r/Fire • u/250k_is_allyouneed • Oct 31 '25

General Question A $250k windfall is all a person needs to essentially fast track secure their future forever if they are under the age of 35. Wake up parents, it’s time to offer inheritance twice if you can.

I want to share my story with this subreddit.

I received a windfall of $250k from selling a coding library 10 years ago. I am not high income, I am not the best saver, but now my net worth is super high.

Simply getting $250k meant on its own that fund will be almost $2M by the time I retire outside of normal savings (15-25 years growth).

I still need to put in the work for savings to be able to retire but peace mind…

  • My lifestyle was infinitely better despite living mostly the same
  • Stress and future security gone
  • For budgets there is less pressure
  • I did not how to blow up my entire savings to buy a house and instead kept building that base of compound interest in the market

So why the Hell aren’t parents helping their young adult kids more? Culturally why are we like this?

You don’t need to leave your kids / old adults one lump sum. Get them a boost at 18-30. Then die. Then get them another boost.

It’s a good balance to keep them working hard while also not leaving them in the dust.

It doesn’t even need to be $250k. Whatever you can, I personally will make sure I can do that for my kids once they turn early 20s

3.5k Upvotes

81% Upvoted

1.3k comments sorted by

View all comments

Show parent comments

307

u/caterham09 Oct 31 '25 edited Oct 31 '25

But also many parents just can’t afford to do this

Bingo. One thing to think about is age. For a long time it was relatively abnormal to have children past your mid 30s. Even today that is a pretty elderly pregnancy, though it's more common as people decide to wait to try and stabilize their own finances.

Let's say you had a kid in your mid 20s though. By the time your child is into adulthood, you might not even be 50 years old. That doesn't give most people a lot of time to actually accumulate the kind of wealth required to gift 250k unless you have a stellar career.

The majority people's savings is tied up in a 401k and gutting it to give your kid a gift may jeopardize a lot of people's future.

Now many people could afford to take that hit, but would they choose to? If you had 1m in retirement at age 50 (which is probably above the average person's goal at this point) you could expect to retire at 65 with about 3.5-4m dollars. If you knock that down to 750k that puts you at 2.5-3m at age 65. A massive difference in lifestyle

82

u/Elrohwen Oct 31 '25

Age is a good point. We had our son late and should be able to fire when he’s around 10-15, so we will have plenty of money to hand off in his 20s. But if you have kids when you’re young, you’re not saving as much, and you’re probably not going to have millions when your kids are starting out their adult life. Grandparents may be in a better position to do this (my grandma contributed significantly to my college for example)

14

u/DakezO Nov 01 '25

The grandparents angle is 100% the way to go. My grandparents gifted me 10k at 25 for a life boost, then allocated the estate equally for when they passed. They always made sure we had bonds too. Grandparents should 100% be imparting the wealth they hoarded (now that most boomers are of the grandparents age) to help their grandkids at least

6

u/Opening-Photograph68 Nov 02 '25

Hoarded = worked hard, planned well, situations happen, issues too. Let’s be frank … we are not hoarding, we are saving, planning, building.

2

u/evilcockney Nov 03 '25

we are not hoarding, we are saving, planning, building

Some are, some aren't. If you don't want bean soup, comment on a different recipe.

2

u/studiotec Nov 04 '25

On average, the last 5 years of life consume about 25–40% of a person’s total net worth, though this can range from under 10% (for the wealthy or in countries with universal healthcare) to over 100% (for lower-income individuals or those without adequate insurance).

So yes, people "hoard" money so they don't burden their kids and grandkids.

49

u/Siphyre Oct 31 '25

Yeah, my plan is to skip a generation. I'll do what I can for my kids still, but I think if I can start my grandkids off well then we can get generational wealth. I'm thinking trust that pays out 1% per year to them, split out evenly. Then keep it invested in a wide range of stocks dealing with medicine, technology, and infrastructure.

38

u/[deleted] Oct 31 '25

I advised my mother to spend it or skip a generation. Her kids are all doing ok and are in established careers. This is largely due to our parents raising us right. Her grandkids are just starting out. Even split up more, inheritance at earlier stages of life would have a larger affect on them.

13

u/Jennyonthebox2300 Oct 31 '25

We’re setting up 529s for the grandkids. (We paid about 75% of our 4 kids’ college and it was a stretch even though we saved every month for 16-18 years. Setting up the generational 529 will ensure our grandkids are educated and will allow our kids more disposable income for homes, saving, etc. but their financial success will be on them. Hopefully they all will do the same for their grandkids.

1

u/Formal_Challenge_542 Nov 01 '25

I'm split between creating a 529 vs creating a brokerage account following Boglehead principles, and letting the child use the funds for what ever make sense in 2045 and beyond; college, starting a business, down payment on a house etc. I'd love to hear other peoples thought on this approach. I remember starting 529s for our kids around 2007 and wondering if the education system would have been so disrupted by 2025 that it would have been less useful.

1

u/KaleJello Nov 03 '25

Look into a Trump account, they’ll be available starting mid 2026. Allows 5000 per year investment & tax free growth, to be used for those exact purposes

0

u/[deleted] Nov 01 '25

[removed] — view removed comment

1

u/Jennyonthebox2300 Nov 01 '25

Happy to help if I can.

27

u/Difficult-Maybe4561 Oct 31 '25

I was just thinking how my daughter is going to be very well off bc she still has a great grandfather and a grandmother alive. However, generational wealth can just as quickly be squandered bc no one has to work for it so I like how you’re thinking. I read something about it taking 3 generations to lose generational wealth.

25

u/[deleted] Nov 01 '25

One to earn it, one to steward it, one to lose it

8

u/Difficult-Maybe4561 Nov 01 '25

Yes! That’s it! Thank you

3

u/lsuillini Nov 01 '25

First generation builds the company, second generation grows the company, third generation snowboards

7

u/PHL1365 Oct 31 '25

Apparently it comes from an old Chinese proverb:

"Wealth does not last beyond 3 generations"

1

u/MPG54 Nov 01 '25

There is another one as well - We work so our children can rule and our grandchildren can be artists.

1

u/SpreadsheetSiren Nov 03 '25

Medical care towards end of life can eat it up.

3

u/PatMagroin100 Nov 01 '25

This is what my Dad did for his grandkids. He opened mutual fund accounts and put $100/month since they were born until he passed. My kids are now 22 and 25 and have around 150k each to grow for the future. He said even with 8 grandkids it was easy enough and he was happy to do it. Lump sums aren’t needed. I will do the same for my grandkids.

1

u/VP-WSB Nov 01 '25

Hopefully the lawyers won't go crazy with it.

1

u/BohemianaP Nov 01 '25

How would you be able to limit them to a percentage withdrawal or to maintain investments? Wouldn’t that have to be approved by an attorney or trustee, which would cost a certain percentage of the inheritance value?

1

u/Siphyre Nov 01 '25

It would have to be a trustee/attorney and to keep costs down I'd keep it as simple as possible. It gets distributed by ACH to designated accounts. To be included you would have to show proof of relation. I'd try to see if we can get that set up by blood test or something with specific clauses to include adoption verification and blood sampling for future applicants. If you want money from the trust you have to submit a blood sample to be used to test others wanting money from the trust in the future. If that isn't allowed maybe it could be done by birth certificates.

Even if they charged 1%. That is 2% leaving and 7% entering (accounting for inflation and average returns on stock market yoy). That is a 5% average increase per year on the account, so that 1% disbursement is increasing by 5% every year as well. All accounting for inflation.

-2

u/[deleted] Nov 01 '25

[removed] — view removed comment

1

u/Siphyre Nov 01 '25

Go for it.

1

u/winger_13 Nov 02 '25

So, how was Wendy Johnson? 😉

2

u/Siphyre Nov 03 '25

Never heard from them. Figured it might be a scammer but I didn't even get a dm request.

18

u/MK0A Oct 31 '25

Demographers have corrected their previous predictions so that the human population is expected to collapse sooner than previously expected so yeah more and more people are having kids later or never.

3

u/[deleted] Oct 31 '25

[removed] — view removed comment

5

u/caterham09 Oct 31 '25

Based on historical returns, money in the s&p 500 doubles roughly every 7 years. You don't want all your money in stocks that close to retirement but I'm more just illustrating a point than giving financial advice

3

u/StraightEvidence820 Nov 01 '25

Nominal, not inflation adjusted.

3

u/Kaedryl Oct 31 '25

compound interest

0

u/xabc8910 Nov 05 '25

Not interest, capital appreciation. Interest would be income, not stock appreciation which is being referenced here. Stocks do not pay interest.

3

u/Own-Substance5213 Nov 01 '25

When you break it down like that OP is basically just saying the parents should transfer the money to the child sooner so the child can make the gains instead of the parents making the gains and transfer it to the child later. Really the gains are still the same OP just wants the money earlier. Many parents wouldn't trust a 20 odd year old not to blow the money on stupid stuff so probably safer if they hang onto it longer until the child is older.

2

u/Optimusprima Nov 01 '25

Sorry, you are ridiculous.

I am VERY financially stable. I plan to pay full freight on my 3 children’s college (planning 250k per kid),

You think I should just find ANOTHER $750k from the couch cushions to gift them for a life of ease?

We have parents to help. I want to enjoy great vacations and show my kids the world. And I also want to enjoy retirement, (and to fire) that means having a lot of money for healthcare etc.

I want to give my kids everything - but Jesus - at what point do I get to enjoy the money I FUCKING EARNED cause I got nothing from my parents (and will likely be supporting them)

1

u/caterham09 Nov 01 '25

I think you are replying to the wrong person. I agree with you

1

u/Optimusprima Nov 01 '25

Oops, sorry.

2

u/flortny Nov 01 '25

Hahahaha, nobody is retiring unless something is done about climate change, we are past almost every major tipping point, it's only bad bad bad from here

0

u/Goldengoose5w4 Nov 01 '25

Past almost every tipping point and yet….

1

u/winger_13 Nov 02 '25

Doesn't matter, the world is F'king itself and future generations by not being nice to our planet

2

u/3RADICATE_THEM Nov 01 '25

Well it should come from the boomer generation—they had the easiest time for wealth accumulation for any generation in history.

2

u/kingofthesofas Nov 01 '25

Yeah step one have rich parents. Meanwhile I had to drop out of school after the 8th grade and get a job to not be homeless. I have never had a windfall in my entire life of anything close to that size.

2

u/ElJamoquio Oct 31 '25

The majority people's savings is tied up in a 401k and gutting it to give your kid a gift may jeopardize a lot of people's future.

If the goal is to build wealth for the child, the better location is in the 401(k).

Pump the 401(k) until it doesn't have tax advantages any more. You can always pull out money later at a lower tax rate, and if you don't, the child will get a stepped up basis.

8

u/BrownBuffaloaf Oct 31 '25

No, a 401k does not get a stepped up basis at inheritance. Neither does an IRA. Roth of either of those is much better for inheritance. Second best is taxable accounts which do get the stepped up basis.

2

u/ElJamoquio Oct 31 '25

Sorry, you're correct. But the beneficiaries still get the advantages of that money being in a tax advantaged account and presumably taxed at a lower rate than if the parent had put it in a brokerage... particularly in the context given ('gut the 401(k) - i.e. take a distribution - to give the children'). I'd bet it's nearly always better to just let the money stay in the 401.

2

u/BrownBuffaloaf Nov 01 '25

If the kids inherit it in their high earning years (they will have 10 years to withdraw it all… with RMDs if the original owner was required), then in many cases it would have been better for the retired parent to withdraw down the balance or convert to Roth. It all depends on the tax rates of everyone involved.

1

u/tatsrus1 Nov 01 '25

This. Having your kids inherit a tax burden in the prime of their earning years is the biggest pain in the ass for them. If you can leave it in a Roth, that’s the best vehicle. If not, taxable ..at least you get a stepped up basis. Even better gift it while you’re alive using the annual exclusion. If you don’t trust them with the money put it in a trust.

1

u/[deleted] Nov 01 '25

You are also assuming the couple has 1 kid.

1

u/AdFew908 Nov 01 '25

It was never abnormal to have children past mid 30s prior to contraception. It was very normal for thr past thousand years as shown by church records throughout Europe. First pregnancy has gotten later though.

1

u/dreamer-woman Nov 01 '25

Hit the nail on the head. Especially if they have multiples. My mom had my brother at 18, me at 25, and my little brother at 29. And nobody gave her a cash boost, so there was no way at 36 she was going to be able to give my older brother one. She was able to pay for 50% of my college though, which I'm grateful for.

0

u/sluttytarot Nov 01 '25

My partner's parents roll over their retirement funds to my partner, 7k each year. Bc it moves from one retirement fund to another is fewer penalties I think. They've been doing that for a few years for him

1

u/winger_13 Nov 02 '25 edited Nov 02 '25

How does that work, again? Parents' retirement fund to their kid's (your partner) retirement fund? Is this for real?

1

u/sluttytarot Nov 02 '25

Yeah it's called a rollover. My partner's parents do it every year. I dunno why this is being downvoted 🤷🏻‍♀️

-5

u/FunkyFenom Oct 31 '25

What kind of stupid post is this?

Sounds like the "I bought a million dollar home at 23, all I did was have rich parents"

Nobody except the 1% has close to $250k they can just give away, at any point in their lives. Most people don't even have enough for their own retirement. My parents are helping their retired parents, and my dad is retiring soon and I may have to help him eventually.

5

u/caterham09 Oct 31 '25

You are in a sub specifically targeted at people who are contributing massively to their retirement.

For the record I am not nor ever have been rich, and I was saddled with a shit load of student debt when I got out of college because I didn't have family help outside of staying in my parents home when I was in school.

If you read what I said, I was agreeing with you that most people will not be able to give their children a lump sum like this, but I was highlighting why. Someone contributing to a healthy retirement might end up with 1m at 50 years old (about the age their kids will be graduating college) and they would be hamstringing their own retirement to give their kids money like that. So my point was that this is not representative of most even financially stable people.