I don’t have any kids – so you will have to decide if I have anything to say worth hearing – maybe I’m disqualified as a non-parent. But I have been on the receiving end (with an interesting twist) of this whole inheritance question – so I think I should be able to have an opinion. Given that, the conversation about leaving a big inheritance for the kids has come up several times recently as friends ask me about retirement. They often plan to spend less than they could afford in retirement so they will have a big estate to leave to the kids. I get it – they’re your kids, but I also disagree. Here’s why:

Are They Kids? Or, Will They Be?

I know that to you they will always seem like young children – they’re your kids. But let’s look at the best case scenario, where you or your spouse live into your 90’s. That puts your kids somewhere around 70 years old when you pass the estate. So you get to leave a million dollars to some 70-year-olds? What does that really accomplish? By the time your kids are in their 70s their lives are pretty much set, it’s much too late for a big financial windfall to have much of an impact on their day to day lives. I’m just not sure it’s worth limiting the enjoyment of your retirement to leave a big inheritance when you are not going to get a big bang for your buck. I think a better idea is to do what my biological father did.

The One Thing My Bio Dad Got Right

I didn’t know my biological father very well, and I don’t have a lot of good things to say about him. But I’ll give him credit for this one thing. One afternoon when my wife and I were planning our wedding I reached into the mailbox and pulled out a nice letter from my father. And attached to that letter was a check for $2,000.00. Not a huge amount, but in 1983 it was enough for us to put a down payment on a little house in Woodstock. That little house went up in value so we were able to sell it and move into a nicer and bigger house a few years later. That $2,000.00 came at a point in my life where it had a huge impact. It got us out of the crappy apartment and we felt like we were successful adults. Not bad for a small investment.

Ultimately, my bio Dad died a very wealthy man (very). I’m not sure what happened but I was not in his will at all. Not a dime was left to me. But by that time, I was in my late 50s and didn’t need his money anyway. My life was pretty much set, I was on track for a nice retirement and I don’t think a big inheritance would have changed much in my life. Maybe I could have retired a few years earlier, but it wouldn’t have been a big deal. That $2,000.00 check in my 20s is what I remember and what I am most thankful for.

Maybe Give Less, but at the Exact, Right Moment

Sure, if you wait until you die, there might be a much bigger pile of money to leave behind. I still think it is worth thinking about giving a smaller sum much earlier in life when it can have a big impact. Give them a down payment for a house, get them out of credit card debt, pay off some student loans – now. Have a conversation and tell them that this is your inheritance, maybe there may be more money later but don’t count on it. Tell them when your time comes to retire that you are going to fully enjoy the fruits of your hard earned money, and you might very well spend it all.

A “just enough” sized gift right now may make a massively bigger difference than a fortune would later. Plus, you get to enjoy it along with them!