Generational finances

[Mummyongin]

I don’t expect I can word this right/fairly but essentially, if retired grandparents have some wealth (e.g., 5 figure savings or assets) and their adult children are bringing up young children on barely enough to pay rent/mortgage, energy bills, childcare and food - is this okay? What are your thoughts and beliefs about how to balance wealth and finances more fairly? What role should grandparents play financially?

They shouldn't play any role.

But if they choose to they could set up trusts for the kids or gift you a sum (hoping that they don't die for seven years and you're left paying IHT.).

'They've earned their money'

This is a HUUUGE misconception.

A lot of generational wealth is unearned wealth from property and good pension benefits. Both of which aren't open to the majority of younger generations.

There was a very interesting article on redistribution of wealth across generations in the Guardian this week. I don't know the solution.

I worry for my generation (millennial), and just hope that we have enough time to turn things around my children's generation.

@EmmaEmerald I totally agree with you. 5 figure savings are nothing at all! We have 5 figure savings, I am due to retire in just over 3 years and we will need all our savings just to top up our pensions. We are still saving, we have an old car, we don't go on expensive holidays, we look for bargains in the supermarket and anything else we buy we usually get in the sales. In an emergency we would dip into our savings of course, but we really don't have 'spare' money - we will need every penny we have saved.

Also five figure savings is barely anything to fund an entire retirement fund. It's not millions is it...

Why did you have what sounds like multiple kids if you can't afford them? I would expect anything off my parents in a very similar situation. We have one DS as that's what we could afford to keep a decent standard of living, by the time two was affordable the age gap would have been to big

@EmmaEmerald its a tricky one. They worked 80+ hour weeks all through my childhood, worked themselves into the ground really. So on the one hand my mum says she doesn’t want me to suffer like she did, on the other she says she thinks it’s ridiculous I took a year off on mat leave as she never had the chance. My parents know how much I hate my job and how I’m my 20s I worked my health away, suffered from burn out and anxiety etc but they feel
everyone should “just get on with it”.

they did massively benefit from the economy of their time, and also house pricing, they have a property portfolio of 15 + houses - most they bought for £120k or less ish, now worth £500k+ as well as having had those mortgages paid by tenants for last 20yrs in south east.

It would be nice if they offer, but the children shouldn’t expect it, and shouldn’t begrudge their grandparents for passing their money on.

Music lessons and holidays are a luxury, not essentials.

If the money is in assets, then they could be asset rich but cash poor. Ie. Have a large house, but have little disposable income.

So basically, grandparents don’t need to play any role in helping their less wealthy relatives. Yes, it would be nice, but not mandatory.

I haven’t actually got any ideas or thoughts about wanting anything. I don’t have a solution either. It’s half term and I’m feeling guilty that I can’t take my kids to do “nice” things like swimming at the leisure centre, half-term activity sessions, visits to a farm etc. Personally, I’d prefer that this was addressed by society as there’s plenty of other families like ours who don’t have grandparents with any wealth.

Have you ever worked out how long 5 figures would last 2 people? It's not a huge amount of money in retirement, but you want some of it? So what happens when they share it, they then run out, and you've done nothing to change your situation so now you all have no money. Best thing here is to change your position, whether that be cutting down, 2nd job, making sacrifices.....is there anything you can do to make your situation better?

I think that people should be able to choose what they do with their own money, but...

I would never watch my kids struggle. My mum regularly gives us chunks of cash to help out and has paid for some house renovations etc. She knows that we aren't frivolous with our own money but don't have a lot left for luxuries. But she is very careful with money and has enough put by to pay for care etc should they need it. If she hadn't helped us I wouldn't have thought badly of her. When my children are older I hope to be able to do the same as I'd get more enjoyment seeing my kids happy and not have to worry. But I can't imagine we will be as well off as them.

Since they only have five figures, chances are they won’t owe any IHT

Stop travelling to see them, OP. When they ask, tell them that you can’t afford the petrol.

Music lessons and holidays are a luxury, not essentials.

I disagree, I don't think music lessons and holidays should be unobtainable luxuries where you've got two adults working in highly skilled jobs.

Another one saying 5 figures having to last the next 20+ years isn’t actually that much; especially if you consider the cost of care home etc. in fact you’d actually need to be careful that you don’t then fall down the trap of deprivation of assets etc if they’re too free with giving out their money.

I get it’s tough but ultimately the responsibility is on you to have to support the lifestyle you want. For example if you had a sibling that chose to put off having children until they were in a better financial position, or made the heatbreaking choice to only have 1 when they actually wanted 2; would it be fair for your parents to give you more money than them?

On the other hand I think it would be fair to encourage them to think sensibly about estate planning if they have a larger amount of wealth (ie above IHT); as then it actually can make a great deal of sense for them to be at the very least maxing out their gift threshold every year.

I honestly can't fathom not sharing everything I possibly can with my children, and improving my children's (and potential future grandchildren's) lot in life is genuinely the main thing, by a long way, that gives my husband and I motivation to build wealth and assets.

I don't really understand what the point is otherwise - you can't take it with you...

Grandparents brought up their kids. Now they are supposed to bring up their grandkids as well?
yes, it would be nice if they helped a bit if the can.
but they shouldn’t have to. I wouldn’t want to see my kids struggle, but at some point, they are adults.

Grandparents should play no role in your finances. Your child, you pay.

You should hit your retirement at the wealthiest you will ever be. Then its gets eaten away at until you die.

It always strikes me as such a shame that our childbearing years are really at the start when we have the least.

Why should “society” pay for your children to swim and visit farms?

It really depends on the details. Imagine encouraging your children to make smart decisions and them making risky or foolish ones then them insisting that you owe them money.

I think parents owe children a great childhood and help as adults if needed but I don’t think an adult is owed a great quality living.

it sounds like you could have provided all of this for you mr children had you had one child. You chose to have sibling and to have a lower quality of life for them.

Many are so afraid of having nothing when in their old-age that they keep it all until they die. You usually find the most generous people are those that do not have a lot to start with.

I will not be like this. I plan on funding my kids private pensions and LISAs when I take early retirement. I would rather die a pauper and make my children wealthy, but am currently aiming for a middle ground.

I'm a BB and a MiL and yes, I am so glad I am able to help my DC and DGC financially. I would hate to see them struggling financially. They do not ask, but I chose to help them. My parents and ILs were not in a position to help us, but we are, so we do.

No, I don't think that parents should automatically offer to help out their children. My mother worked until she was 80 as a housekeeper and cleaner, I would not have thought of expecting anything from her or indeed my older sister. About 10 years ago I was made redundant, it took me nearly five years to move from temp work to a perm role... during that time, I go put onto meters and eventually lost my home. I never shared with any of my friends how bad it was, because it was my problem to solve and yes, it was bloody tough and no doubt they could have helped me BUT it was my job to push on through it.

Life is not fair, so all you can do is just work through it and hope that better days will soon be here.

I really hate these posts. No adult is entitled to their parents money whilst alive or when they eventually pass away. Your parents didn’t know that properties they purchased years ago would inflate to the levels they are now. They would have had their own financial worries and concerns at the time.

You may also be remembering your childhood with rose tinted glasses. Holidays and music lessons may well have only been afforded by sacrificing something else.

You really shouldn’t begrudge your parents wealth as you could end up in a similar position with your own DC and DGC expecting you to help fund their lifestyle in years to come.

@Onnabugeisha true but I assumed that was as well as a family home etc to go over the threshold