Nearly half of young millennials get thousands in support from parents | Hacker News Reader

Nearly half of young millennials get thousands in support from parents

cnbc.com

100 pointspaulpauper102 comments

This is exactly what one would expect to happen as the wealth gap between young (disproportionately affected by stagnant wages and student-loan debt) and old (disproportionately benefiting from low taxes on property/investments) continues to grow. Some parents pass the proceeds onward, but only to their own children. Some parents can't or won't pass anything on to anyone. The end state is a rigid class system in which most people's wealth is determined by their parentage instead of their own efforts or accomplishments. The solution is to levy less tax on the young and poor, more on the old and rich.

BTW, I'm on neither side of this. I'm too young to be funding my daughter's college or early adulthood, but far too old to be on the other end of any such transfer. If anything, I'd be negatively affected by the suggestion above.

The graph commits a couple of errors, one of which is a cardinal sin: https://image.cnbcfm.com/api/v1/image/104274858-ParentalFina....

One is the glaring typo--1985 instead of 1965. Two is starting the scale at 30%. That makes the 35-50% jump look far bigger than it is.

The other two problems are cutting off in 2010 (basically during the aftermath of the 2008 recession), and starting in 1965. It looks like support decreased a lot from 1965 to the trough in 1980, then started trending back up. So what you might really be seeing is the consequences of the 1960-2000 period of unprecedented growth, with parental support returning to historical levels.

As an Asian person, I find it odd that people at CNBC would find this odd. Parents supporting young people starting out is an extremely old practice. These days it's paying for student loans, but back in the day it would mean giving household goods, land for farming, etc.

Wow, that graph is atrocious.

Another issue is that I can’t tell what age groups are included. What on earth does “modal age 23-28 mean”

> One is the glaring typo--1985 instead of 1965

They've actually accidentally swapped the 1980 and 1985 labels. See fig. 3b on page 25 of https://www.psc.isr.umich.edu/pubs/pdf/rr13-801.pdf

That doesn't make sense either, because then the equal-sized segments go 1980 to 1985 (5-year gap), 1985 to 1995 (10-year gap).

Ugh, sorry, I confused the situation even more with my wrong comment above. The graph starts correctly at 1985 and has 5 year intervals.

So the label '1980' should read '1990'. Phew!

I don't know where you got 1965: clearly they just labeled 1990 as 1980. And truncated scales, clearly marked, are not a cardinal sin. They can be used to mislead but I see nothing wrong with the way they were used here. Cutting it off in 2010 is the bigger issue, I think.

"truncated scales, clearly marked, are not a cardinal sin"

^^^ I know some people are trying to make that happen, but no, it's egregious misconduct and there is no excuse for it.

> The graph commits a couple of errors,

Starting at 30% is not a cardinal sin: comparing things by proportion isn't the only valid purpose of a graph. That said, covering up an apparent peak with an overlay image is a cardinal sin, and you left it out.

> One is the glaring typo--1985 instead of 1965.

It's 1980 instead of 1990 not 1985 instead of 1965.

> The other two problems are cutting off in 2010 (basically during the aftermath of the 2008 recession), and starting in 1965.

It starts in 1985. Starting in 1965 would be an improvement.

Can confirm. Massive help getting through school. Huge "loans" starting my own business. A life lived without financial fear because, even when not being actively aided, knowing that rich folk "got my back" is priceless.

Honestly acknowledging this has made me much more humble in my success and much more liberal in my politics than I would be otherwise.

It takes a degree of self reflection to be aware of that. I know a couple of "self made men" who are anything but, but they aren't aware of their own advantages to realize that not everyone shares in them.

I like to call this "pulling oneself up by one's bootstraps at Andover," with apologies for singling out Andover.

You reach down, grab your bootstraps and pull, marveling at how quickly you rise, all the while ignorant to the fact you're riding in an elevator.

Well said and applies to me as well. Thankfully myself, and the founding team of my company are all very aware that this is the case, and feel extremely blessed to have been born in such a fortunate position. I think in this case being self-aware is half the battle, the next half is to aid those without this luxury in concrete ways.

This is what people don't realize, real poverty is knowing no one has your back, the psycological effect it has on people is inimitable. Bill gates fails? He goes back to harvard, aided by his rich parents, same goes for Zuck, same goes for 90% of the new age entrepreneurs. My point isn't to be derisive of what they've done, they are brilliant entrepreneurs, but it's more a comment on the way the world is heading towards richly rewarding those who already have strong advantages.

I graduate high school in '03, turned 18 a month later followed by boot camp two months later. After boot camp, it was 1.5 years of air traffic control training. This involved 8 - 10 days 5 - 6 days a week in the military, knowing if I failed I would be washed out of the career-field, potentially kicked out of the military with no benefits. On a positive note, I wasn't in a combat role so that did alleviate some stress.

After I completed training and was comfortable as a controller I started using my benefits to complete school; went through two master's degrees using my benefits. Separated from the military while living in southern Turkey, accepting a role in a small town in Idaho as a data scientist. Wife and I landed in the states and a month later we drove our two children to a town we've never even visited to start a job I've never done. Five years later, I work from home as a data scientist.

Acknowledging the hard work and risks it took without a fall-back has made me much more conservative in my politics than I would be otherwise.

That was not an easy journey. The resilience to see it all through is certainly admirable.

I can't see why that made you more conservative though.

Is it a sense of wanting to keep every ounce of legitimately hard earned wealth, that would be used to make life easier for others in the work force, when you never got any support ?

Or do you mean it in a sense, where you work your way through the system, feel that the system isn't that bad and that others can similarly work their way through it without needing any extra support ?

I hope it does not come off as confrontational. I am genuinely curious.

Probably when he said the risks he took without a fall back made him more focused and targeted. There was no room for liberties. So conservative approach that minimized risks was the way to go. .

I was raised and lived in fairly conservative areas - Alaska, Louisiana, North Carolina. Though as everyone does, I explored many areas of politics, attempting to formulate my own belief system; it is continuous work in progress never settling.

However, having lived and traveled throughout the world, from the US, Iceland, Ukraine, Turkey, Cyprus, Nepal and more I've learned that your own culture and people help you the most. The US is too big to systematically solve any problems at the federal level. Issues are best solved locally, at the community level.

I don't keep every ounce of wealth, we donate to our local church which gives to the homeless in our area. My wife gives her time to the church, helping families that are currently homeless. She aids in the school, volunteering in the classroom, functions, ensuring the children are receiving the attention they deserve. Local issues are what we are trying to progress. Areas we can see an impact - where our money, time, and effort are being used properly.

I do believe the system is set-up for people to succeed, but it isn't easy. Work, sacrifice, owning up to your mistakes and learning from them are what matters. I've never seen one person regardless of race, sex, or age be denied an opportunity they truly put 100% effort into. Does plan A always work? No, sometimes you have to accept plan C and make the best of it.

Hopefully, that provided a little insight. It is late here.

I'm glad it worked out for you, but contrary to popular perception the military is not an option for everybody.

I wish the reality of our economy was talked about more. Without benefiting from the wealth of our parents, we'd be very poor indeed.

Most people I know are being supported in some way by their parents.

Maybe the United States should have a discussion about why most of us our getting poorer. If the American dream is to live better than your parents, then that dream is dead.

You'd probably be interested in watching Ray Dalios recent interview: https://www.cbsnews.com/news/ray-dalio-capitalism-needs-refo...

Here's a good one from Eric Weinstein. The whole interview is good (about AI), but at the end he discusses this kind of issue (time is bookmarked): https://www.youtube.com/watch?v=2wq9x2QcZN0&t=4260

This is part of a good lecture by Dr. Jordan Peterson on IQ, AI, and how AI is and will continue to displace people who will have no means to work to support themselves: https://www.youtube.com/watch?v=X6yLIdBikmI

I think as a corollary we must invest heavily in public education (and I don't mean just throwing more money at it)

I went to shitty schools in shitty places but my parents always were tough on education and basically forced me to be "smart". You can't ever guarantee that someone's parents are going to care, but you can provide them an environment that cares and educates them effectively for 7 hours a day.

The UK tried this, and ended up with an army of baristas with master's degrees.

The current situation can be partly blamed on the quantitative easing undertaken by the Fed post 2008 housing crisis. By printing trillions of dollars out of thin air and using them to bail out AIG and other rich businesses the dollar in our pockets lost a portion of its value. The wiki section on QE talks about this effect in more detail: https://en.wikipedia.org/wiki/Quantitative_easing#Increased_...

It also went directly into corporate balance sheets instead of to the average person. People that own tons of stock won BIG. People that own small-medium amounts of stock (think retirement accounts) did okay.

People who didn't own stock got nothing.

>> People who didn't own stock got nothing.

So they lost, since the total amount of money in the economy increased.

I don't know, but the situation here in Germany feels very similar.

I think the reason why this discussion causes so much resentment is the failure to acknowledge that people don't only get rich thanks to their parents and the implied accusation that wealth is the result of privilege, not effort.

I think the American point or view is skewed by politics and the fact that the country didn't have catastrophic events in the last century or so.

My parents and grandparents have zero wealth because they have been born in a socialist country, and I have 100k in savings by age 30 which I consider a huge achievement. Surely you can see why I might be appalled by the suggestion that my money was earned unfairly and more socialism is the answer.

Why is this an issue? I'm in the GenX generation, and I know a lot of people that got help from their parents with college, cars, and even first homes.

Me too. Am Gen x in 40s. They paid for my $100k college education and I'm eternally grateful, and forever indebted.

Nothing is free. Unless you're a low life, you will always feel indebted to them and make up for it through other means.

I'm a 22 year old immigrant to Canada. Moved there when I was 13.

Starting grade 10 I started working, I paid my phone bill, transportation and most other expenses (except of course food and room)

I have worked my way through university, bought a car, and will graduate with $20k in student loans that will vanish once I get my sign-on bonus in two months while making more that 2x of my whole household combined. It's very much possible to move up the social ladder in my eyes.

Am I a low life? What should I feel indebted about.

I'm grateful for their support of my life path, but most people don't have the privilege of living cozy lives.

Wait, I’m that age range too. Where on earth did you go 20 years ago that cost $100k?? That sounds like today’s price tag. I went to a state school that cost a couple of grand per semester in the late 90’s.

That was the running rate for pretty much all ivy. With room board food I think it was quite a bit over 100k.

It's an issue that not everyone has access to this support, and whether or not any individual person does is random and dictated by birth

The article suggests that parental support is increasing. Furthermore it seems to be caused by rising rents and non-rising wages making it difficult for young people to support themselves like they largely did in the past.

Only in that those who aren't getting support are left behind, and feel like failures because they're not able to match the success of their peers, not knowing that they're working with significantly less resources. Also could lead to a lack of sympathy on the part of those who are getting extra help, thinking that those who can't keep up with them are either lazy or less capable, when in fact they are starting from a place of privilege.

Causes resentment and division, basically.

Is it possible to resolve this? Parents are going to want to help their children over others; people without that help will feel resentful. Seems like a consequence of human nature, and changing the tax incentives won't ameliorate what is essentially an emotional problem. (The issue isn't parents helping their kids, the issue is the reaction to it)

I think there are a lot of policy changes that could make massive strides towards resolving this. A significantly higher marginal tax rate and a wealth tax would reduce the amount of wealth available to gift. Lowering the amount of money that can be gifted legally would reduce the amount of support that could be offered. Free education and healthcare (and potentially a UBI), forgiving student loans, and some combination of rent control and improved zoning laws (and possibly vacancy taxes) would ameliorate most of the problem areas that people get help with and that cause this resentment.

I disagree that this is essentially an emotional problem. This is essentially an inequality problem; the inequality (unsurprisingly) breeds resentment, and trying to fix the resentment without fixing the inequality is just slapping a bandage over a sucking chest wound.

What do you think would be the unintended consequences of the policy changes you mentioned? It seems possible that reducing inequality could have some side effects that might make everyone worse off -- less equality because everyone makes significantly less.

It's not an outcome I'm particularly worried about. There are a lot of countries with a median GDP per capita greater than or roughly equivalent to the United States[1] with more robust social welfare states and lower GINI coefficients[2]. I'm much more concerned about the effects of runaway inequality.

[1]: https://www.cgdev.org/blog/world-bank-poverty-statistics-lac... [2]: https://data.oecd.org/inequality/income-inequality.htm

Would you say that a person would be more motivated or less motivated to learn new things every day and work insanely hard if they receive UBI, get income redistributed to them from richer neighbors, receive free goods and services, and also know that most of their wealth, if they earn it, would be taxed away?

Well, first, I reject the idea that the only potential motivation for learning new things, building interesting things, and working hard is personal greed, especially given that virtually the entire tech industry is built on the hard work of open source contributors, who built and continue to build incredible things without any expectation of financial recompense.

But more importantly, I don't really care if a few people are slightly less motivated if it means that we can unlock the massive amount of latent human potential currently wasted in poverty, hunger, and desperation. The number of people like that would be massively outweighed by the people who aren't scrabbling just to survive, and whose intelligence and work ethic could instead be turned to learning and building the future.

Not everyone in GenX got help either, or was born into middle class. It sucks, but it's reality too, and not new.

If it helps you feel a little more optimistic, many grew up in the recession around the 1980s which was far worse than 2008.

Like PG writes, you can make your life about finding a way to work really hard for a few years so we don't have to one day.

It will almost certainly be more work than others but you will improve more than others from that effort you put in.

Everyone's equal in their potential to have work ethic, developing has to be applied each according to the formulas of the circumstances of our life.

Surrounding yourself with hard workers (regardless of background) is the key I look for.

If there's no work ethic and effort, talent or privilege doesn't really get as far.

It contributes to a lack of social mobility, which is correlated with some negative things. It's likely a cause of reduced happiness in populations, among other things.

It doesn't contribute to a lack of social mobility. It is a perceived result of a lack of social mobility. And if your parents are in an income bracket, you are probably going to be in that income bracket. The only thing a high number of people getting help from their parents indicates is they might end up worse off than their parents, in income. But you'd need to wait until they've reached their peak earning years to know for sure.

It definitely contributes to a lack of social mobility. If you are competing with others for zero-sum access to the upper reaches of society and they get substantial assistance from their parents then you don't have as much of a fair chance.

The question becomes - how much of a factor does it play? I would think less than the intangible but non material benefits of having higher income parents (your upbringing, the lessons learned from your parents, their professional connections, a safety net that lets you take risk) but more than I would like to have admitted to myself a decade ago.

Exactly. My parents just paid for my sister to go and be a host at Camp America, with the explicit intention of it looking good on her CV. I think it's good she's doing it, and for them it's not a lot of money (as it's a paid role, just not paid enough), but it's not something that everyone can afford to do.

There has been a lot of criticism of unpaid internships for the same thing, notably in journalism in the UK. This is an industry entirely driven by unpaid internships, or jobs that pay well below what it costs to attend them in central London. As a result, journalism in the UK is a pretty middle-class dominated industry, which itself helps to perpetuate the cycle of low social mobility.

It's only a problem in that before this was an accepted and expected practice and now people in this situation are looked down upon for needing help. I say it all the time, Americans have not acknowledged that the rules have changed and the conditions that led to prosperity for the previous generation no longer exist in the same quality and quantity for today's young people.

> I say it all the time, Americans have not acknowledged that the rules have changed and the conditions that led to prosperity for the previous generation no longer exist in the same quality and quantity for today's young people.

Yep - and I wish this was more of the conversation ... I'm really playing a completely different game than my late father.

The ONLY reason I realize it vs my peers is because both of my parents died by/in my mid-20s and left me nothing going into adulthood. In contrast, I would anecdotally say >60% of my peers are still receiving parental help with everything from childcare, to down payments on houses, etc - even well into their 30's... regardless of income.

It's an issue because when your parents were young they didn't need a handout to survive. Nowadays the young are unable to offer themselves the same lifestyle their parents had and that's partly because housing cost is through the roof(pun intended) and partly because our wage has not followed with inflation.

I think that's doubtful. My mom needed help from my grandparents after her divorce. It would have been really tough to survive as a mother of four living on just child support. The idea that the world was easier in the 70's/80's isn't true in any way.

Yes, but if everyone you knew wasn’t rich that wouldn’t be the case. For the average person that all sounds ridiculous.

If there is more systemic downward pressure then average people wonder how are all these people surviving if they’re claiming to be self-sufficient, and this article aims to reveal that lie.

The biggest issue is resentment, although I've personally gotten over it for the most part.

The key phrase of the article being "secret" - it took me until junior year of college to realize that the reason a lot of my classmates could eat out wherever they wanted and buy whatever clothes they wanted was due to their parents funding their lifestyle. In comparison, I struggled a lot in college financially (even on a full ride scholarship), as well as fitting in with my peers both academically and culturally.

When I had asked my friends how they were able to afford everything, they always told me that they had "money saved up", which I legitimately believed and never really questioned.

It really wasn't until I started working and my friends would reminisce about college that I realized that the "money saved up" was really their parents money. Then some of my friends started buying homes: they had "money saved up" and "invested wisely", they claimed, but this time I was wiser because we were working the same job at the same company, and I knew that they spent more money than me.

When I started my own company, some of my friends in the tech community said something along the lines of, "how much money are your parents gonna invest?" - which is the same kind of assumed privilege that left me feeling so bitter before. I've definitely grown out it since then and have taken steps to stop comparing myself to others as much, but it's human nature to do so and I think my story will ring true with a lot of people with similar backgrounds.

Ultimately, there's nothing inherently wrong with any of this, but I did spend a lot of time saying no to a lot of things (as a result of not having time and/or money) and feeling inadequate as a result. And before anyone says I should "make better friends" - I think our own personal narratives are always biased to sound more self-sufficient than we actually are, so no, I don't blame anyone either.

I had the opposite experience. My father got laid off the year before I was to enter college. Because of the way financial aid worked at the time, it looked back at three years of parental income. He was cashing out his retirement to keep paying the mortgage and buy groceries, but on paper we were too "rich" to qualify for any financial aid. I worked a full time job and enrolled at a community college at night. I paid my own way and worked hard. I never said no to anything and would travel to remote sites if they needed someone to go. I never took out a school loan.

I moved cities for an awesome job and moved in with my best friend from high school. He was on his second year in an engineering program at a major university. I was working full time and going to community college classes at night, while he worked part time and was living on financial aid and loans. I was incredibly jealous. He would go out drinking every night, always had cash to do whatever he wanted, had a nice car, took amazing vacations and I can't tell you how many times I would wake up and see a different girl who spent the night.

Later on, when I looked at my peers who were buying houses and nice cars, I had assumed they were doing better than me, had better jobs, or had help. Nope. They were up to their eyeballs in debt. Some lost jobs and lost everything. My best friend ended up moving away after a suicide attempt and never heard what happened to him.

Lastly, I decided to go back to school for a second degree in electrical engineering. Not because I needed, but because I wanted the challenge. I had to retake some lower level courses that didn't transfer. Overhearing young adults complain about not having time to do anything, school is so hard, and then talking about the party where they smoked pot all night is just cringe-worthy.

You shouldn't feel inadequate at all. I certainly don't.

I lived at home while I was attending university. I didn't directly receive monetary support from my parents but not paying rent / not paying for food works out to a lot. I'm sure a large number of young people have always received some kind of support from their parents.

Let’s put to one side for a moment the legitimate problem of the millenial generation’s money problem... the central thesis here is that generations should be financially atomized and autonomous. No I don’t come from generational wealth but I’ve always viewed “my” money as the money of my parents and my children should they need it. There is an implicit social construction here of an autonomous nuclear family cut off from an extended family which I find curious and far from universal.

Every time I see mention of this, I am reminded of the short story about the struggling butterfly:

http://instructor.mstc.edu/instructor/swallerm/Struggle%20-%...

Are parents doing a long term disservice to their children by doing this? I don't know. What I do know is that after highschool, a self-sustained budget became a real thing, real fast. I reckoned that a lot of my friends and peers received this so called drip feed of e-transfers from their parents. My parents were middle-class; not poor by any means, but they believed in "tough love" and strengthening through struggle. It was indeed a rougher ride, but I'm thankful for the outcome. Perhaps there is something intrinsic about paying your own way. But I believe I might be starting to see the subtle differences emerge from the two groups now that I'm in my early thirties among my circle of friends

The idea that this is 'secret' is patently absurd. You would have to basically not interact with the world to think that.

Parents _not_ helping children out is an anomaly. It's definitionally bad parenting; it doesn't change because the subject may be physical goods or money rather than e.g. 20 years of food and water, or childhood education, or just making sure they don't walk out into the road, etc.

So too is the idea that people should be ashamed of it. Literally every non-damaged parent out there gives their children money or housing or something similar; the degree may differ (a poor parent may have to stop at 16 or 18), but the fundamental idea is the same.

I don't have wealthy parents. I've done fine. Would I have done better if, all else being equal, they had a few million? Perhaps.

To me this all seems like sour grapes. Be happy with where you are in life. There's always more.

> about 40 percent of 22-, 23- and 24-year-olds get significant assistance from their parents, much of which goes towards housing and start-up capital

Must be some good parents?

In the context of this article "start-up capital" could also be defined as "all of the costs associated with moving out on one's own: furniture, dishware, utensils, etc." and would include a cash reserve for unexpected needs. This is beyond the monthly cost of rent covered by the term "housing."

My mom always told me about how she had to pay her own way as a young adult, due to her father financially disowning her for taking a scholarship to college (he didn't believe women should attend). That definitely colored my expectations towards asking for support, so I opted to work 20 hours a week or more during my college years to support myself. Even so, I did receive $500 assistance my freshman year towards buying furniture, as well as a used car for 4k (though I sold it after college for 80% of purchase price and gave proceeds back to my mom). I consider myself more independent than my peers because I never requested or took an allowance or payments after freshman year (and my tuition was paid via grants and student loans), but I still know that even my option to work part-time to pay for rent and food was dependent on having that car available, so I still recognize I wasn't as independent as I'd like to believe.

I do think most college-age or immediate post-college millenials could be more financially independent if they felt the need for it. I was definitely in the minority of students at my college who worked significant hours while also maintaining a full workload. So many people bought into the idea that school should be a full-time thing, or that their parents wanted to support them so they didn't have to experience crappy jobs - and they really didn't think financial independence was a valuable pursuit on it's own.

That attitude persisted after college for some of them. I have a friend living in a very expensive city, who got a masters in a STEM field, but won't apply for jobs that actually are attainable b/c this person believes they deserve better than a mediocre job living in a un-cool city in the midwest, and their parents don't mind footing the rent bill until that dream job pops up somewhere cooler. I was taught that sometimes you just need to take the crappy job as a step towards getting a good one (and it worked out for me), but the people who never had financial pressure to do that don't really see it the same way.

Unfortunately working 20 hours a week on top of full time college still puts anyone who does it at a disadvantage to those who do not. Those 20 hours a week could have been spent on more studies, extracurricular activities, networking, or resting and therefore being more effective at those things.

Not that I don't respect it. Also, I suppose that it could be reflected on a resume, although I personally doubt that someone who worked through school would be chosen over a higher GPA, more extracurricular activity, applicant on average. Unless of course the job was an internship.

The funny thing is nowadays if you want your kid to come out of school with less debt disowning them is probably a pretty solid strategy. Either way the kid's gonna have debt but if the school/government thinks you're supporting the kid they'll take your money first whereas if they think the kid's on their own they'll give them financial aid first which preserves your ability to write a check 4yr later and wipe out a lot of that debt. Kicking your kid out of the house at 18 well enough to satisfy financial aid requirements is a hard thing to do though.

The most important factor to succeed in the US (and indeed, many other places); rich parents.

Sure, it's always been the case, but the trend is heading in the wrong direction ("wrong", that is, if you don't like rich parents being the key to success).

> Why do parents continue helping children into their early twenties or beyond? It seems to be, largely, because they can.

The evidence offered for this is simply that better off parents are more likely to do so now, but to answer why the changes occur you actually have to track what has changed in who has given over time (and also track against potential external factors, like broader economic conditions.)

Obviously, those who give are a subset of those who can, but that doesn't mean that that is what is driving the increase.

I just want people to be less 'secretive' about receiving parental support; in my peer group it seems almost shameful to have help, yet I can guarantee all of us have received some sort of financial help from family. It seems disingenuous to not acknowledge this fact especially when talking about government financial assistance.

Just like incest and bankruptcy, dynastic wealth transfer is shameful when we plebes do it, yet it's perfectly acceptable for American presidential candidates and the royal families of Europe.

Wait, incest is perfectly acceptable for American presidential candidates? Since when? I thought it was only fine for members of Congress.

How much of that “secret support” is keeping kids on your health insurance until they turn 26?

In our case, why not?

Most insurance plans have three tiers:

You

You+1

You+n

It doesn’t cost us anymore to keep our grown son on our insurance since we also have a younger school age child than it would cost if he wasn’t on our plan.

If he had to get his own insurance, it would be an extra $4000 a year probably with a plan that wasn’t as good.

Yes he works and doesn’t live with us.

The fact is that the government taxes estates and not gifts. It's better to give money to your adult children, even if they don't need it, to avoid probate and estate taxes. This is just the basic mentality of "I don't want someone else to take my money."

Gift and estate taxes are linked. They kick in only when you exceed the lifetime exemption, which is currently $11.2 million for individuals and $22.4 million for married couples.

With a couple able to transfer over $22 mil without estate taxes. Not many people have that issue as the driving factor.

That's just untrue.

You can give 15k per person per year (may have gone up in the past year) without reporting it. Anything more than that you have to report it, and it counts against the untaxed portion of your estate. Aside from that 15k per person per year value, there's no tax difference between giving it away now, or willing it away when you die.

Estate and gift tax are intertwined. There's even a page on the IRS web called "Filing Estate and Gift Tax Returns".

https://www.irs.gov/businesses/small-businesses-self-employe...

It might be easier to work things out while you're alive to make the gifts, but it doesn't get you out of the taxes.

Yeah, so the thing is that you give the money away while you're alive. You can give 15k per year per spouse. So a married couple with two married children can give away 30k to each child and 30k to each son/daughter-in-law. That reduces the total estate that is taxed by 60k each year. If you have 20 years left of life, that's 1.2 million dollars given tax free. Way better than a probate.

You're correct that if they gave all 1.2 million in one year, it's subject to tax, but no one does that.

The threshold for estate tax is over $20m right now for that same married couple. Your example takes 20 years of foresight and only gets you an extra 5% before hitting estate tax.

20 years of foresight is not much if you start at 55. 5 percent is still free money. I'm not sure what the argument here is. The rich are more organized than you give credit for

My point is that your initial comment stated this was a good strategy to avoid probate and estate taxes. I agree it's a good strategy to avoid probate, but I disagree that it's a very useful strategy to avoid estate taxes. You also incorrectly (or at least greatly oversimplified) said gifts weren't taxed.

Sounds like a Headline from the Zerohedge Website

TL;DR quote from the article:

> Why do parents continue helping children into their early twenties or beyond? It seems to be, largely, because they can.

Who said trickle-down economics doesn't work? :trollface:

That seems like a silly question. What parents want to see their child fail because they weren't able to afford getting started? If they are capable of helping they are going to most of the time.

I don't doubt that this hasn't been as necessary in the past though.

Anecdotally, my millennial peers receive financial help from their parents because they'd otherwise not be able to save anything up due to crippling school loans and low-paying entry-level jobs.

I, personally, had to live with my parents for the first few years out of college. They were too poor to help out financially. To offset that, I don't take vacations, don't have a car, and generally just don't go out into town.

Whose fault is that? Why pay exorbitant tuition just to get a job that pays low wages? Which low paying job cares about which school you intended?

I went to an unknown state school,stayed at home and within three years I was making as much as people who paid more per year than I paid an entire four years.

That's a narrative that one was unlikely to hear about a decade ago in highschool. My parents & teachers essentially preached that you went to college to succeed in life. You _could_ not go, but you wouldn't have nearly as many opportunities to succeed.

That said, if I went back in time, I'd still attend the same school. It was a (expensive) life-changing experience.

(moral of the story: predicting the future is really, really difficult)

The moral of my story is don't go to an expensive college.

Again, predicting the future is difficult. The fear with going to a no-name college was that you're throwing money down the drain to have the same opportunities as those who don't attend college at all.

Okay. I’m not being completely honest - I’m leaving out some details that changed the equation for me.

I did graduate from a no name school with a horrible CS program in the mid 90s and it didn’t affect my career.

That could have been a horrible mistake. Especially seeing that I was accepted to Georgia Tech (still a state school) but I went to my school for free and they gave me room and board even though I stayed at home.

However, the few others that graduated with me from the CS department weren’t so lucky. I had the advantage of having a computer growing up and a lot of them didn’t have one growing up or in college. By the time I got to college, I had already been programming in assembly for 6 years on an Apple //e and in college I had an (expensive) Mac running Soft PC (x86 emulator). I also released a shareware program in college that caught the attention of another college to give me my first freelance contract.

That led to me being able to impress another company in Atlanta they offered me an internship with free lodging. Which led to my first job and the rest is history.

There was no GitHub back then or an easy way for most people to publish software. I happened to know how to hack around a dialup gopher server (showing my age) to get to Nyx (http://nyx.net/) that offered a Unix shell to publish to the ftp Info Mac archives.

Today, I have a relative who was thinking about getting a CS degree from the same college I went to. I discouraged him and his mom from him going there. He actually needed the exposure, the education increased opportunities for internships, etc.

I still said that he should do his first two years st home and then transfer to a college in Atlanta.

But, if he was going to enter a low paying, non competitive field like teaching, social work, etc. I would have suggested he stay in the no name state school.

That's an awesome turn of events! I think there's a good lesson in there, that I wish my peers learned early on; higher education is nice to force you to figure things out, and improve your work ethic.

But what you do in your own time, at least in the Computer Science field, is likely what gets you a job you'll enjoy. If you aren't fooling around with servers and such, it's also a good indicator that this might not be the career you'd actually like to pursue.

Trickle down economics is a made up name given to the theory of supply side economics. I wish more people would realize this and that supply side economics does actually benefit society!

The FAFSA already takes such money into account when calculating aid. 'Secret support' makes this sound like it's a conspiracy on the level of the USC scandal.

They account for it even if it doesn't exist. I got screwed on financial aid (before the FAF and the other one were merged into FAFSA - it was a long time ago), because the amount was predicated on a much higher parental contribution than actually materialized (due to health costs). Not only that, but a far higher percentage of that total was work-study instead of grants.

I mention that not to gripe but to warn people, and to highlight the fact that differences in parental support really matter. I already see several people trying to minimize this by saying it's not new, they got plenty of support Back In The Day and so did their friends. Well, good for you. Not everybody did. It was a symptom of inequity then, and it's a symptom of inequity now. Enjoy your privilege, and hope that your children appreciate theirs.

If you can make do without health insurance from or tax breaks for your parents, the solution to this is to not apply for financial aid as a dependent. They will always consider your parents' ability to contribute, even if they hate the idea of higher education and refuse to spend a dime on it.

The amount of student aid I became eligible for once I applied as independent was insane.

You can’t apply as independent until you reach a certain age, 23 I think, or a court has declared you independent or whatever. That excludes most students, who are trying to get a four year degree after high school.

Friend of mines parents spent the college fund on her brothers private school. She was expected find a man to support her. She wasn't eligible for any student aid at all. Took her about 12 years of working and going to school to finish her degree.

I think the history of means testing is kinda negative. But it's deeply embedded in how the people the run the US think. Witness Hillery Clinton blustering that free college would just be a give away to wealthy families. Better a bunch of poor kids have the door closed in there face than let one child of privilege skate.

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