FIRE May Make Building Multi-Generational Wealth Impossible

If you want to FIRE, one of my regrets was pulling the ripcord too early at age 34 in 2012. Even though I started writing about FIRE in 2009 with the launch of Financial Samurai—trying to uncover as many blind spots as possible before taking the leap—I still feel like I made a mistake. In hindsight, I should have worked at least five more years until age 39, or even 40 before retiring.

At the time, I didn’t know I’d have a kid five years later, let alone two. Fast forward more than a decade, and with tremendous inflation, skyrocketing college costs, and never-ending healthcare expenses, the squeeze is real. If I had worked a few more years, I probably could have generated at least $60,000 more in passive income into perpetuity.

Although I’m confident I’ll build enough wealth so my two children will never go hungry, I’m not certain I’ll ever reach true multi-generational wealth. To me, that means having enough so that three generations—my family, my children’s families, and my grandchildren’s families—would never have to work soul-sucking jobs to survive.

Multi-Generational Wealth Is Not Necessary (But It’s Nice To Have)

Of course, multi-generational wealth isn’t a necessity. Neither is the need to Fat FIRE. Our baseline expectation should be that our children grow up, achieve financial independence, and learn to take care of themselves.

But after living in San Francisco for 25 years, I’ve seen the opposite play out repeatedly. Every single neighbor I’ve ever had either still has an adult son living at home, or the son lives in a house purchased by his parents.

I’ve gotten to know many of these families. The sons all went to college and worked hard. Yet, despite their education, none of them could land jobs that paid enough to live independently with middle-class comfort. Instead, they’ve relied on ongoing financial support from their parents to make life in San Francisco work.

Given this reality, I’m pragmatic enough to expect that the same dynamic could affect my kids. The world is only getting more competitive, with AI threatening jobs and international students filling up top university spots at the expense of Americans. Getting ahead will become increasingly difficult for the next generation.

Hence, the solution: attempt to build multi-generational wealth.

If my children don’t end up needing financial support because they find well-paying jobs, build businesses, or otherwise thrive, then great. The extra wealth will simply serve as a cushion or be redirected to charity. But if they do need help, I’d rather already have that “insurance policy” in place than scramble later.

Other Reasons To Amass Multi-Generational Wealth

Here are some reasons why you may want to build multi-generational wealth beyond simply wanting to give your kids and grandkids a head start:

• Severe disability or health challenges. You, your spouse, or your child may require extraordinary financial resources to maintain a decent quality of life—think 24/7 caretakers, modified vehicles for mobility, custom housing, or lifelong occupational therapy.
• Genetic risks. If you or your spouse carry recessive genes that could appear in future generations—causing loss of mobility, senses, or cognitive functioning—you might want to build a bigger financial safety net.
• Historical inequities. You may come from a community that has been historically marginalized and denied equal opportunities. Even though progress has been made, you may not trust that your children and grandchildren will ever be given a fully fair shake. Generational wealth becomes both protection and empowerment.
• The loud “provider’s clock.” Some people feel an unusually strong responsibility to take care of their family members. Maybe you were the first in your family to attend college, or you lucked into a life-changing opportunity like joining a startup before it IPO’d. Whatever the case, you feel compelled to leverage your luck into a lasting legacy.
• Volatility of opportunity. Opportunities come and go, and not every generation will be fortunate enough to catch a financial tailwind. Future generations may face bigger systemic risks than we did. By building more than you personally need, you’re smoothing the path for your heirs when they face tougher times.
• Philanthropic leverage. For some, it’s not just about family. A dynasty-level fortune allows you to create family foundations, endow scholarships, or shape institutions that last long after you’re gone.

Ultimately, the drive to build multi-generational wealth is usually not about greed. It’s often about love, protection, and creating optionality for the people who matter most.

The Math Behind Multi-Generational Wealth

Imagine a upper middle-class lifestyle for a family of four today costing $350,000 a year before taxes. In expensive cities like San Francisco, New York, Los Angeles, Settle, or Honolulu, this level of spending provides comfort, but it’s hardly extravagant once you factor in taxes, housing, childcare, education, and healthcare.

If you happen to live in a lower-cost city, feel free to adjust the numbers to better fit your situation. The country is vast, and the cost of living varies dramatically. This is simply a theoretical exercise to illustrate how much wealth might be needed to support three generations.

Supporting One Family Of Four Today

Using the 4% safe withdrawal rate, here’s how much capital is required: $350,000 ÷ 0.04 = $8,750,000

That means one family of four today needs $8.75 million in investable assets (not including primary residence) today to generate $350,000 in annual gross spending without depleting principal. If you want to build multi-generational wealth, the decumulation of principal is not the way.

In 20 Years (Next Generation)

Let’s assume each of this family’s two kids grows up, starts a family with two kids, and wants to maintain this same lifestyle. Using 3% annual inflation for 20 years: $350,000 × (1.03)˄20 ≈ $632,000

So what costs $350,000 today will cost about $632,000 a year in two decades.

At a 4% withdrawal rate: $632,000 ÷ 0.04 = $15,800,000

Each child will need about $15.8 million in invested capital to sustain a family of four in 20 years.

Total Required For This Family Of Four And Their Two Children's Families Of Four

• This family of four today: $8.75 million in investable assets
• Child #1 in 20 years: $15.8 million in investable assets (assuming they are a family of four)
• Child #2 in 20 years: $15.8 million in investable assets (assuming they are a family of four)

Grand total = $40.35 million.

And that’s assuming steady markets, no major financial shocks, and no lifestyle creep. To be safe, you’d want a 20–30% buffer, meaning the real target is closer to $50 million+.

In 40 Years (Grandchildren’s Families)

Now that we've got the two children's families and the current family taken care of, it's now time to think multi-generational and figure how how much we need to save and invest to take care of their grandchildren's families. Let us assume each grandchild has two kids and a spouse of their own.

Using the same assumptions:

• Base annual spending today: $350,000
• Inflation: 3% per year
• Timeline: 40 years

$350,000 × (1.03) ˄ 40 = $1,141,000

So by the time the grandchildren are adults, an upper middle-class family of four lifestyle could cost $1.14 million per year. Sounds kind of nuts! But the math doesn't lie.

At a 4% withdrawal rate: $1,141,000 ÷ 0.04 = $28,525,000

Each grandchild’s family of four would therefore require $28.5 million in capital in the future to sustain themselves.

With four grandchildren, the total comes to: $28.5M × 4= $114 million.

The All-In Generational Number

• Family today: $8.75M
• 2 kids in 20 years: $31.6M
• 4 grandchildren in 40 years: $114M

Grand total = $154.35 million.

Add a 20–30% safety buffer for market volatility, higher-than-expected inflation, or health/education shocks, and the real number pushes closer to $200 million.

Holy moly! Coming up with $154 – $200 million is a crazy amount of money. No wonder some high-income earning parents feel the angst of not being rich enough. Only CEOs, unicorn-startup founders, top athletes, or elite hedge fund managers or venture capitalists can amass that type of fortune.

So the sad reality is, even if you don’t FIRE and grind yourself into dust, you still probably won’t amass multi-generational wealth anyway. Hence, think carefully about sacrificing your life to try and achieve an unlikely goal.

Calculating The Amount Needed In Today's Dollars

But here’s the good news: In this example, you don’t need to save and invest $154 – $200 million today. That figure represents the inflated future capital required to sustain everyone’s lifestyles. What really matters is how much you'd need to set aside in today’s dollars.

• Family today: $8.75M to generate $350,000 a year in gross investment income at a 4% rate of return
• Kids in 20 years (discounted back at 3%): $17.5M instead of $31.6M in the future
• Grandkids in 40 years (discounted back at 3%): $35M instead of $114M in the future
• Grand total = $61.25M instead of $154M in the future

Now, $61 million is still a monster sum, but it feels a lot more approachable than $154+ million. And that’s using a conservative 3% discount rate (equal to the assumed inflation rate).

It gets better when you assume a higher rate of return (discount rate):

Base amount needed today: $8.75 million (no need to discount this number)

Amount needed today based on various discount rates to take care of two more generations, 20 and 40 years in the future:

• 3% (inflation only, base case): ~$52.5M ($61.25M total minus the $8.75M you need today)
• 4% (inflation + 1% real growth): ~$44.7M
• 5% (inflation + 2% real growth): ~$31.9M
• 6% (inflation + 3% real growth): ~$27.6M
• 7% (inflation + 4% real growth): ~$21.6M
• 8% (inflation + 5% real growth): ~$18.9M
• 9% (inflation + 6% real growth): ~$15.5M
• 10% (inflation + 7% real growth): ~$13.8M
• 11% (inflation + 8% real growth): ~$12.1M
• 12% (inflation + 9% real growth): ~$11.3M

Although $20.05 ($11.3 + $8.75 needed today) to $61 ($52.5 + 8.75 needed today) million is still an enormous sum, it’s far easier to wrap your head around than $154 million.

Generating a 5%–8% annual rate of return is quite reasonable. 20-year Treasury bonds yield about 5% risk-free, while stocks have historically returned around 10% per year. My venture capital investments in private AI companies could potentially generate even higher returns.

Working Obviously Helps Increase Your Chances

If you want to build multi-generational wealth by continuing to work, each year of saving and investing will further strengthen your returns. For instance, saving and investing $87,500 in a single year would raise a base of $8.75 million by 1%. That 1% boost can either accelerate your path to the target or provide a valuable buffer during downturns.

Think about this type of calculation as a Coast FIRE calculation for multi-generational wealth creation. You don't need all the money today. Instead, you need enough money to grow at a reasonable rate of return beyond your consumption rate to support your future indefinitely.

How To Run Your Own Multi-Generational Wealth Calculation

If you’d like to stress-test your own plan, here’s a framework:

1. Start with your desired annual household expenses today.
   Example: $X per year for your current family size.
2. Estimate your children’s timeline to adulthood.
   How many years until your kids have families of their own? Call this N years.
3. Apply an inflation assumption.
   Multiply today’s expenses by (1+i)N(1+i)N, where i = inflation rate.
   • Conservative: 2%
   • Realistic: 3%
   • Pessimistic: 4%+
4. Apply the safe withdrawal rate.
   Divide the inflated annual expense by 0.04 (or your preferred rate). This gives the capital required for one family.
5. Multiply by the number of families you want to support.
   For example, two kids who each have two kids = six families total (including your own).
6. Discount back to today’s dollars.
   Use a discount rate that blends inflation and expected returns:
   • 3% = inflation only (very conservative, “real dollars”)
   • 5% = inflation + 2% real return (reasonable base case)
   • 7–9% = higher real returns (optimistic, but still possible)
7. Add a buffer.
   Because nothing ever goes perfectly, tack on 20–30% to your target.
8. Come up with a realistic number more years you're willing to work.

This framework lets you plug in your own numbers. If your annual expenses are $80,000 in a lower-cost city, your target will be much smaller. If you think inflation will run hotter than 3%, your target will balloon.

The Most Realistic Way To Build Multi-Generational Wealth

Now that we’ve run the numbers, let me share the most straightforward way of building multi-generational wealth: real estate.

Once you’ve gone “neutral real estate” by owning your primary residence, aim to buy at least one rental property per child. Ideally, you purchase one when they’re born or even years before, giving yourself more time to pay down the mortgage and let the property appreciate as your child grows into adulthood.

The next step is to acquire additional rental properties based on the realistic number of grandchildren you expect. Since the average family has about two children, you can multiply the number of kids you have by two to set this new goal.

With affordable housing locked in, life gets much easier. If you can reduce your housing expense to 10% or less of your income, financial freedom becomes almost inevitable. After all, food, clothing, and shelter are relatively inexpensive compared to housing costs. Here's my housing expense guideline for financial independence if you want to get more in the details.

Over a lifetime of saving, investing in other risk assets like stocks, and paying off multiple mortgages with leveraged gains, you’ll give yourself a strong chance of creating multi-generational wealth. And even if you fall short, you’ll still leave behind the most important foundation: paid-off shelter so your children and grandchildren will always have a roof over their heads.

Reconciling FIRE With Legacy Building

This is the hard truth: FIRE and multi-generational wealth are competing goals. FIRE is about quitting early to maximize your time. Multi-generational wealth is about working longer and compounding capital across decades.

You can’t maximize both at once unless you’re an ultra-high earner or build a billion-dollar company. For the rest of us, the trade-off is clear:

• Retire early, and you cap your wealth potential.
• Work longer, and you expand your wealth potential but sacrifice time freedom.

I’ve made peace with the fact that I may never hit multi-generational wealth to fully fund my grandchildren’s futures. And that’s OK.

My first job is to provide for my kids and raise them to be financially independent. If I can also build a cushion for my grandchildren, wonderful. If not, I’ll leave behind values like hard work, frugality, and investing – traits that may end up being more valuable than money itself.

After going through this exercise, I've realized there's no way I’d be willing to work another 20 to 30 years just to build multi-generational wealth for my grandchildren’s family. I'll leave that responsibility for my kids, if that's what they want to do.

Final Takeaway

FIRE may make building multi-generational wealth impossible. But that doesn’t mean FIRE is a mistake. It just means you need to be clear-eyed about the trade-offs. Retiring too early cuts off the compounding engine that dynasties rely on.

The best we can do is strike a balance: build enough wealth to enjoy freedom today, while still setting up a foundation for the next generation. Anything beyond that is gravy.

Readers, what assumptions do you use for inflation, investment returns, and spending in your financial independence calculations? Do you think about building multi-generational wealth, or do you believe kids should be fully on their own? Why do you think people get upset at others for running financial simulations to see how much wealth they can build over a lifetime?

If you see any math or logic errors with my above calculations, please feel free to point them out and I'll correct them.

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