The headlines about a massive generational wealth transfer are real. I've been witnessing it for years since starting work in NYC in 1999 and arriving in San Francisco in 2001.
I'll share just a few examples that I've observed in my own neighborhood. The Bank Of Mom & Dad is out in full force supporting their adult children.Trillions of dollars will be inherited by the next generation.
When I bought my previous home 10 years ago my 68 year old neighbor stopped by to say “hello.” He was the godfather of the block, having bought his building back in the early 70s. He gave me the inside scoop on all the neighbors. One neighbor stood out in particular.
He said the house across the street was purchased a year before mine by a family who wanted a place for their son to live while attending UC Hastings School Of Law. The purchase price? $1.45 million for a 2,100 square foot three bedroom, three bathroom house.
Living It Up Thanks To Rich Parents
The son would host at least one fraternity-like party every year, but other than that, the house was pretty tame. The son continued to live in the house after law school and now it looks like they might sell.
For 10 years, the son not only lived for free, but he probably made rental income as well thanks to his two roommates. His $120,000+ law school tuition was also probably full paid for by Bank of Mom and Dad. He also drove a $60,000 Audi S4. If the house ever sells, I wouldn't be surprised if he gets to keep the $1 million+ in profits.
It's clear to me that my neighbor is going to be fine, even if he doesn't work for the rest of his life. If you're willing to accept so much assistance that's beyond what you can afford, then why bother working at all? Just mooch off your parents forever!
More Examples Of Generational Wealth Transfer
About two years ago my 32 year old next door neighbor came home in a brand new, $48,000 Toyota 4Runner Limited. I thought it was a quizzical purchase because the car couldn't easily fit in his garage. I saw him struggle for five minutes just to get the beast in.
Even so, I was intrigued and wrote a post about it called, “Dealing With Money Envy” because I was jealous. He's lived in his parent's flat for the past 11 years since college. While his parents lived in their other home in the South Bay.
With the average SF rent for a two bedroom at $3,800 a month, of course he could afford a new 4Runner. He's saved $400,000 in after-tax money by not paying rent for 11 years.
Parents Taking Care Of Everything
My neighbor is a nice fella who now works in real estate with his father. For 2.5 years he got to travel around the world in his 20s without holding down a job. His mother would stop by and share with me how her son was having so much fun.
Meanwhile, I worked my ass off all throughout my 20s just so I could be able to afford the house at age 27. His carefree lifestyle is what made me the most envious. The car was just an extra kick in the nuts.
When I was moving out he asked whether I'd like to sell my house to him (to the family really). If he could really afford my house at $1.7M, then his finances must be in great shape. Valuations have gone a little nuts as you can see in this chart.
Then in mid-2017, when I texted him to know I was considering selling my house to simplify life, he gave out an offer of $2.1M. It was a low ball offer because I believed the market value was at least $2.4M – $2.5M. However, it just goes to show how much money his parents have to help him buy!
It Is Not As Expensive To Live As We Think
One of the biggest problems in society today is the widening wealth gap. Part of the angst has to do with the rising cost of living (rents and property prices) while wages for the middle class have stayed stagnant. There isn't a week that goes by where some type of newsworthy fight between landlords and renters, developers and renters, and tech companies and renters doesn't occur.
But if you ask my two previous neighbors about costly living in San Francisco, they'll have no idea what you're talking about. They haven't had to pay a dime in rent for years thanks to their parents. They are benefiting from a generational wealth transfer from their parents.
Rent Is Affordable If You Share
The other week I surveyed four UC Berkeley part-time MBA students about their rent during a meet up one evening. Their average age was 31 and their rent ranged from just $800 to $1,600. That's not bad for folks who are presumably making at least $80,000 a year.
Every single one of them was sharing an apartment or house with a roommate or three. One finally said he was moving in with his girlfriend and splitting their $2,800 a month rent. $1,400 a month each is not too bad at all.
Rooming with other people and living just a little bit further away from city center was the basic feedback of my post asking how people can afford to live in expensive cities on less than six figures a year. To me, it feels weird to still live with roommates after age 30. But I guess that's how things are nowadays. At least it's a step up from still living at home with your parents in adulthood.
Let's meet my new neighbors.
Meet The New Neighbors, Same As The Old Neighbors
One of the reasons why I moved out of my old neighborhood was to experience a new lifestyle. I also wanted to eat and drink at new restaurants and bars, hike at different parks, and view different sceneries. The people are pretty homogenous on the north end of San Francisco, where property prices easily top $1,200/sqft. I longed for a little more diversity.
I thought I'd experience a more realistic representation of San Francisco given my new house is roughly 50% cheaper than my old house. Further, it was not much more expensive than the median SF home price, but not so! It seems like there's even more parental help for adult children the cheaper you go.
Here is a quick summary of my six neighbors in Golden Gate Heights. They are all wonderful people. One couple even snipped me a bunch of roses from their garden as a welcoming gift.
Profiles Of My Neighbors And Their Adult Children Living At Home
* Neighbor 1: 50-year-old female. Grew up in the house since birth and inherited the house after her parents passed away.
* Neighbor 2: 40-year-old male with wife and kids. Father bought his house for him nine years ago according to his father. His father introduced himself to me while painting his son's house while he was away.
* Neighbor 3: 24-year-old male attending community college. Lives in the entire house for most of the week while his parents live in another house up north.
* Neighbor 4: 40-something year old couple. Lives in his father's house with his partner. His father lives somewhere else.
* Neighbor 5: 60-year-old woman living with 31 year old daughter. Daughter has lived in the house since she was in middle school.
* Neighbor 6: 30-something year old woman with family. Father bought the house for her in cash early 2014. It's the same father who bought his son a home! Father was a first generation immigrant who started an auto repair shop and saved all his money.
* Neighbor 7: When I bought a forever home in Golden Gate Heights in 2020, I met with more neighbors. It turns out the neighbor across the street from me had all three of their adult children move back at home. One daughter dropped out of college and the 25 year old son has been there for the past three years.
* Neighbor 8: We upgraded to a new forever home in Forest Hill, on the west side of San Francisco, in October 2023. And guess what? Our neighbor to the right is a 28-year-old high school math teacher who lives alone in his parent's old house. His parent's house is worth probably $3 million. Not bad! He's a nice guy.
Generational Wealth Transfer To The Rescue
It's pretty interesting how much you can learn by just keeping quiet and listening. There's a lot more detail, which I've kept private. For those who asked what I do, I told them I was a writer working on an online media business.
Notice the commonality in all six neighbors? NOBODY has to pay rent or a mortgage because they either inherited the property or their parents paid for the property.
None of them had to go to some fancy private university and get some cutthroat job in banking, consulting, private equity, tech or any other high-paying industry either.
According to Cerulli Associations, an estimated $84 trillion is expected to transfer from baby boomers to Generation X and millennials by 2045. Of this, $72 trillion is predicted to pass to heirs, while $12 trillion is earmarked for philanthropy.
Feeling Bad For Grinding So Hard
I'm not making this stuff up. I am the ONLY turkey who had to aggressively save money and delay gratification for years to buy my latest house! I also had to make plenty of sacrifices to achieve financial independence on my own, such as missing a lot of social events.
I'm sure my neighbors worked hard, saved their money, and took risks as well. But it's hard to come up with something as expensive and hard to save up for like property, unless you're talking about saving and investing for a new business. Oh yeah, doing that now. I let honor and pride get in the way of getting ahead.
My initial reaction to the realization that every single one of my neighbors for the past 10 years didn't have to pay a cent for their house was, Why bother trying so hard? I was admittedly envious of their good fortune and I felt deflated for having to take a more treacherous path.
I quickly got over my pity-party and focused on the one big positive. Everything will be OK due to a massive generational wealth transfer!
A Better Life For Our Children By Generational Wealth Transfer
Someone has to slave away so the next generation can have a brighter future. It's the American way. We pray our children will have better lives than us because from where I'm standing, life seems so damn competitive.
Elementary school kids are already being pushed by their parents to be superhuman with after school activities and weekend schooling. Elite universities have acceptance rates under 10% now thanks to population growth and the common app.
Jobs are being outsourced due to cheaper labor and the internet, which makes the transfer of skills much easier. Costs for real estate, tuition, food, and gas are rising much faster than wage growth. What is a young person supposed to do to get ahead except tell themselves hard truths?
But after witnessing with my own eyes how every single one of my neighbors over the past 15 years was able to get ahead thanks to the help of their parents, I am no longer as concerned. The reality is, there are fewer self-made millionaires than we think due to so much wealth and parental support.
The godfather of my old block has a multi-unit building that generates over $300,000 a year in rent. He said his daughter will inherit the building when he passes. Lucky her.
The Main Concern For My Children
If I ever have children, they will get living help from me as well if they decide to live in San Francisco. I'll make them pay at least 75% market rent so they don't grow up being entitled brats. But still, I will help them out as much as possible because getting ahead is brutally tough.
Of course if they decide to complain why they can't get ahead when they are only working 40 hours a week or less, I'll let them fend for themselves.
I first wrote this post in 2014, three years before I had my first child. And what I realize now is that living at home is a great way to save money and also for parents to reconnect with their adult children. However, if you're near or over the age of 30 and still living at home, I think there's more downside than upside.
My wife and I plan to teach our children as much personal finance as possible before they become adults. This way, they will hopefully have enough knowledge and wisdom to make better financial decisions. We want them to be financially independent of us so they can feel great making their own fortunes.
Here are my thoughts on a concept I call a Provider's Clock which helps determine why some men work harder and are more caring for their family than others.
Downside To Relying So Much On Parents For Money
The one common thread between most of the adult children still living at home is that they have mediocre-to-poor personalities. Therefore, as a parent, I will do my best to help develop better personalities in my children so they can get into a good university and get a solid job.
Over time, I realize the angst experienced by high-income earners with children is because they are not rich yet. They are HENRYs who lack generational wealth to ensure their kids will be OK.
Hence, if you want to feel less stress, anxiety, and angst as a parent, try to accumulate generational wealth so you no longer have to worry about your kids getting into a good college and landing a well-paying job. With generational wealth, all the rejections don't really matter because they are set for life!
Support From My Parents
My parents provided an incredible foundation for me to learn and grow. I remember my father introducing me to many of his business connections in order to try and help me get a job. In the end, I went my own way. But I did so only because my parents gave me the educational opportunities in order to do my own thing.
One thing that kept me going during the most brutal times in finance was knowing I could always go back to Hawaii and live for free in a home my grandfather purchased 60+ years ago. Hawaii was my backup plan that I almost executed after 9/11 happened.
Even though I don't expect an inheritance or a generational wealth transfer from them, just knowing that I wouldn't fall into the abyss provided me motivation to take some risks.
If you are thinking of providing some generational wealth, I think one of the best ways of doing so is by providing the gift of education. Superfund multiple 529 plans for your children, grandchildren, and other relatives. This way, you know your money is going to a good cause. It's harder to spoil your children by educating them!
A Massive Generational Wealth Transfer Is Happening
The next time the media says Americans are in financial disarray, don't believe them. There is roughly $38 TRILLION dollars getting passed down over the next 15-30 years, according to government estimates and independent research houses like Impact Assets.
Talk about a massive generational wealth transfer. The average American inheritance is $180,000 and will just continue to grow over time. Your neighbors are generational wealth moms and dads who own multi-million dollar homes and send their kids to the most expensive private schools thanks to family wealth.
And if for some reason your parents didn't purchase a home 30+ years ago to leave to you and they didn't save and invest their money wisely over their careers, not to worry! Not only are you not spoiled, you're now able to create your own fortune one dollar at a time to leave to the next generation.
Generational Wealth Transfer Updates Over The Years
2018: I decided to sell my SF rental house not to my neighbor for $2.1M, but to a tech VC for $2.74M in 2017 and simplify life after the birth of my son. I still own my primary residence in Golden Gate Heights.
I used $500,000 of the proceeds to reinvest in real estate crowdfunding. My goal is to earn passive income by buying cheaper valuation properties in the heartland with higher net rental yields. If I can earn an annual 15% return on $500,000, that is a greater net return than what I was making with $2,740,000 in exposure with my SF rental house.
2019: I met a new neighbor, 29 years old and still living with his parents. But they bought him a new $50,000 truck. I asked him if he works in construction and he said no. He just likes big trucks and goes up to Tahoe during the winter with his dog.
Neighbor #3 is now 28 years old. He is still living at home as he still tries to figure out what to do with his life. In the meantime, he got a new $8,000 motorbike. His dad said he wants to get a graduate degree in something.
Maybe Everything Will Be OK
2024: I met another neighbor whose 22 year old daughter is trying to find her purpose in life. She worked on turning a van into a camper and drove to a commune where she was planning on living. That didn't work out as she planned and now she's back at home with her parents.
The neighbor I met in 2014 living at home with his parents is still living at home. Now his brother is living at home with them.
The more I've thought about this generational wealth transfer issue, the more I realize the fear of spoiling our adult children is overblown. By the time adult children receive a large amount of money, they will have already been set in their ways.
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A Massive Generational Wealth Transfer Is Why Everything Will Be OK is a FS original post. The amount of wealth the oldest generation will transfer is incredible.
I love this post (along with many of yours!)
This makes me deepen into a sense of gratitude and contentment.
I grew up in a wealthy DC suburb and felt incredibly insecure with my family’s rented house and hand-me-down cars. Needless to say my divorced parents aren’t rolling in dough.
After enlisting in the marines out of high school, I found my sense of self, went to community college, transferred to an ivy, embraced sobriety, joined corporate America, and found a path to financial security.
I’ve been married for two years to a superb partner and we’ll be able to buy a home — not anything over the top, but something we’ll be proud of — and start our family. Our annual income floor for now is $300K and will more than likely continue to rise at a decent rate. I do work I enjoy (leadership development), and don’t see burnout in my future. Similarly, my wife has so far found good work life balance.
Im both highly privileged AND have worked hard to find the position in life I’ve found today. My wife has as well.
I grew up insecure comparing my socioeconomic status to my friends. Today I’m happy. I see some of my friends and ways in which they were actually hindered by the financial abundance of their parents. I wouldn’t even consider changing my position with theirs.
Don’t get me wrong — we have friends and the husband was born into an entrepreneurial household in the insurance industry, and he’s built a successful business of his own. I get the impression they could retire today and be set for life. I catch myself with a bit of envy for their abundance.
However, his parents didn’t just give him a pile of money — or if they did, he learned how to use it wisely and work hard to grow it. Likely they mentored him and gave him a skill set and worldview more valuable than cash — and he in turn developed put them to work.
I do believe in karma and I believe if I inherited money at an earlier age than today, it may have limited my growth/fulfillment in life.
Sam — do you think you’d have the level of fulfillment you have now if you had an unlimited bofm&d account back in your early adulthood? My guess is no.
“ Today I’m happy.” This is your most important sentence!
I appreciate coming from my four dollars an hour McDonald’s job to go into college and then beyond. Having the perspective of hard work and not much is wonderful!
Makes me appreciate much more everything I have today. I also don’t take my luck for granted.
I hope you pick up a copy of my new book, Buy This, Not That. It’s perfect for your demographic.
Wealth transfer! Hahahaha!! Hilarious. The global financial system is literally collapsing right now. Not only will there be no wealth transfer, we’re very realistically entering a global Dark Ages thanks to the criminal mafia we call the government and banking cartel. Kiss your dreams goodbye!
Sorry you are losing money. Hang in there’s! And work on a proper net worth allocation to help protect on the downside.
If people honestly think that the US government is going to allow wealth of the boomers to transfer to their heirs, then they are truly gullible. Assisted living, medical bills, in home health care will take the majority then taxes will get the rest.
You were jealous? I’m glad I don’t have that problem. When I was in my late-teens almost all my peers had their own car. I didn’t have one and while walking home from school one day I thought “I’m just a dumb guy that’s why I don’t have a car”. I was literally at the top of my class then – always on honor roll. Then decades later I discovered that generational wealth is why everyone had a car and I didn’t.
This revelation occurred because now many people I grew up with are millionaires and it’s not that they earned they money – they inherited it. I wasn’t dumb. My father got into our wealthy community because he was very smart but was also alcoholic. Apparently he lost his executive level position, lost it and spent the days at a bar! All the while I was in school doing really well. But yea. I get it now. It is possible to be self-made but most people who have wealth are not. It’s generational wealth.
Indeed. And I think it’s great that you don’t feel jealous at all. I’ve actually never met someone who doesn’t feel jealousy. How do you feel you achieved such a state of being?
Related:
The Desire For Prestige Is Ruining Your Life
Be Rich, Not Famous: The Joy Of Being A Nobody
First, I don’t believe we want a country where your future is decided by whether your parents have an inheritance waiting for you or not. We want a meritocracy where hard work and creativity is rewarded. If you work hard but still can’t afford a decent lifestyle because less hard-working people are holding down the fort thanks to their parents’ money, that is not good. You may say that it should only motivate the hard-worker more, but we have to accept that everyone has limitations even in that regard. If you need another 10k, it’s achievable. 100k, it’s a stretch, but OK. But if you’re short a million, that is a tough pill to swallow even for a motivated person.
For example, let’s say one of your neighbors that inherited their home is just living at home and not working. Meanwhile, a hard-working person who got a job at UCSF doing cancer research is looking for a home. Because less homes are available, this person may not find an affordable home. They may end up going to another region, or another country, which will end up benefitting from that person’s research. Not good.
Second, you are just taking the average wealth and dividing it by US population to conclude that we all have a big sum of money coming our way (I assume). But we know that wealth is massively concentrated in the hands of a few. Few Americans, as a percentage, are going to get a decent chunk of that multi-trillion dollar pie. And keep in mind that, for historical reasons, certain races and nationalities have much less generational wealth in the United States, through no fault of their own, and will end up with nothing. Does that seem fair?
So while your conclusion at the end of the article is celebratory, I think this is actually cause for concern. Our system of restrictive housing in the bay area is leading to increased income inequality and economic issues which will bite us in the ass later on.
well said
This article evokes a lot of emotions in me. It’s not that I feel envious so much as I really don’t think it is good for parents to take away “firsts” from their children. Receiving your first check, buying your first car, first house, first stock, etc is such a wonderful feeling of accomplishment. Why would a parent want to take that away from a child? Secondly, I don’t think it is good for our democracy/society in the US. There is something to be said for working hard and achieving your goals. It is good for your mental health. It’s not good for you to rely on your parents to support your mental well-being. Also, I think the parents who are letting their children live with them or buying them houses and things are actually trying to fill a void in their own life.
And seriously, do we think we can keep a democracy in the US if we have those who inherited money and didn’t have to work for their wealth? If you don’t have motivation or you don’t know what it means to work hard for the things you achieve you won’t want to protect it.
It’s a great article, thank you so much for it.
I am you neighbor and live in the South Bay, and I see a lot of adults living with their parents for free, not worrying about paying rent or saving money. And yes, sometimes it makes me envy. But I’ve learned how to deal with this feeling.
You are absolute right, as a parent I will help my kids (I have 2 daughters) but my primary help is to raise them right. Raise them being able to make right decisions, being able to work hard and save. Raise them with an example of delaying gratification.
That’s my primary help for them. And not living for free, doing nothing and waiting for my death to inherent whatever I will have by that time.
I think receiving financial help from parents is a great way to have a head start in one’s life. My parents helped me opening a bank account, they taught me the basics of saving and investing money when I was 10. My parents paid for all my college education including living expenses, but I still worked hard by volunteering and scored high in summer internships. My parents also bought me be a condo when I was 20, but I’ve never lived in it and my parents rent it out for income. Having this money enabled me to choose a career out of passion, choose a husband out of love, choose to live where I want to. So less limitations and more freedom in my life.
I come from a family where we believe it is parents’ duties to fully fund their kids college education, and help them get their first property. The kids are expected to get at least a Bachelor degree (everyone in the last 4 generations starting with my grandparents went to college), work hard for a successful career, live below our means to accumulate more wealth to pass onto the next generation. When parents get older and need extensive care, the kids are expected to reduce work or retire early to take care of them (at least for emotional support). I am taught to volunteer and donate to the people in needs. I am also constantly reminded by parents and grandparents on how lucky I am being born into this family, and responsibilities come with the privilege.
The most important inheritance is not the money, it’s all the values and life-skills needed to be successful in life and build wealth. My grandparents lost all their fortune during the Chinese cultural revolution in the 60s and 70s. My parents, all my aunts and uncles still got wealthy in the last 30 years on their own thanks to my grandparents’ teaching.
Sally
I agree with you totally. Unfortunately my parents went bankrupt in life and I ended up paying for their funerals – both single children and inherited. I learned what one doesn’t do a very hard way. I am the only one with graduate degrees and my 4 younger siblings have grade 10. In this era. What a broken family can result in. I must admit I am jealous of friends who are all coming into million or so inheritances. However we helped my daughter with school and a down payment. So I do agree but also know how hard it is to start and even more so now. Although I did have 16% interest rates when I bought.
Great article
J
I think receiving financial help from parents is a great way to have a head start in one’s life. My parents helped me opening a bank account, they taught me the basics of saving and investing money when I was 10. My parents paid for all my college education including living expenses, but I still worked hard by volunteering and scored high in summer internships. My parents also bought me be a condo when I was 20, but I’ve never lived in it and my parents rent it out for income. Having this money enabled me to choose a career out of passion, choose a husband out of love, choose to live where I want to. So less limitations and more freedom in my life.
I come from a family where we believe it is parents’ duties to fully fund their kids college education, and help them get their first property. The kids are expected to get at least a Bachelor degree (everyone in the last 4 generations starting with my grandparents went to college), work hard for a successful career, live below our means to accumulate more wealth to pass onto the next generation. When parents get older and need extensive care, the kids are expected to reduce work or retire early to take care of them (at least for emotional support). I am taught to volunteer and donate to the people in needs. I am also constantly reminded by parents and grandparents on how lucky I am being born into this family, and responsibilities come with the privilege.
The most important inheritance is not the money, it’s all the values and life-skills needed to be successful in life and build wealth. My grandparents lost all their fortune during the Chinese cultural revolution in the 60s and 70s. My parents, all my aunts and uncles still got wealthy in the last 30 years on their own thanks to my grandparents’ teaching.
My dad used to tell me the story of how his his uncle told his daughters that they would be very wealthy someday. My dad’s uncle died back in the 1970s when he was in his mid 60’s, but his wife lived almost a full four decades longer. My dad’s cousins didn’t inherit until they were in their 70s and had medical issues of their own.
Inheritances can be a funny thing. I don’t think it is wise to count on them, and it seems kind of morbid, since you know, the person has to actually die first.
For all I know, my parents will inherit from me, they are the beneficiaries on my life insurance policy. :D
Had an interesting sit down conversation with the parents recently and this post came to mind. My parents worked hard most of their lives and now have a low maintenance business generating decent 6-figure income every year. I asked them what their plan was moving forward because they just hit their 60s and they can’t run the business forever. They essentially told me they wanted me to run the business later and share the profits with my sister 50/50 (it’s just us two ‘kids’).
Some background info:
Me = in tech making 6-figures, wife making 6-figures, savings rate 70%+, early 30s, looking to FI by mid-40s, 2 rental properties (maybe more in the future), FinacialSamurai fanboy, in state Uni w/ full ride, etc…
Sis = self employed in the ‘arts’, struggling to save a dime, designer everything, spend spend spend, always struggling with finances, private college paid my mom&dad ~200+K, always hitting up bankofM&D for help (cc debt, car, rent, etc.).
I’m not totally okay with running the business. It would require me to move, and although I like the low maintenance of the business, I’d rather not be tied down to it. I proposed they sell the business and travel/spend as much of the money as they can. I can’t imagine the extra income/money affecting me much.
My main concern is what the money will do to my sister. She’s never shown much interest in personal finance nor improving her own. I’m afraid what that kind of money would do to her life, habits, etc. My parents trust my opinions and advice on their finances due to my track record, but this situation isn’t as clear cut.
I wanted to see what advice you (FS and FS followers) would give. Thanks in advance!
You can’t control other people or change their habits. Everything is split 50/50. Your sister gets what she gets and if she spends it, in your opinion wastes it, and lives in poverty because of it, tough sh**.
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[…] course if your parents want to gift you money on the side, buy you a house, or buy you a car, then great. But once you start accepting money from one set of parents, then you […]
[…] give a crap! He’s going to have the time of his life that weekend. Besides, he’s got help from his parents. Work to live […]
I’m not sure where I fall in your survey… I am still eligible for my parents’ health insurance and they pay for my cell phone bill. I live with my boyfriend now, but for a while I was living for free with a friend and doing chores as rent. I freelanced and was able to keep my schedule flexible.
Where do / did I fall?
“The Millionaire Next Door” covered this topic extensively. In a nutshell, children that get financial help not only earn less money themselves (obvious effect), but actually take in less money overall even when considering parental financial help. This surprised me, but looking around I think I believe it. This probably only applies to middle class folk. The truly rich can give a lot more than I’ll ever make.
There is a saying in Guatemala “Hard working parents, gentlemen kids, panhandler grandkids”, saying if you spoil your kids too much, like this first generation migrant, they won’t know the value of money but will still have enough to live without working, while the third generation will be entitled and broke. It is common here for rich families to buy a $400-750K house cash for the newlywed kids who make $1,000 or so a month, so basically they get used to living beyond their means and parents foot the bill. If I have kids I would want to avoid inheritance taxes as much as possible and buying them a house could achieve that goal but I would try to have them pay a rent or find roommates so they pay for taxes and maintenance and learn the value of money.
I remember being jealous of the kids who’s parents would only buy their books (& my assumption tuition, room & board) not the t-shirts. My parents did not even buy my a pencil while I was in college.
I’ll be beyond flabbergasted if I get any inheritance.
Only upside for you then!
Well – this is a very interesting observation. To compare to Australia, my next door neighbour is a young woman living in a 3 bedroom house probably worth about $800K, owned by her parents, who 9 years ago was undertaking a PhD in Law – has flatmates – must have finished by now but still appears to live there in the same circumstances. The house across the road sold 5 years ago for $1.2million to a family who had come into an inheritance. so yeah – inter-generational wealth is alive here too AND it also is not in many situations.
I left home at 20 to move into my own mortgaged apartment, and now MANY years later my father constantly says he is going to die with only 10 cents left. My father-in-law passed 6 months ago leaving none of his estate to his children.
There are many stories in the media of how Sydney real estate prices are locking out first home buyers by Baby Boomers buying places at high prices for their university attending children.
Only 1/3 of properties in Australia have mortgages on them – so whilst there may be a small number of people who own a lot of the property, there would be a decent percentage of people living in wholly owned, and thus rent/mortgage free, property.
Obviously I am not the only one really struck by your thinking and interesting topic
Australia is #1 in terms of inheritance at $500,000 per person! Your supperannuation system rocks.
Every single Aussie I know is so kick back. Maybe that’s why!