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 many of us. Because of our longer lives, higher cost of living and lower rate of savings these days, many of us will have little left over for heirs.
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
If you can’t leave your kids big bucks, at least avoid asking them for financial support. There may be some circumstances — sudden ill health or job loss, for example — 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 best “gift” to your children may be to become disciplined about living on the income you have. That may require radical downsizing.
Also, avoid taking on debt in retirement — or at least avoid debt that will require a financial rescue from your kids.
2. Pitch in where it really counts
What gifts of wisdom, labor or other assistance can you offer now to help set your kids up for a better future?
Before one of my friends lost her dad, he helped her and her husband strengthen their financial security while he was alive. She told me:
“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
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 print copies of the Uniform Residential Loan Application that mortgage borrowers often must complete, and go over it with them. That will clarify the process and help them start planning. 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.
4. Get your finances in order
It’s grim but true that none of us knows which day will be our last. For that reason, don’t leave your kids with a mess to unravel.
Following 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.
- Shred records you’re not keeping. Read “13 Smart Ways to Spring Clean Your Finances” to see what to keep.
- Make a list — and update it often — of your online accounts and passwords. Keep it somewhere secure. See “How to Manage Your Data After Death” for more tips.
5. Take care of your health
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 distant 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: 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. Having left the workforce can also 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
Make a simple will telling your loved ones 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 your will, telling them you love them and where to find the accounts, documents, passwords and other stuff they’ll need.
Do you know of other ways 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.
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