One self-made moderately rich friend (lawyer/entrepreneur) related that he’d told his daughters that their expenses would be paid through college, but after that they were on their own. He and his (nurse) wife would be spending all of the money that they’d earned on luxury consumption, extra leisure time, etc. They expected their daughters to achieve comparable levels of success to what the parents had achieved.
Another self-made rich guy (specialist physician/health care business executive that the plaintiffs of Massachusetts neglected to mine out) said that he was going to leave all of his money to a charitable foundation that he’d set up and was passionate about. “My daughter is 28, lives in an apartment with her boyfriend, and says that she doesn’t want to have children or own a house or car.”
To the doctor, I wrote the following:
Pew talks about the trend toward later births, but constant total fertility (i.e., American women have the same number of kids as before, but later in their lives). If your daughter does have kids, she will need an inheritance!
Due to population growth, it costs a minimum of $1 million to live in a decent neighborhood anywhere in the U.S. and surely this price will rise as the population trends toward 400 million (via immigration, if not high fertility). Young people today are extremely unlikely to have the kind of success that you and I had. I was Class of ’82 at MIT. 50% of applicants got in. When I was growing up, any dentist who worked full time could afford a house on the beach near a big city (e.g., Cape Cod if he or she lived in MA). Now the lot alone would be $3 million. Hardly anyone in crowded societies, e.g., Europe or China, can afford a comfortable lifestyle without a big input from parents.
See this nytimes article. Young folks today are living in what were garages to hold the cars of people our age.
I was also admitted to MIT in 1980 and it didn’t seem that difficult to get in. I bought my first house in 1984 and always had career possibilities that exceeded the cost of living. It’s definitely a different world.
Readers: What do you think? Is it reasonable to tell children “You have to make it on your own because I did”? A friend who is active in the MIT alumni organization told me that he learned that the current average applicant to MIT is as qualified as the average admitted student for his class (1999). If not, how much money should one leave a child in order to put them in the same relative position in U.S. society that those of us born in the 1960s have enjoyed?
(Separately, if you do leave children money, make sure that it is in a discretionary trust that is difficult for a child support or alimony predator to attack. Otherwise, there is at least a 50 percent chance that the money put aside for your children will end up in the hands of a plaintiff stranger.)