One of the worries about entering the decumulation phase is that you might start spoiling your adult children. If you end up giving your adult children so much money, you might just take away their motivation to work!
Being able to earn your own money and provide for your family creates one of the most satisfying feelings ever. What a shame to take away such a great feeling by giving your adult children everything.
The Fears Of Spoiling Our Adult Children With Money
Here are a couple of comments left in my decumulation post that encapsulate the worries of a financially-responsible parent. If you are a parent who has been reading Financial Samurai for longer than a year, this is probably you.
I want to give my children some leg up. But not enough to be a dealt a “silver spoon” scenario which may kill their motivation to improve themselves.
I want to leave my kids with enough money to do SOMETHING, but not enough to do NOTHING.
As a parent of two young children, I worry not having a traditional day job might warp their reality. Since they didn't experience their dad leaving for work at 5 am and getting back after 7 pm for 13 years, they might think staying at home working 3-4 hours a day is good enough!
Therefore, I have to find a way to show them most people need to work very hard for a very long time before having the option to work at a more leisurely pace. Thankfully, I can easily show my kids what I do because I'm home all the time! The same goes for many parents who are also able to work from home.
If my kids want to play, I'll just tell them to give me some time to finish up work first, even though the work isn't urgent. This way, they'll always be reminded of the importance of work. They'll also practice delayed gratification and develop some grit.
But here's the thing. Maybe parents like me don't need to worry about spoiling their children or adult children at all. We can give them plenty of money once they are out of the house without fear of them turning into ungrateful degenerates.
The reason is apparent once you accept the following true scenarios.
Why Most Parents Don't Need To Worry About Spoiling Their Adult Children
The typical parent begins to decumulate after age 60 because most people retire after age 60. With the average age of first-time mothers around 26, the average age for an adult child to receive significant financial assistance from a parent is therefore over 34 (60 – 26).
And for those parents who want to provide an inheritance upon death, then the average age for an adult child receiving an inheritance may be around 54 (80 – 26)! After all, the average life expectancy is around 80, but increasing.
Therefore, if you receive an inheritance between the ages of 34 – 54, it shouldn't spoil you because you'll already be long set in your ways.
As a 45 year old this year, there is no amount of money my parents can give me that will change my lifestyle or my money habits. I've already got food, clothing, transportation, shelter, and educational expenses taken care of. It's very hard to break my habit of saving and investing for an unknown future.
Further, if you end up being wealthier than your parents, then it's hard for your parents to make a big financial impact.
More Appreciation Of Money In Your Mid-30s
By age 34, you've already had 16 years out of high school studying and working. Very few able-bodied people still live at home with their parents at age 34. That said, the median age for a first-time home buyer is around 34. At this age financial assistance from parents could be huge.
But by your mid-30s you should be much more appreciative of any financial assistance your parents provide because you realize how hard it is to build your own fortune.
You've probably changed jobs at least twice, got backstabbed by a colleague at least once, broken up with at least one love interest, and made plenty of investing mistakes. Further, you might be under tremendous pressure as first-time parents to juggle both work and family.
Therefore, by your mid-30s, you are probably the most appreciative of receiving any financial help from your parents. Due to mostly pride, you may have held off asking for money for a long time already.
I know plenty of adults who would rather work three jobs and sleep on their friend's sofa than ask their parents for money after college. Most people are thoughtful and want to start giving back to their parents after being cared for for 18-22 years.
Given you're so appreciative, you will do everything possible to honor your parents by working hard to pay your parents back. You'll also stay more in touch with your parents if they provide financial assistance.
The right amount of money to leave your children will depend on your child. But if you've raised them properly, you won't have to fear spoiling them.
A Wonderful Scenario For Parents
If you are the parent providing financial assistance, you will most certainly appreciate more phone calls and more visits from your adult children. In turn, you will feel they are more appreciative of your help rather than less.
For so long, you've stepped aside to let your children live their own lives. You've been told to get out of their way so they can fly and crash land on their own.
But secretly, you'd love to be more involved in your children's lives because you love them so much! You've always dreamt of being their best friend once they're all grown up. Having them want to spend more time with you empty nesters is a dream come true.
Less Appreciation For Receiving Money In Your 40s And Beyond
If you start receiving money from your parents in your 40s and older, chances are high you won't appreciate monetary gifts as much as you did when you were younger. As a result, being spoiled with money is out of the question.
Think back to the days when you got a crisp $5 bill for your 10th birthday. What joy! Now think back to when you got a $20 bill or maybe even a $100 bill as a teenager. Amazing! But as time goes on, that joy fades because you get used to the monetary gifts.
More importantly, by your 40s, you will have already made a significant amount of money. For example, by age 40, you should have between $250,000 – $1,000,000 in your 401(k) according to my 401(k) savings guide by age.
Hopefully, you'll also be generating a decent amount of taxable passive income to provide you more options as well. At the end of the day, it is your taxable investments that are the source of your passive income streams.
Peak Earning Years
Your 40s are also when you're close to or in your peak earning years. You may be lucky enough to be earning six figures or even seven-figures by your late 40s. As a result, an inheritance or financial assistance might not mean that much.
What you'd rather have is more quality time with your parents. And if you have children, you'd love it if your parents got to know their grandchildren a little better. So in terms of money, the best financial gift may be a grand family vacation.
In your 40s, 50s, and 60s, you are likely also thinking about giving more money away. After all, the best age for decumulation is somewhere between 40 – 60 years old. Therefore, the act of receiving money from your parents who are decumulating later than recommended won't change your daily habits.
The Riskiest Ages To Give Too Much Money To Your Children
In conclusion, most parents shouldn't worry about spoiling their adult children by giving them money. Maturity, pride, and honor will ensure most adult children will appreciate any financial gifts that come their way.
Financially responsible parents teach their children about delayed gratification, strong work ethic, and investing throughout their childhood. By the time their children are in their 20s, they will want to try to create their own wealth without assistance.
The only age range when giving too much money is a risk is likely between ages 5 – 27. Starting around age 5, children begin to understand the concept of money. Spoiling them early without commensurate work is no good. Giving adult children money between the ages of 18 – 27 may take away their incentive to see what they can do on their own.
About five years after college or ten years after high school, adult children will have gone through enough misery to really appreciate any financial assistance. Further, by age 25, neuroscientists have determined the brain fully develops as well.
Therefore, starting at age 28, parents who want to lavish their adult children with money should feel more at ease doing so. But hopefully by then, their adult children will be doing so well there will be no need.
Related posts about money and children:
Readers, is the fear of spoiling our adult children with money overblown? Hasn't your appreciation of money increased as you've aged? When do you think is the right age to start financially assisting our adult children?