When It Comes To FIRE, Kids Are Holding You Back
Kids Are Holding You Back?
I have mentioned often that I am Second Generation FI (Boring FI). The unfortunate truth is that I started ahead of the game. I grew up with financially savvy parents who modeled good fiscal behavior. Because of that, I found my chances of reaching financial independence pretty good from the get go. That is not to say that I didn’t have to sacrifice. Getting through medical school and building a private practice were certainly hard work. So it was with great interest, yesterday, that I was discussing with my mother early retirement. Her main premise was that early retirement was never really a consideration. No matter how much money my parents had, there were five children to think of, and college education, and even graduate school. Not to mention other basics like healthcare. Her thoughts really caused my head to swirl. It never dawned on me that when it comes to early retirement, maybe your kids are holding you back.
By The Numbers
I have two children. in today’s economy, it would not be unheard of to spend $50K a year for college tuition, room, and board. Multiply that by four years and two kids, and you end up with $400K. A large some of money, but we have been diligent with our 529’s and could likely swing it. But what if my children decide to go to medical school? That could add another (conservatively) $300K a piece.
Putting the numbers together, that could be an extra million dollars!
Now imagine if you have three, four, or five kids. In my family, I have two siblings and two step siblings. And each and every one of us went to expensive private colleges and graduate school to boot. Maybe your kids are holding you back. They were for my parents. Can you blame them for staying in the workforce?
.
Then Again, Maybe I Won’t
I can hear the early retirement enthusiasts before I even hit the publish button. Of course, there are many caveats to this scenario. Kids certainly don’t have to go to the most expensive colleges or graduate schools.
Many take out loans and get scholarships. Why do the parent’s have to even pay? Debt builds character, right?
While I understand these sentiments, I also have written in support of the ivory tower before. Some of these expensive private universities do provide opportunities and connections that can’t be found elsewhere. Although early retirement can cut down W2 income and thus help students qualify for needs based grants and scholarships, they are not assured. And it certainly feels a little strange being wealthy and taking money earmarked for less fortunate.
Kids are holding you back. Or at least in the case of my parents, they were.
Teach A Man To Fish
There is also the argument that paying so lavishly for your children will spoil them. If you truly want to teach them how to be financially independent, then you have to not give them handouts. Maybe they should pay for college and graduate school by themselves just out of principle. This will not only build character, but the requisite skills necessary to make financially mature decisions.
While I can’t disagree with this line of thinking, I clearly benefited from my parents support through college and medical school. I surely would have made it to financial independence without it, but the road would have been much more painful.
What’s the point of fighting it. Kids are holding you back from early retirement. But aren’t your kids a large part of why you are working so hard to reach financial independence in the first place?
Final Thoughts
It is likely that your kids are holding you back. Education is an expensive luxury that often comes due right smack dab in the sweet spot for early retirement. There are definite ways around it, but the truth still remains. We are a community of careful people who don’t like to leave much to chance.
Underfunding your child’s future is not an option for most of us.
Is it for you?