Boomer dad on why he’s gifting Gen X, millennial kids’ first legacies

• A 68-year-old government employee in Canada is already transferring his wealth to his grown children.
• He says he is ready to retire and wants to help his children financially in their years of need.
• He is part of a trend of baby boomers actively passing their wealth on to their children.

MJ, a 68-year-old government employee in Alberta, Canada, has already begun passing on his wealth to his four grown children, while he is still six months away from retirement and plans to live to “old age.”

MJ, who asked not to go through the initials for privacy reasons, told Business Insider that his mindset changed a few years ago when he read the 2020 book “Died With Zero” by Bill Perkins. .

“The book emphasizes that kids usually need help in their 20s to 40s, when they’re dealing with house payments and mortgages and kids and all the things that go along with life,” he said. “That’s when they could really use the help.”

MJ’s children include his two sons and two daughters-in-law, who are all between the ages of 35 and 46. In the past few years, he has given each child a lump sum of $5,000, typically an end-of-year stipend, as well as one. An additional $1,000 for each grandchild.

He is among a growing group of boomers who are spending their wealth earlier in life, which financial planners previously spoke to BI. The active inheritance trend comes as millennials, in particular, have higher debt rates and lower home ownership rates than their parents had at the same age — and as boomers pass on trillions of dollars in assets.

“We consider inheritances and money from families as gifts of love,” Gideon Drucker, a financial planner who is president at Drucker Wealth, previously told BI. “If your intention is to pass this money on to the family as an inheritance, you probably want to use it in the best possible way to maximize the peace of mind for everyone.”

MJ said he inherited a small amount of money when his father died, but at the time he was financially comfortable and didn’t really need help. Similarly, he said, if he waits until he dies to pay his children, they will probably be in their 50s or 60s and may not need it.

After reading “Die With Zero,” MJ took a look at his finances. He realized that with his savings, the pension he expected to receive after retirement, and some investments in the stock market that had paid off well in recent years, he was set for a very comfortable retirement. And there’s still more to come. .

He says he and his wife own their house, their cars and a trailer they go camping in. They cost less, don’t taste unusual, and are still able to travel regularly.

He also considered the tax rates he pays on the income he gets from his investments and thought the money would only go to his children.

“Let them pay off the debt and not pay the interest, and maybe it will help a little bit more than it does now. It will help a little bit 20 years, 30 years down the road,” he said.

The money he gifts his children comes with no strings attached – they are free to spend it however they see fit. For some, it covers basic living expenses. For others, it helps pay their mortgage.

“I think the biggest thing is to treat them like adults,” he said. “They have to manage their money for the rest of their lives. Here’s an opportunity.”

MJ says that once he actually retires and manages his cash flow better, he will likely increase the amount he gifts them each year.

He says that if someone is thinking about giving their children their first inheritance, then the most important thing is to have a strong determination about their finances first.

“I’ve seen people who have emptied their bank accounts to help incredible children become literally poor, and I don’t think anyone should do that,” he said.

Drucker, a financial planner, previously told BI that it’s a good idea for someone to give money to their children early, but only if they plan their finances well, are financially independent, and Have enough money to meet your needs. without risking withdrawal.

MJ says he’s also spent a lot of time studying Warren Buffett, who is among billionaires like Bill Gates and Mark Zuckerberg who don’t plan to leave their entire fortune to their children. In a 2021 memo to shareholders, Buffett offered this advice to ultra-rich families: “Leave the kids enough that they can do everything but not enough that they can do nothing.”

MJ says that he has the same mindset and he doesn’t worry about spoiling his kids.

“I’m not going to send them all into retirement with what I’m leaving behind. I’m going to do everything I can to make their lives a little bit easier,” he said. “And I love them and take care of them, and I’m glad I can do that.”

Have a news or story to share about passing on wealth? Contact this reporter kvlamis@businessinsider.com.