Generational wealth

Hi Patricia,

I was listening to a sports show the other day, and they were discussing rookie contracts in the NFL.  A couple years ago, the league put a limit on the amount rookies could get paid, and now everyone is happy.  Top players are still getting big bucks (just not as big) for taking severe blows to the head and billionaires get to keep their lips firmly around the money spigot.

That's not the important part.  One of the commenters on the show used the term "generational wealth".  Having sat through a couple of estate planning seminars in my day, the term had been tossed around before.  Its general meaning is a secure amount of money that is significant enough to retire comfortably and have extra for passing down to kids and grandkids (with a minimum cut taken by Uncle Sam).  It's something we're all supposed to aspire to. 

But it's a pretty big number.  Tens of millions of dollars to keep yourself comfortable through old age, PLUS enough more to generate a stable stream of money for the inheritance.  Even with the cap, a lot of athletes get this in one lump sum as they're walking out of college.  That's a lottery win right there.  Kind of suggests why so many athletes end up broke.  

It also made me think of what I had walking out of college.  Is there such a thing as generational debt?  

Of course, the girls are not going to be saddled with my college bill per se.  But what about lost opportunities.  What did an extra round of graduate school take from them, since the bill is coming out of our pockets now?

No one in this house is hungry or missing medication or going naked (although they try).  But we are not in the most expensive neighborhood.  Or sending to all the language classes.  Or engaged in every enrichment event.  For many years, I was locked in a job for its stable income rather than being home with the girls.  That's been corrected, but again, at a cost.

Maybe my narcissism has taken over my enjoyment of sports.

Cheers,

Ray

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Hi Ray,

Sorry for the lengthy delay in responding. It’s partly because I read the first sentence, said ”Sports!? Really, Ray?” and then set it down for a week.  But lo and behold, it’s not really about sports.  Hoorah!  I also apologize that this is the longest reply ever.  I'll try to be more concise next time.

Salary caps: not your point, but just to get my position on the record, I think it makes sense.  I understand that athletes have a limited number of earning years in their chosen profession and that the work is often dangerous, but I’ve never really understood how sports stars make six figure salaries and teachers make essentially minimum wage (if you factor all the hours they actually work) and still have to buy their own classroom supplies.  I’m not a sportsfan, but I recognize that the watching of surrogate heroes do battle in your name has some kind of sociological purpose or benefit. But seriously… teachers teach your kids how to READ. 

On to the actual topic: Generational Wealth

I think the notion of generational wealth is flawed at its core.  For one, almost no one can achieve it.  We know the distribution of wealth in the US is a lopsided bar graph and those on the bigger side tend to be pretty damn lucky if they can manage to keep themselves out of state care in their dotage.  Having dignified sunset years with hefty leftovers for the kids is a part of the American Dream that few actually realize. The real problem with striving for generational wealth, though, is that it puts the focus on the money, which is totally the wrong place. 

Who knows what will happen with money? Stock markets crash; economies go under; recessions and depressions occur; criminally greedy asshats steal people’s retirement funds…   for all we know, the anti-capitalists will succeed in fomenting revolution by the time our kids are adults.  There are systemic problems with how our society addresses wealth and poverty; it could be a whole different picture for our kids as grown-ups – one that having some coin in the piggy bank will do little to help them with.

I was a late addition to my family, so my parents are a wee bit older than is typical for my age group.  For my parents’ generation, the American Dream wasn’t so much generational wealth as it was to work to make sure your kids had it better than you did.  The focus wasn’t on a dollar figure some actuarial firm calculated for you.  It was a flexible notion, almost like a sliding scale. My parents were both born near the end of the Great Depression - my father in Kentucky and my mother in Northern Ireland.  They both grew up in the kind of poverty you see in old black and white movies.  They wanted more for their kids.

My dad worked from the time he was 11 until he retired in his 60s.  He was committed to making sure that my brothers and I not only had more comfortable lives than he had growing up, but that we would also be afforded opportunities he did not have.  My dad left formal education at 6th grade, despite being one of the brightest students in his school. He had to work to help his family make ends meet.  Like all his brothers, he joined the military at his earliest opportunity; he learned skills and traveled the world. When my dad left the Marine Corps – about the time I was born – my folks had a choice of where to settle the family.  They chose Montgomery County, Maryland – at the time, the best-rated school district in the country.   It was a deliberate step on the path to giving us the best opportunities the family could afford and it served each of us quite well.  We have achieved much with the foundation set there and the principles we learned growing up: between us we have earned several advanced degrees, numerous awards for achievement, and recognition in academics and employment. 

We became first-generation members of the mid-to-upper middle class, in large part, because of the many sacrifices our parents made to give us the opportunity to excel.  I think they are as proud of us as we are grateful to them and I have promised myself not to forget what my comfort and privilege cost them.  I know it was done willingly and with love and I think that though sometimes things were tough, there was a sense of accomplishment in providing so well for us.  To my mom’s chagrin, my dad never made me stay at the table all night when I refused to eat my brussel sprouts (a frequent occurrence).  I remember asking him once why he didn’t mind.  He told me that it brought him contentment and pleasure to know that I always left his table so full that my plate would have leftovers.  Only when I was older did I appreciate that for someone who never once went to bed with a full belly as a child, the ability to provide such plenty for his kids was an American Dream come true.

So here is where I expose myself to the world as the tree-hugging pinko you know and love: the real wealth we give our kids has nothing to do with legal tender.  It has everything to do with living principled lives and trying to provide as many opportunities as we can for them to develop skills, discover their talents, and know that they are safe, secure and unconditionally loved. 

I used to feel guilt over practicing the kind of law I did.  I was in the top 5% of my class, actively involved in the legal community, and published (however modestly) when I graduated law school.  My peers were getting jobs at the largest firms in town with impressive names and impressive salaries.  I am reasonably certain I could have landed a similar gig if I had applied to any.  Instead, I sold my condo and traveled around the world for a year and then took a job at a non-profit, representing victims of domestic violence for free.  Had I followed the more typical path, my kids could be in private school right now.  My daughter could be taking those acting classes she mentions to me once a month or so.  My son could be doing artist residencies in the summers at cool colleges anywhere from Baltimore to Tuscany. 

But they’d be doing it all with a parent who they rarely saw.  I would not have been able to make every single school play, band concert, art show or pumpkin run they have done.  Like you, I worry about the opportunity cost and their level of comfort.  But I think it was the right choice.  They may not have cell phones or the latest [insert whatever fad is cool for the current 12 seconds], but they have a parent who can help with a school project about the Pyramids using first hand experience and they have seen the rewards of compassion and charity and the importance of helping vulnerable or marginalized people have a voice. 

It will be the same with your girls.  They benefit from the person you became in college, the years spent in grad school in Montreal and the skills you honed in law school. I’ve heard the types of comments your older one makes; she has a remarkable grasp on logic and how to use prior statements in the course of promoting her position.  I wouldn’t be surprised if she could successfully argue a hearsay exception.  And your wee one – what toddler can use language like that?  She has not only mastered basic communication, she makes up puns and engages in pretty sophisticated wordplay. Cheeky monkey.

Also, you staying home with them shows them that traditional gender roles are simply that: tradition, not some biological imperative wherein daddies go to work and mommies bake cookies and kiss boo boos.  Further, because of the same intellectual curiosity that led you to get your advanced degrees, you use your time with them to do the coolest things ever.  You routinely “do science” – like making marshmallows from scratch and observing matter in various forms; you regularly go to art museums; you introduce them to nature; encourage their imaginations to run free; and demystify things like public transportation and finding your way around in a new city so they won’t be fearful of new experience when they are older.

On the balance, I think that even without some of the language classes and enrichment programs – and even without the benefit of a fat bank account waiting for them when it’s time for college – you are providing the girls with generational riches so valuable that they will be prepared for whatever opportunities and challenges the world hands them.  And isn’t that what it’s really all about?  

Best,

Patricia

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Hi Patricia,

Behold the power of the classic Simpsons plot double-cross.  Start steering the conversation towards football, then ZOOM Homer's in a Norse jail for whale poaching.  

I have been focused on debt because I have no reasonable means to get out of it.  Staying home feels like financially treading water.  Even with multiple degrees, the net cost of working (transit, daycare, snappy suits) is high enough to minimize the marginal impact on debt.  I could pimp, but fake fur negatively highlights my butt and I'm very allergic to being punched in the face.

What's amazing is how the discussion of wealth always turns to a discussion about money and debt.  There is no money without the ledger, and all of our names are on it.

Your point is exactly correct.  There are other types of wealth, some without ledgers, and we're not all in the red quite as far. I'm sure that at some point we shall discuss why there is this misbegotten reverence for the wealthy, but we'll just put a button on this one here. 

Cheers,
Ray