What Do You Tell The Kids?

Dee asked a few questions the other day with respect to kids and early retirement.

How old will your kids be when you retire? I remember my mom retired for my last year of high school and I had to get myself up and to school while she slept in. She did let me use her car to get there, though, so that part was nice. Do your kids anticipate any particular feelings about your retirement?

The first question is rather easy, so let’s address that first.  My oldest will be 13 at the time while my youngest will be almost 10.  So they won’t be really young, but that will be in that lovely stage just before teenagers.  So on the plus side they will be mature enough to explain the entire concept to them if I want, but I’m not sure I will.

I have to admit I’m a big concerned about my kids thinking we have lots of money.  We live a comfortable life right now, but we don’t act rich.  Yet I do worry about telling them straight out that their Mom and Dad have a million dollar net worth. I’ve seen odd things happen to kids who think their parents are rich.  Like for example: a lack of motivation, a sense of entitlement or just plain old arrogance regarding money that isn’t theirs.

While my wife and I haven’t firmly decided on what to tell them yet, I’m leaning towards the truth, but in a context that makes more sense for them.  I don’t have an exact speech in mind but it would likely be something like:

Hi guys, we need to talk.  Dad is leaving his current job on [insert date here].  But that’s okay, since we have got a lot of savings we don’t have to worry about paying for groceries .  Dad is going to change jobs to writing.  You remember his book downstairs, well I want to make more of those.  So my new job will be writing books.  I will work from home just like Mom does from now on, so I will be here when you leave and get home from school.  Any questions?

Of course I will play it by ear a bit.  It depends a bit on how much they already know.  It’s not like I actually hide my retirement plans or anything, but at the same time I don’t put it in their face.

Now some people may assume by telling them my job will be writing, that I’m lying to them.  I personally don’t see it that way, as writing will be my job.  I just don’t worry about making much money at that job and all my deadlines for work will be entirely self imposed (until I sell a book to a publisher and then I have to meet their deadlines).  I do love to write, so I will be doing that regardless of anyone paying me.  Like you know, right now, writing this post for you. 😉

9 thoughts on “What Do You Tell The Kids?”

  1. I like the line “Mom and Dad have money, you don’t.” When they turn a certain age its no longer family money, no presumptions about entitlement.

  2. A million dollars isnt what it used to be. Invested at current interest rates, you have an income of $20-30,000 per year. Thats not rich.

  3. I agree with another comment that $1 million is really not “rich” – you can’t even buy a tear down house in Vancouver for that these days!

    Of course you know your own kids better than anyone else, but having kids the same age, it seems to me that you’re erring on the side of oversimplification. I would be more straight up – you’ve worked hard to achieve an early (semi) retirement and you will continue to live a relatively simplified lifestyle. Also I would explain that there are many career options these days – not everyone has to follow the 9-5 routine. You are going to pursue your writing and other passions.

    I think kids are a lot more savvy than we give them credit for – and you are helping them see that there are many paths in life. They have learned by watching you all these years already, so it’s just a continuation. Just my two cents worth!

  4. You don’t act rich because you aren’t .When you get 1M in investible assets then you are getting there . I don’t believe in counting real estate in the net worth when defining millionaires so I would be careful about telling kids about having a million dollar net worth when one does not actually have the cash. My youngest will be in grade 12 when I think I may pull the plug but man , early and preteens is just when they start to need and want a lot of things. Expensive things . Unless you plan to homeschool and isolate your kids , do not underestimate the power of peer pressure .Of course the idea is to have provide them with what they need and value it and also to look at what they want and decide if has enough value to them that they are willing to work for it.

  5. A reply to ‘diharv’ – Firstly, it’s a myth that homeschool kids are isolated or out of touch. My kids have a wide social network and are actually more engaged with their community than most kids in school. They have lots of friends – homeschooled, in public and private schools — and they are well versed in pop culture etc. Secondly, kids don’t need expensive things and no parent is under any obligation to buy things for them. That’s the tail wagging the dog. My kids know that unless it’s a necessity (or a birthday or Xmas) they’re on the hook for “nice to have’s” … They’ve known that since they were little and have learned about delayed gratification.

  6. @Sharon – Oh I agree a million isn’t rich, but kids seem to have a different idea on that. Hence, my concern that they will think we are ‘rich’ when in fact we are not.

    @Sherry – Oh, glad to know. I’ll have to write up another post regarding the kids and teaching them about money.

    @Gloria – You may a good point. They may be more ready than I expect. After all they will be a bit older than they are now and better able to understand it all. As I said in the post, we haven’t firmly decided yet. Thank for the comment, I appreciate the other point of view.

    @diharv – I am aware teens can be expensive, but of course everyone with wants can be. As my kids have already learned you can’t have everything you want. A small part of why we want to keep doing some part time work at the start of the retirement period is to provide some buffer for rarer kid expenses like: school trip to Europe or help fund their first car. They don’t need them, but I may help with wants if they provide a good case for why.

    Great feedback everyone. Thanks.


  7. A single person without children (like me) can easily live on the investment income from a $1M portfolio, even as a young retiree at 45 which I was 8 years ago. And I live in a high COL area (NY City metro area). Let that be an incentive for your kids, Tim!

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