My Grandpa (may he rest in peace) was a generational thinker. Everything he did, every move he made, had a long term play. He ensured that every generation that was under his family tree was provided for the best way he knew how. He laid a lot of the groundwork for who I am today. But what do I mean by generational thinker? Let’s dive in.
Let’s start by deconstructing what most of Americans’ ideal retirement is. I would say most working-class Americans ideal retirement is: to own a paid-off house, draw social security, have a nice 401K (let’s say $400,000), maybe have a toy (RV, boat, jet ski), and be able to visit family as required. This is a great life. No complaints from me. I will call this an institutional retirement. This is where Kris and I were headed until June 2019.
What will be left when they eventually pass away? Say they have 3 children. Since they owned one home, chances are they will sell and split 3 ways ($150,000 each). The social security check goes away. The toy will be sold and split 3 ways ($30,000 each). And what is left of the 401K will be divided in 3 ($20,000). The children would receive a windfall of about $200,000 each. That is a nice windfall.
Now let’s see what a generational retirement would look like. Pretend that the couple starting learning of generational wealth in their mid 30’s. Over the years they bought and paid off 3 more homes, totally 4. They started dividend investing outside of their 401K at the same time. The father starts a small business building decks on the weekend.
When they pass away, they leave each child a paid off $200,000 house that can be rented out. They leave a $2,000,000 trust fund that will split the dividends between the 3 children for the rest of their life, starting at about $1,000 a month each. One son takes over the family business and splits the proceeds between the siblings. This is in addition to all the other wealth left behind. The children now have multiple streams of income for life.
To become generational thinkers, we need to truly invest our time into ways to create, build, and sustain wealth. Having multiple income streams is the first step. Building up investment portfolios is the second step. Creating businesses is the final step. We also need to pass all this knowledge down to our children. They need to know what generational retirement looks like before the world shows them institutional retirement. It is a compelling message. Hopefully, my grandfather would be proud of the message we are sending.
Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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