Just because you don't have a vast estate to divvy up among your heirs doesn't mean you can't give them a nice boost.
Parents generally want to give their children a leg up in the world. For that reason, many of us would love to leave an inheritance. In reality, this is difficult or impossible for most of us. Because of our longer lives, higher cost of living and lower rate of savings, many of us will have little left over for heirs.
It helps a little to know that most American adults do not expect to receive an inheritance, Gallup pollsters found. Only 28 percent of people polled said they expected to inherit either money or valuable possessions from family, and 69 percent expected no inheritance at all, although some already had received an inheritance.
But just because you don’t have vast holdings to divvy up among your heirs doesn’t mean you can’t help your kids get ahead in the world in ways like these:
1. Live within your means
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If you can’t leave your kids big bucks, the next best gift you can give is to avoid asking them for financial support. Okay, there may be some circumstances — sudden ill health or job loss — that prompt you to turn to family, including your adult children.
But depending on your kids for help because of your own out-of-control spending is something else entirely. If you are on a path to becoming a burden, your “gift” can be to become disciplined about living on the income you have. That may require radical downsizing. Here’s how:
- Follow these 10 tips for living within your means.
- Avoid taking on debt in retirement — or at least debt that will require a financial rescue from your kids (Read “Debt After Death: 10 Things You Need to Know“).
- Face facts. Ask yourself, “Am I a shopaholic?“
2. Pitch in where it really counts
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So you can’t leave a fortune. What gifts of wisdom, labor or other assistance can you offer now to help set your kids up for a better future? One of my friends recently lost her dad. Here is her story of how her father helped her and her husband strengthen their financial security while he was alive:
My dad was absolutely instrumental in renovating our (1909) house in a neighborhood that was expensive even in 1997 (thus worth a small fortune now) and renovating a rental that is now a cash-generator. I consider that more than enough inheritance! He didn’t leave much money, but he left the results of his labor and contributed a huge amount to our nest egg in the long run.
3. Help them buy a home
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If you can’t give your kids an entire down payment (nice as that would be), think of other ways to help them become homeowners. Here are two:
- Contribute to a down-payment fund. Contribute gifts of whatever amount you can — on holidays, on birthdays or whenever — to a fund for their home purchase. Maybe you can add several thousand dollars or maybe just a few hundred. Whatever you can contribute helps to defray some of the fees and costs of buying a home.
- Give know-how and encouragement. If you’ve bought a home yourself you may have valuable assistance to offer. For instance, you could — if they wish — download the Uniform Residential Loan Application that all mortgage borrowers must complete, print copies and go over it with them. Going through the documents clarifies the process and helps them to start planning. Depending on how much personal information they wish to share, you also could offer to take on other steps, such as searching for lenders, or retrieving and printing financial documents, or brainstorming ideas for coming up with a down payment. Planning for buying a home can take years. Your encouragement can help with steps along the way. Read “10 Ways to Come Up With the Down Payment for a Home.”
4. Get your finances in order
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It’s a little grim but true that none of us knows which day will be our last. For that reason, don’t leave your kids with an unruly mess to unravel. Here are a few ways to organize your finances. There’s no need for perfection. Just do your best, a little at a time, but start now:
- Put tax records and financial documents in one place.
- Toss most of the records you’re keeping. Read “13 Tips for Spring Cleaning Your Finances” to see what to keep. Otherwise, take a deep breath and let go. Tip: I recently hauled a year’s worth of bank statements and junk mail to a mail stop that offers secure shredding. For an astonishingly low fee — less than $30 — they put it through an industrial shredder. I’d been meaning to shred it at home but somehow kept finding other, more fun things to do on weekends. The pile just grew and grew. Now my shredder is rusting. Think I’ll put it on Craigslist.
- Make a list — and update it often — of your online accounts and passwords. Keep it in a small locking safe at home or in a safe deposit box at your bank.
5. Take care of your health
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To stick around as long as you can and help your young ones as much as possible, take care of your health. That advice sounds generic and faraway until you hit your 60s and 70s. Then, the effects of a healthy lifestyle become vividly apparent as the debilitating “lifestyle diseases” come home to roost. Among them: atherosclerosis, stroke, heart disease, colon cancer, obesity, type 2 diabetes and disabilities from the effects of smoking, inactivity, and alcohol and drug abuse.
Adult kids pay a high price when they quit their jobs to become caregivers for their elders. Leaving the workforce can make it difficult for an older worker to get rehired.
According to the nonprofit Family Caregiver Alliance:
- Caregiving reduces paid work hours for middle-aged women by about 41 percent.
- In total, the cost impact of caregiving on the individual female caregiver in terms of lost wages and Social Security benefits equals $324,044.
6. Make a will — or update it
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Since you really want those kids to bless you when you’re gone, make a simple will telling them what to do with your stuff and what your desires and plans are for a funeral and burial or cremation. This is such a thoughtful thing to do. It will save them time, money and headaches when they are grieving. If you’ve got a will, update it regularly. Also, write a sweet note to go along with it, telling them you love them (lie, if necessary) and where to find the accounts, documents, passwords and other stuff they’ll need.
You’re sure to find other ways, too, to strengthen your children’s futures without leaving them an inheritance of money or property. Tell us what you’ve done by posting a comment below or tell us on Facebook.