<p>Two of ours are still in school and one is employed, and while they never lived in an environment of financial pressure, they didn’t get their own cars on the 16th b’day party either, and never had to deal with managing significant amounts of their own money. If DW or I hold on for another 15+ years, I suspect the following will not be much of an issue. But if we were to sign out now, or suffer some debilitating injury, my concern is they wouldn’t have the knowledge to deal with the inheritance, and perhaps not the maturity to handle the assets. I hate to think how we didn’t even think of this when the kids were really young with much more drastic consequences, but with retirement approaching (and reading things in this thread), a lot more of these ignored issues are fortunately bubbling up.</p>
<p>I like a mini- or micro- version of Buffet’s vision along the lines of leaving his kids enough so they can do anything, but not enough that they can do nothing. DS having a good salary and working in finance will be street-smart, but the girls rarely deal with anything over a few hundred dollars and will be quite naive because we’ve shielded them. I’m trying to figure out how best to bring them up to the “ways of the world” as well as have some protections in place - perhaps giving them the inheritance in tranches so that one big mistake at the beginning won’t wipe out everything. And being first generation immigrants, we don’t have any uncles or aunts, and only a couple of blood relatives scattered across this country. Even giving power of attorney to someone to take care of our affairs if we’re temporarily disabled is something, I’m ashamed to say, we haven’t planned, and all of this is this winter’s project.</p>
<p>Our 25 & 27 year old kids do NOT know details about our trust and estate. We may talk about it when them in another 5 years or so, but we are both currently in great health and neither they nor we feel it is a topic for discussion now. Fees charged by banks and other instutions to manage vary – they make their fees available so you can decide whether you are interested and are generally based on a percentage of the assets managed, I believe. Since my brother (primary) and niece (secondary) agreed to be our executors and then the funds will be given to the kids, we never explored the cost of hiring someone else to manage the assets.</p>
<p>Shawbridge’s comments resonated with me not so much in terms of the money, but in terms of the stuff. About 20 years ago, the antique furniture and other items my parents had would have been welcomed to decorate my house. Now that I am nearing retirement, I am looking to downsize and the last thing I want is more stuff. And my children don’t yet have homes and don’t want to be burdened with caring for and storing the furniture. I have no idea what I will do. Some of this has been in the family for generations. </p>
<p>As people live into their 90s these days, their children are in their 60s. By then financial situations are pretty fixed and that ‘you never know what the future will bring’ is less relevant. If one child is still working and would like to retire to enjoy the rest of his/her life, but doesn’t have the resources, that is where the money will go. As long as that won’t create any problems between them, I will give where the need is. No point sending coal to Newcastle, as the saying goes. </p>
<p>Dad<em>of</em>3 - The biggest concern is “what happens if we both die”? And at least now you are past the years where you’d worry about who would raise / support the kids. </p>
<p>Although the usual case is for one spouse to die first, it’s good that you are setting up the will for all scenarios. I’ve heard that the remaining spouse often does not have the mindset (or health) to redo the will in a timely fashion. </p>
<p>H and I are both 58, and kids are now turning 19 and 21.</p>
<p>One kid is very good at managing money; the other has learned with Dave Ramsey HS personal finance (also reinforced by me, a listener of his show). They both have jobs (one summers, the other PT year-round) so they do understand money in and money out.</p>
<p>Both kids manage their money in college. We have a fund to draw from (I am custodian) - I cannot be off that until they are 25. They know whatever isn’t spent in college is theirs. So we talk about money and they understand. Focusing on doing well in college classes, keeping their scholarships, and not too much on spending.</p>
<p>Sheltering kids from learning about money - and learning about the downfall with lots of debt - better to plan a way for them to learn. Listen or read Suzy Orman, Dave Ramsey, etc. Discuss money situations.</p>
<p>Bank trustees are a rip off IMHO. In the ‘old days’ they typically were used. In our wills, we had a relative to assist kids under age 25. We have a financial guy with much of our retirement funds, so they can continue to draw on his expertise.</p>
<p>For @dad<em>of</em>3 your oldest could perhaps be named to assist the others in the event of both parents passing.</p>
<p>Just make sure that they know where to find the details if something unexpected happens to you and your H. This happened to a friend of mine when we were young moms and the grief was exacerbated by the fact that she and her siblings knew absolutely nothing about what plans her parents had made re: wills, insurance, who their lawyer and accountant were, etc.</p>
<p>Kiplinger’s Jan 2015 issue has an extensive special report “How to Get the Most From Social Security”. They have a chart that breaks down different contingencies under married, single, divorced and widowed.</p>
<p>Another article devotes 6 pages to housing snapshot, including the largest 100 metro areas with median home price, % change in 1 year and % change since 2006 peak, affordability index, and homes with 10% or less equity.“Kiplinger forecast that home prices nationally will rise by 3.5% in 2015, at the low end of the historical range of 3 to 5% annual appreciation (before inflation). We also expect existing home sales to increase 8% in 2015 (after declining 2% in 2014) and new home sales to rise 25% in 2015 (after a meager 4% rise in 2014).”</p>
<p>I’ve been thinking about this question all day: Do we have enough to retire now? There are so many variables and unknowns. </p>
<ol>
<li><p>We have the 8x salary in 401ks. We could spend that down now and travel and do active things while we still have the health to enjoy it.</p></li>
<li><p>Later, when the house is too big, we can downsize and use the equity.</p></li>
<li><p>We do factor expected inheritances into our plan which will triple our current savings. Parents and MIL are in their 90s. </p></li>
<li><p>We will receive an amount about half of what we earn now in rental income from a commercial property after MIL passes.</p></li>
</ol>
<p>Still, it’s very scary. I don’t want to miss out on the younger retirement years of active fun working “unnecessarily” so to speak. But one never knows what inflation will be like in the next twenty or thirty years. Will Social Security still be there. The trust fund goes underwater in 15 or 20 years. Will cuts be made to those with assets? Does that mean it makes more sense to start taking it at 62 and get it while the gettings good? </p>
<p>I am not sure there are any right answers. So much depends on luck and things that cannot be foreseen.</p>
<p>We do not have the income in item 3 and 4. Our item 1 is smaller. We also have not paid off our mortgage yet (because we moved many times in the past in order to live in a “better” school district) but there is some equity built up over the years. We have a very small pension.</p>
<p>Our financial situation is definitely not as rosy as yours. Recently, we kept thinking whether we can only afford to retire in a much cheaper area (potentially even in lower cost-of-living country). I personally am all for it (retiring in a lower COL country) but it seems I have some difficulty in convincing my spouse to do so. Understandably, she wants to be closer to our grownup kid (but I am more into not becoming our child’s “burden” in the forseable fiture.)</p>
<p>As regard to WHEN I retire, it is not always up to me to decide.</p>
<p>One “bright spot” for us is that we have just paid our very last education expenses (some of them was still from DS’s student loans though - kind of 1/3 of COA paid/discounted by the school, 1/3 paid by the parents and 1/3 by his student loans) after 8 years - no more such tuitions-related expenses in our life time. Hooray!</p>
<p>There is no way to know if one if doing the ‘right thing’ with regard to retirement after a certain savings point. If H died or became disabled so that he couldn’t travel, he’ll wish he’d retired earlier. If we both live to be 100 and the stock market crashes or any number of things, then we might wish we’d saved more. </p>
<p>I’m always wary of financial advisors. They’ll say ‘oh, no you don’t have enough’, 'keep investing, (with me). They want you to keep your money in their funds as long as possible. Do they get paid by how much money they manage? </p>
<p>@TatinG, many (most?) FAs get paid based on AUM (assets under management). They also frequently get a (usually undisclosed) kickback from funds their clients purchase. Most of them do not have a fiduciary obligation to their clients. </p>
<p>Basically, DIY works for many people. Sometimes, talking to a fee-only advisor works for some people; talk to them for a few hours every year for an hourly fee. Vanguard will also do it for 0.3% of AUM, they have some fixed price planning offered, and if you have enough I think it’s free. Personally, I just do it myself. I might leave a few nickels on the table, but better that than quarters in someone else’s pocket. Just my 2 cents; ymmv. </p>
<p>ETA: buy or borrow “The Bogleheads’ Guide to Retirement Planning” from the library and read it. If you read that book, you will know more than 98% (bogus number, but probably not inaccurate) of near-retirees. </p>
<p>I have enjoyed working part-time and having H retired and getting a pension. We are doing a lot of travel, as we want to do so while we still have the health to enjoy it and before we are caring for my folks and any grandkids. We have ore than 8x our salary, if you count property values and other assets (excluding our home). We have been very comfortable in H’s retirement–much moreso than we expected. Having paid off all ed expenses and all our mortgage has really made our money go further and freed up funds for travel and other fun things. ;)</p>
<p>@VeryHappy, it is a rule of thumb, but it is promoted by those with a conflict of interest. Its only benefit is that it’s easy to remember and compute. For a decision that important, it’s better to spend the time it takes to come up with a better estimate.</p>
<p>@ixnaybob, thanks. I had never heard that rule of thumb before. And of course no rule of thumb can apply to everyone, because it doesn’t take into account pensions, SS income, what one wants to leave one’s heirs, how much of it is tied up in real estate, and what one’s expenses are. </p>
<p>Nevertheless, if that’s the rule of thumb, I feel good. :)</p>