Halls of Shrewd'm / US Policy❤
No. of Recommendations: 5
Came across this piece and enjoyed it:
Inheritance and the Do Anything/Do Nothing Distinction
The Time Warren Buffett Fooled Himself
https://harveysawikin.substack.com/p/inheritance-a...I’m a fan of Warren Buffett’s sayings, often repeat them, indeed if it were up to me, they’d be collected in a little red book that investors were required to carry in the breast pocket of their work smocks. I came across one, however, that I will now critique, at the risk of being sent for reeducation somewhere in Omaha province.
Buffett famously said that in passing down wealth, parents should “leave children enough so they feel they can do anything, but not so much that they can do nothing.”If they have enough to do anything, they have enough to do nothing...though I expect Buffett was thinking along the lines of do nothing and live a playboy lifestyle.
We have pledged to pay for our kids' education - whatever they want - but beyond that we haven't thought much about it.
No. of Recommendations: 6
"If they have enough to do anything, they have enough to do nothing...though I expect Buffett was thinking along the lines of do nothing and live a playboy lifestyle."
I think of this challenge quite a bit. Besides paying for undegrad and post grad degrees for my 3 kids, I intend to pay for my grandkids education. have also paid for significant housing investments for 2 of the 3 so far.
I also set up trusts for the young ones that have grown amazingly well even just gifting the $19k a year or whatever the limits will be.
I consider it my respsonbility to eductate the young ones on personal finance among other life lessons. I don't want them to grow up to be "Trustafarians"
No. of Recommendations: 1
If they have enough to do anything, they have enough to do nothing.
Eh. Disagree.
It's like giving your kid $5 million.
Five's a nightmare. Can't retire. Not worth it to work. The poorest rich person.
It's enough to do anything, but not enough to do nothing.
No. of Recommendations: 6
"Five's a nightmare. Can't retire. Not worth it to work. The poorest rich person.'
$5m puts a US resident in the top 1-4% of wealth. Not bad.
Even drawing 5% a year (similar to Warren's recommendation) that equates to $250k. Assuming LT Capital Gains rate remains around 24% (state income taxes may matter) this ain't half bad!
No. of Recommendations: 7
It's like giving your kid $5 million.
Five's a nightmare. Can't retire. Not worth it to work.
Pretty sure most people can retire quite well on $150K (3%)/year for life. That's well over the median income in every state in the US, and far, far more than social security will pay. I lived well on ca. $150K/year (current value) as a half-time, self-employed contractor in the very expensive SF Bay Area for nearly 20 years, while my assets grew enormously since I didn't need to spend anywhere near that amount.
No. of Recommendations: 7
It's like giving your kid $5 million.
Five's a nightmare. Can't retire. Not worth it to work. The poorest rich person.
The 4% rule may not be right, but I expect close enough for planning purposes. 4% of $5M is $200k per year. This exceeds about 85% of households in the US. I think most people would not consider this to be a nightmare except they would have to decide what they really want to do if not work. Perhaps the nightmare is not working?
Aussi
No. of Recommendations: 12
Before we get an infinite string of people responding that $5 million is a substantial amount of wealth and of course not a nightmare, the original post was a reference to HBO's Succession, where the (terrible, spoiled) son of a media magnate made that statement to someone else:
https://www.youtube.com/watch?v=m0sRrsara9c"You can't do anything with five, Greg. Five's a nightmare......
Can't retire.....not worth it to work.
Five will drive you un poco loco, my fine feathered friend.
Poorest rich person in America
The world's tallest dwarf......the weakest strong man at the circus."
No. of Recommendations: 9
I think most people would not consider this to be a nightmare except they would have to decide what they really want to do if not work. Perhaps the nightmare is not working?
In my opinion it really depends on the person's age at that point.
If a US person is 55+, it would seem to be an easy decision. I see no point in continuing to work for my current employer beyond age 55.
But if the person is younger than say 50, it does create a bit of consternation once you have "enough" to cover your needs but not enough to throw caution to the wind and indulge in all of one's desires. If $200k a year is "enough" then maybe you are a single/dual income household making $250k a year pre tax. Your next "promotion" at work might help you bring in an extra $800/mo and you keep asking yourself, Do I really care about an extra $800/mo for the extra headaches? Saving it doesn't move the needle. Spending it means I need to save more for the lifestyle creep. What the heck am I even doing working here if moving up the ladder is meaningless?!
Maybe you start thinking about taking a little income from that $5M. A little nicer vacation, newer cars, upgrade the home, and oh no maybe a BOAT! Well now you need $6.5M....$8M.....more?
It reminds me of the conversations I've had with my wife and kids over the years when they ask things like, "Why can this family down the street go on all these fancy vacations and drive new cars?". I use it as an opportunity to explain Normal Distribution Curves. No matter what population you find yourself in, always assume you are near the mean and be content.
Jeff (Sisyphus some days)
No. of Recommendations: 11
when they ask things like, "Why can this family down the street go on all these fancy vacations and drive new cars?"
Same thing for us. I wondered myself when I saw them driving a new car home. How could Val and Ralph afford a new high-end car? I am sure I make more than both of them combined.
Then one day it hit me.
They don't own that impressive brand new car. They lease it. In 3 years the lease will be over and they'll get another new car. (Which is exactly what happened.)
Which will come with another monthly payment.
Meanwhile our perfectly good car will be paid off. In 10 years we will have had 6-7 years of no car payments while they had 120 car payments.
Luckily, neither of us cared about cars. If it worked, that's all that is necessary.
My teenage son asked me once, when we were going out to eat and I asked them which of the restaurants I named would we like to go to, "Dad, why do you make us choose only the ones you have a coupon for?" I told him "The coupons are the only reason we are going out and not eating at home."
No. of Recommendations: 3
County appraisal district websites are good when the wife and I are going down this road. You can see who in the neighborhood that has no business being there might not actually own their house. In our area, there are lots of parent-owned (grandparents to our kids' friends). Pretty typical for the homes to be gifted or rented when the grandparents retire to another area.
Even still, I have that same mental argument a couple times a year about the fancier, newer car: "Come on Man, you've gotten to this stage in life. You've EARNED a new car. See those kids 10-15 years younger than you driving the brand new rides".
But the tightwad that sits on my shoulder just won't let me pull the trigger.
