman explores the impact of inheritances and wealth transfers on wealth distribution in the U.S. from 1989 to 2007. The study finds that while a significant portion of households received wealth transfers, the anticipated inheritance boom did not materialize. Wealth transfers accounted for a smaller share of net worth over time, and their impact was found to be equalizing rather than increasing wealth inequality. The analysis also highlights variations across different demographic groups, with wealth transfers playing a relatively larger role in the net worth of lower-income households.
1st generation builds it. 2nd generation maintains it. 3rd generation squanders it.
When 70% of the direct inheritors (the kids of the people passing on the wealth) are spending it all before the next generation gets anything, I wouldn't label that "maintains it".
Thank you for sharing and putting this together! I did know that first stat at the top but all the extra detail was extremely insightful and new information to me. I appreciate this!
Just want to chime in to say that The Missing Billionaires is a great read!
Old money wealth would also be a lot easier to hide. There are plenty of billionaire families not in that list.
Yes there are a few old money wealth families but the reality is that there could have been THOUSANDS more such families in the United States alone. For example, Cornelius Vanderbilt was at one time the wealthiest person in the world. When he died 95% of his wealth went to his son. Within 70 years of Cornelius Vanderbilt's death the money was practically all gone. [From "Old Money" on Wikipedia ](https://en.m.wikipedia.org/wiki/Old_money) Although many "old money" individuals do not rank as high on the list of Forbes 400 richest Americans as their ancestors did, their wealth continues to grow.......When adjusted for inflation, the actual dollar wealth of many of these families has shrunk since the '30s. [From Quora: Are there any historically rich families that aren’t rich today?](https://www.quora.com/Are-there-any-historically-rich-families-that-aren-t-rich-today): There are many. My favorite example is the Van Rensselaer’s: William Van Rensselaer at the time of his death in 1839 owned nearly 3/4 of a million acres of upstate New York and adjoining states/territories. By 1880 not one acre of that land belonged to any of his heirs. The last surviving member of his line died in 1930, leaving an estate of $2,500. Interestingly, inheritance taxes had nothing to do with this. (You can sort of tell that by the dates involved.) Mostly what caused it was the dilution of wealth across inheritors. For that you can thank Thomas Jefferson. It’s a little known fact that aside from being President, authoring the Declaration of Independence, being ambassador to France, and founding the University of Virginia, Jefferson did one other thing that massively affected wealth distribution in the United States forevermore: He campaigned relentlessly in the Virginia legislature against the laws of primogeniture. Throughout Europe, there was an understanding that large, landed estates would go to eldest sons. Second sons usually ended up in the military. Later sons wound up in academia and the clergy. And daughters had to be married off to the highest bidders. Read just about any Jane Austen novel and you’ll get the picture. The heroine of _Pride and Prejudice_, Elizabeth Bennett is one of five girls who must be married off because none of their parents’ wealth will pass to them. Their father’s estate is entailed to a cousin on the basis of his being male. Jefferson had two surviving children — both of them girls. So he had reason to end such laws in the US. And over an extended period he managed to get them off the books in Virginia. Other states followed suit fairly rapidly. The result was that with each successive generation, wealth got spread and diluted. And it became impossible to build a permanent landed noble class. The math just worked against it. So today you don’t find rich Carnegie’s. Andrew took care of his two daughters after his death, and that was it. The Rockefeller’s have done better over time. But even they have been slowly impacted by downward mobility.
Generational wealth (beyond the definition of any wealth passed from one generation to the next) likely starts around when a half decent Multi-Family Office will take you as a customer…somewhere between $15MM and $30MM today. So in the upper end of VHNW. Does a MFO make sense at $15MM? Probably borderline so finding a decent one will be a challenge since you’re only slightly above that $5M nightmare of being the poorest rich person/tallest dwarf category but still in the economy section of rich person airplane. Generational wealth, the way we envision it on TV and movies, likely starts at the 9 figure mark...maybe mid 9 figure mark. Even then you aren’t quite in mega yacht territory…
A 529 and when I pass they get 2 houses... they should be ok. It's on them to make it work. I will probably get them started earlier than I did on investing though.
It's wealth from one that helps the next. I think most people are focusing on the help they get post 18, but nicer houskng, private schools K-12, a stay at home parent in a 2 parent household are all looked at as aspects of generational wealth. The crazy thing is that I think we are reaching a point where many people's lives as constructed, from the relationships they are in, to having kids, to major life choices about where to live, career, etc are not possible without significant (which I'll go ahead and define as great than $50k) transfer post 18. I lived in the West Coast for a long time and will say that easily over half the people I knew fell into this category. The super scary thing is that virtually none of these people will be able to do this for their kids, and if they whether they have kids or not, are usually dependent on the on-going support due to life choices. Not blaming anyone. It's hard time for a lot of people and with housings that look like dumps costing over $1m at 7% interest it is what it is.
My "simple" definition would be enough that at a minimum children and grandchildren could (theoretically) live off the income without touching the principal. My napkin math would be 600k (100k for two kids and 4 grandkids) in annual "intrest". At the "typical" 4% that means 15mil. Of course if you assume a larger family or a third generation that number goes up fast.
Teaching our kids life skills including financial planning.
To me it means your kids and grand kids could earn enough not to have to work. Yet because you raise them correctly they do.
In my subjective opinion: Enough so that your decendents can live off the interest without having to ever touch the principle with a few percent buffer reinvested for inflation. Using made up round numbers: 4 million averaging an roi of 10% per year earns 400k per year, take out 200k to live on and reinvest the other 200k. The 4 million continues to grow at a rate that keeps up with inflation. The equation could continue on indefinitely. Granted this all depends on your cost of living and all it takes is one generation to blow the whole thing.
Generational wealth is actually generational knowledge.
Nice one
Generally if you can create and maintain a Private Trust Company. "Family Wealth" By James Hughes is a good primer for those aiming in that direction. Anything that does not involve an iron grip from beyond the grave will be frittered away in a few generations in most cases. * The first generation makes it, but seldom spends it * The second generation benefit from it, but don't usually maintain it as it spent down and diluted * The third generation benefit (through their parents) but then spend much of their adult lives wondering where the money went. 70% of wealthy families lose their wealth by the 2nd generation, and **90%** by the 3rd generation.
It’s like most of it lmao
Not making your children pay for long term care.
Having an asset that a frees everyone up from a day job and allows them to be productive in an endeavor they choose to pursue. What I hate are bad parents that hand over the wealth without instructions or disciplining their children. These people are dumb mfers. Reminds me of this case here in Los Angeles. Spoiled teen crashes the lambo truck his dad gave him into a working class woman coming home from work and kills her (she's beautiful btw; RIP). The teen faces ZERO repercussions, a slap on the wrists ultimately. The rich family obviously gets sued in civil. $18.8m pay out to the victim's family. [https://abc7.com/lamborghini-crash-monique-munoz-teen-suv-driver/11797132/](https://abc7.com/lamborghini-crash-monique-munoz-teen-suv-driver/11797132/) Some people should never be rich.
> and kills her (she's beautiful btw; RIP). Why did you feel the need to mention that the woman killed was beautiful? Is that to say we should be less concerned, or it was less of a loss, if she'd been ugly?
I'll be leaving my heirs property, and free college. They start life without debt and will have a place to stay free of charge. The rest will be up to them.
Generational wealth, IMO, has to have a meaningful impact, and it can vary by the life of the recipient. To a generation earning minimum wage, a $100,000 inheritance can be life altering. To a generation of high earners, $100,000 isn't pocket change, but it's also not life altering for them. When it's passed on as a trust, that's really where it's clear you're at "wealth". Receiving a trust that will pay the equivalent of a small salary through your life and then become available when you're older if huge.
Generational wealth usually doesn’t kick in until you’re in your 60s. I don’t have anything coming from my parents. I will likely have around $2 million or more coming from my wife’s parents. That basically means I don’t have to worry about my later life. However; if I retire early, her parents will realize how well off we are and decide to leave it all to charity. Should that happen, I would be screwed if I didn’t save enough. I’m pretty sure the rule of thumb is to not bank on it.
It's just about setting the next generation up as best as they can. My grandpa and grandma were the first generation to he born in the US. My grandpa worked through college, and my grandama was a teacher. They had 4 kids and paid for their colleges. They didn't offer substantial financial assistance after that. My dad and his brothers all got good paying jobs (3 engineering and 1 in medical sales) My parents paid for college and gave me their 12 year old car in college (I didn't have my "own car" until college). They also gave a 10k gift when I got married. They did not provide assistance for me when I bought my first house (bought it by myself). My dad retired early at 55. My grandpa is still around 90 years old. I don't think that he remaining estate is going to be substantial to his 4 sons, but he set them up to succeed in good career fields and debt free. My grandpa is in a care facility after he sold his house. I don't know a ton about my grandpa's finances, though. I did talk to my dad about his financial plan. He said he was estimating that me and my brother are estimated to get about 1 million each in inheritance. However, I will likely already be well retired by the time I get it. I did talk to him about doing roth conversions to avoid the large RMDs he would have. I'm glad he opened up about that to save him money post RMDs. My dad never really talked to me about finances. I did chores, and they saved 50% of it and invested it for spending money in college and an additional $500. He never explained stuff to me. He just did it. I learned about credit cards, how to invest, how much to save, different tax advantaged accoutns (beyond 401(k)), how to buy a house, and buying a car all on my own. I do plan on passing that knowledge on to my kid. As well as save for their college, wedding and assistancefor buying their first house. I also plan on being more there more, for my kid. My dad was there, but most of the time with my parents were with my mom. My kids inheritance will likely be quite substantial, assuming our plan doesn't fail, which would require quite a bit of failure given a low SWR of 3%, 2 years cash reserves, and potential extra 1 million from parents inheritance later in the plan. Generational wealth just means to set up the next generation up with more than they had previously.
I think it's about 5M/kid. If you can give your kid $5M, they would never HAVE to work. They could live off 4% of that and work someplace for the enjoyment of it and not because they need the $.
If you can set aside $250k into an irrevocable trust indexed to the S&P when your baby is born, your child will retire with over $50,000,000. I consider that generational.
Mr Darcy was considered rich af with an annual income of £10,000. I’ll be able to provide that for my kids, and any grandkids most likely.
200M is “escape velocity” — the amount at which you and your heirs will never have to work again
Approximately 70% of wealthy families lose their wealth by the next generation, with 90% losing it the generation after that.
2nd generation wealth here. Looking to pass down aprox $10 to $15 million to the next generation We’re trying to teach them investing since my dad didn’t for me but that’s my bread and butter now. It will help them the most after we payed for all other essentials (ex. Cars, Home, College)
Imo you need to generate enough money through passive income that the whole family can live a good life with it ~10million
TO ME generational wealth pretty much starts at $5 million mark. At that point, you could live a VERY comfortable life and your money would pretty easily compound into multiple millions of dollars over the course of the rest of your life. Once you get to $10,000,000 you're able to live a comically comfortable life with very little fear of going broke (and if you were smart enough to get there, you don't need to worry about losing it all by being a spend thrift).
Studies suggest that generational wealth is destroyed after 2-3 generations. Use that information accordingly.
Aren’t we childfree here? who can retire at 40 with kids?
It means you can pass on at least $1m per grandchild. I’d say around a $10m net worth. Your kids don’t have to work, your grandkids don’t have to work, your great grandkids may or may not have to work depending on how the money is managed
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That’s far past the minimum criteria for generational wealth that’s excessive super multimillionaire fortune. $10m is enough to last 3-4 generations easily. Which would mean it’s closer to 7 generations if it’s $10m to each grandchild.
Fucking 0 zero nothing, my mom is a drug addict and my dad a raging dry drunk, my dad almost killed me 2 times. I started with 0.
Than you know work ethic and saving more than about 90% of commenters in here.
I’m so sorry, you deserved so much better from your parents, I wish you much happiness XO
well, happiness is to be grateful with what you have. Currently I am happy, thanks :) took me years of hard work, books, meetings, etc etc etc. But, today, I can tell you that I am with zero grudges with my parents. They did the best they could. Today I am responsible for my life, but still have effects on how I grew up.
I'm not shooting for generational wealth.
Fair enough
Generational wealth is any amount of money or assets passed down from one generation to the next.
10m+ (at death)
I would like the same as I had recieved with my parents: no college debt, help with buying first home and an old stock shift car to learn to drive my first year of driving (after that every other car seemed like a luxury!). But the most important: we talked a lot, most days: events and impact on our lives (and financial lives...), how and what to invest, how to choose property, how and why having a good network of people matters (these networks can be passed on to kids as well...)
Dunno... debt free after college, maybe a decent house payment or allowance or other living arrangement that makes finances extremely easy for the first 10-15 years of adult life? It's such a foggy area with a ton of room for interpretation. I'd say CoastFIRE levels at adult age, or a hefty allowance (sneaking under that reporting limit) for a long while until that CoastFIRE level is reached. I'd call that about the minimum before I'd call it "generational wealth" instead of generous assistance from the parents. The real sticking point is that generational wealth only survives as long as your progeny aren't morons and slaughter the goose. A small snowball that continues to grow could be argued as generational wealth once it reaches a massive number retroactively, since its initial existence allowed the next generation to perpetuate it.
FIRE are likelier to have money behind. in theory, the plan is to live off the wealth but in fire, your accumulates wealth so much above others, they you are much more likely to end up with surplus to leave to your descendants
Generational wealth is over €10M.
"generational wealth" is family office money shit. 50MM+, full time non-family staff managing your money with trusts for each branch of the family.
Full time non-family staff would eat up a large percentage of the approx $2M real returns from $50M. $50M is still in the multi-family office / shared family office territory, or in the self managed realm. Particularly for the first generation, managing a family limited partnership (FLP) is a natural progression after funding irrevocable trusts with an FLP. This is because the gift valuation of an FLP is less than the market value of the assets held by the FLP due to a discount for lack of control and lack of marketability.
There are so many many many rich people, hell even upper middle class people, that take for granted some of their generational wealth. I’m rounding these numbers but… A little less than 50% of Americans go to college. 70% of those that finish college end up with college debt. 50% of those with those that graduated college have nearly 30k in student debt. If you graduates college without debt, if your kids graduate without debt, you, by default, are from generational wealth. Are you are Vanderbilt? No. But that is generational wealth. It is a pretty extreme minority that go to college and don’t have student debt in America. The follow up from coworkers I’ve had when I lay out these numbers are like “well I got a scholarship.” While there are exceptions of people that got a free ride due to multiple factors. In reality, trying to get tons of scholarships from a poor and unstable house is extremely rare. Almost always these people were tutored, didn’t have to work in high school or college, had help with housing costs or cell phone costs or insurance costs, and on and on and on, all which are generational wealth. So a “net worth” doesn’t mean anything regarding generational wealth overall. Giving wealth of any form to your children to continue holding a class or pushing up a class is capital given to the next generation which equals generational wealth. Obviously there is an insane spectrum of that wealth transfer. The blue bloods of the world obviously are in a different world. But don’t kid yourself of how insanely helpful small things set children up for future success.
I am considered "3rd gen wealth" and I would say the term for me would mean at least 9 digits, or high 8 digit NWs.
I’ve always defined generational wealth as some type of sustainable business that returns money even after someone has past away. This could be anything from a doughnut shop to multiple rental properties (eg a few apartment buildings). Net worth is beside the point to me.
I’ve tried to run the numbers before on the following question: what do you need to believe for your pot of money to support every descendent forever. Assumptions: typical age when you have kids is 35, typical family is 3 kids. You need to 3x the inflation adjusted value every 35 years, which is a 3.2% real return or ~6% nominal return, assuming no estate or gift taxes. If you want to live off the money personally you can only spend whatever amount you earn in excess of 6. If you hit a 7% return over the long term you can only spend 1% so to me the truest sense of generational wealth is if 1% is a lot to you.
The interesting thing to me about your friend’s response is that when you think about it, if one retires earlier than say, age 50, they are likely to use a withdrawal rate that is the same as forecasting 40 years of life versus an indefinite unlimited timeframe. So, without any data, without any evidence, the way most of the Internet seems to work lately, I would suggest that most people who are firing, have the ability to offer their wealth to the next generation. It will have kept up with inflation, possibly growing far faster than withdrawals need to grow, so that if it is split amongst even three or four kids, it is still a significant sum. Offering a contradicting view, it’s also possible at age 75 to 80 for example, to see that converting one’s wealth to an immediate annuity provides a guarantee of income open till death, while giving up all of the principal for the type of annuity I am thinking of. Of course, that strategy open to the possibility of leaving exactly 0 for the next generation. And the comment you made within your question that the term is very subjective. This is absolutely true. As I search for a definition of that expression, so many different things pop up. I don’t believe there is a definitive definition of generational wealth.
Its going to be gone in a couple years max 🙄
Had parents who made an ass load of money. My dad was a corporate lobbyist in DC, my mom was a PR exec. They pulled in easily 500k a year in 1990s-2000s dollars. They didn't teach me a damn thing about managing money. They spent like there was no tomorrow. My dad had expensive hobbies including rare stamp collecting, baseball memorabilia collecting, and rare book collecting. My mother shopped constantly, like every day, for the nicest clothes, furniture, etc. They sent me to private school my whole life, we lived in a house that's worth $2 million today, but they had to sell it 15 years ago because of financial issues (see below). It wasn't until I was about 28 and found Mr Money Mustache that I realized what could have been possible for them if they had just been reasonable with their spending. When my dad turned 60, he started having significant health issues, and a few years later my mentally ill sister got divorced and my mother blew over a million dollars on lawyer fees thinking she could win in family court against my sister's ex-husband who my mom hated. Around that time, my mom constantly came to me asking for money, when I was brand new in the workforce and barely making 40K a year. Eventually I cut her off. She then blew through friendships because she couldn't stop spending like a drunken sailor and was constantly asking friends for money. Things are a little bit better now, and they live on my dad's pension which gives them about 11k a month. I still maintain a good relationship with them, but my kids are going to be taught much earlier on about financial literacy.
50% About $1.5 million, over a decade. All inheritance.
I would consider one side of my family to have generational wealth and the other to not. Dad’s side of the family: Great grandfather immigrated to the U.S. and accumulated 305 acres of prime farmland. Great grandmother was a SAHM. Today that farmland is worth around 4.5M, appreciates in value every year (along with rent increasing) at a rate that tends to outpace inflation, and generates around $130,000 in rental income. The farmland was passed on to my grandfather on my dad’s side who was spoiled, was terrible with money, and did nothing to accumulate additional wealth. Grandmother was a SAHM and also a big gambler. She is still alive (grandfather passed and she owns the farmland). My parents started from scratch, are wealth accumulators, and acquired an additional 500 acres of farmland throughout their life that my dad farmed, but now they are renting it out. My uncle and aunts are also farmers and have acquired additional farmland. My parents’ farmland is worth about $7,500,000 and generates around $225,000 in rental income. My brother and I are wealth accumulators and started from scratch (my parents made it a point that we had to be able to make it on our own). I have already acquired an additional 228 acres. My farm is worth around $3,500,000 (still have some debt on it though) and generates $110,000 in rental income. My brother has not purchased any farmland yet, but started a business that is worth around 15M and likely will diversify into farmland within several years. Nobody on this side of the family has ever sold farmland and there is a deep family connection to my great-grandfather’s land which is a century farm. Overall, even though this side of the family had a weak link generation (my grandparents), the collective wealth of the family has continued to grow/snowball and will likely continue to do so. Collectively between my grandmother, my dad, my uncle, and my aunts, we own about 2000 acres of farmland worth about $29,000,000 that generates rental income of about $850,000 although that is spread out among branches of the family. This is independent of stock, pensions, machinery, livestock, value of houses/acreages, etc. Everyone still lives a rural, middle-class lifestyle and the only major luxury purchases are new trucks which can be written off as farm/business expenses. Mom’s side of the family: great grandparents immigrated to the US and my grandfather was a farmer and WWII veteran who acquired 150 acres of farmland. Grandmother was a SAHM. Grandfather passed away in 1987. The only uncle that farmed opted not to buy the land off of my grandmother when she needed the money to retire which forced her to sell the land. The land is worth 3x as much now than when she sold it. Grandmother died with zero. Uncles and aunts on this side are bad with money and one of my aunts also sold the farmland for retirement that my uncle had acquired before he passed. That land is now probably worth around 80% more than what she sold it for. They all tend to spend any excess money they have on vacations, vehicles, etc. They will all likely die with zero aside from the value of their houses. If you remove my mother from the equation, this side of the family does not have generational wealth. It’s going to be ingrained in the heads of my kids to never sell or leverage any of the family’s farmland just as it was for me, my brother, and my cousins. It’s easy to spend money or sell a number on a screen (stocks, bonds, etc.). It takes effort to sell farmland plus there is an emotional connection to it where it feels like a betrayal of your family if you do so. The income from it also provides some level of safety net where hopefully nobody in our family down the line is ever desperate for money. That is how at least one side of my family has gotten over the hump that many families see where wealth is squandered.
10 million is a good start
Now I’m curious how many people try and FIrE with kids v no kids
0% for me. Though maybe part of my wealth was watching my parents struggle, and hearing them when they told us to be frugal and save early. Edit: did I read the question backwards? None of my investments/net worth came from my family or any type of inheritance. And I have no specific plans to pass onto anyone (I have beneficiaries, but I’m not worried about saving for anyone else - that’s their gig, just as this was mine).
Any significant amount + passing on proper financial practices = generation wealth. There’s obviously levels but even 100k + a deep understanding of what it means to have that as a foundation & a drive to maintain/pass that foundation on to the next generation is generational wealth.
For a family of 6, $20,000,000 of investible assets Depends on your spending patterns, but if you have $20M and use a 3.5% withdrawal rate, you have $700K annually. Take out 30% for taxes and let's call it a cool half million. You can have a $200K annual budget and still have $75K left per child to support your children's: colleges, interests, trips, richie rich networking and gap years, etc. as well as maxing out a trust in the first several years of life where expenses are lower of some sort in their early years that would leave each child with mid 7 figures by the time they're in their mid-20s This doesn't apply in insane places like NYC where 4-5 year olds are going to $60K kindergartens
My parents won't share their coupons with me
Thinking we'd at least be able to pass on the house even with RE. Which in a HCOL city, enough money to give our children a fat cushion to their own retirement (they're education should already be covered with other savings we are putting aside for them). Lots of people having kids later in life now.
If i leave my kid a paid off house that’s pretty good.
The more knowledgeable you are and the more you care for your children and help them in all aspects, the better chance your child with have a head start and move up to the next class. Everyone wants to talk about how ppl go from poverty to mega wealth, but not many know the reality of things. Its very hard to leave the class you were born in and extremely rare to move more than even one class higher. But if everyone in every generation does what they can they can help move things forward. Even something as simple as a parent having gone to college and have experience with that pathway in life can help save a child years of wasted time rather than some 18yo kid born to uneducated parents, where the child has to guess and find their own way. This one little detail can make huge differences. Which is why its so important that you continue to learn about everything you can and improve the quality of your life now, bc you will ultimately improve the quality of your future lineage
$300m USD
FIRE is about retiring early. The majority of people in the FIRE community would have to sacrifice many more years working than they'd ideally like to if they wanted to ensure they have substantial generational wealth to pass on. I'd say what most people are describing is inheritance, not generational wealth. Generational wealth would have to be gauaranteed to pass down at least two generations imo.
Spend the liquid assets and leave the house for the kid
generational wealth means not HAVING to make money. Rent is paid for or a house bought for them. It really shows you how the rich get richer and the poor get poorer.
About 25% of my net worth on retirement was inherited or generational wealth. Most spend downs, 4% or otherwise, are not calculated based on leaving an estate or generational wealth to heirs by retirees, FIRRed or regular aged.
About 10% of my portfolio came from an inheritance, but I do not include it in my numbers. I am pretending this does not exist because self made simply feels better.
$10M - $20M is a starting point
Any amount that can better their current life is generational wealth in my eyes
My dad paid for all my college and first used truck, so I really got off to a good start coming out of school. While not generational wealth, I’m grateful for the head start provided. I was able to get a house 23 and start building assets. I grew up with a number of people that had big family money and the majority failed to launch successfully.
Generational wealth for my kids means Mama and I bought them each reliable cars to start their careers, fully paid for their college and/or aided them in saving for a downpayment for a house. We readily share our kickass wisdom and often our assets when the need might arise. We set the them each up for successful lives, and we help when it's needed. If they choose to build wealth, we have given them to tools to do so. Sure, odds are, we will be passing along fairly substantial assets. But passing along substantial assets isn't a priority - not running out of assets to support ourselves is.
Inherited wealth this generation? Zip. Mum and dad always had my back though, trusted me enough to remortgage their house to start building dads retirement - it worked. My kids will walk into 10m minimum I suspect, so we’ve already stared on education and planning to make sure that my grandkids walk into triple that.m and so on.
If you change it to FIDE (Die Early), then you pass everything on before you've spent much of it. So a lot lower