The Millennial Retirement Plan So Crazy It Just Might Work

Okay, it’s not that crazy. In fact, it’s one of the oldest retirement strategies known to humanity.

Many of us born after the baby boomer generation known as millennials think of retirement as nothing but an illusion or pipe dream. So immersing myself in the FIRE community has been eye opening and often times downright disheartening.

Is it too late for me to even think about retiring early?

Am I willing to sacrifice some of the most important goals I've had for myself if that's what it takes to live within my means?

Will I even get to slow down and seize my life as a senior citizen?

I had lost all hope until I saw #MillennialRetirementPlans trending on Twitter a few weeks ago and among the daunting and disgruntled messages that aligned with my thinking, discovered one glimmering reminder of a not-so-alternative path to the light at the end of the rat race tunnel.

I’m referring to the #MillennialRetirementPlan contained in this tweet:

Cultivate my kids so they can become successful millionaires and live off of them #millennialretirementplans pic.twitter.com/4iLFMOigWy

— Leah Williams Fitch (@fitch_williams) September 17, 2019

A few immediate thoughts that came to my mind:

• Ha, that’s pretty funny.
• Wait—why am I assuming it’s meant ironically?
• Isn’t this exactly what Kris Jenner did with her family?
• How many families think this way?
• Maybe it’s not a terrible idea…

What I love about this tweet is the way it flips conventional personal finance and budgeting wisdom on its head. In the frequently thorny and pessimistic conversation about millennial money, the idea of retiring off of your kids’ fortune seems so backwards it starts to seem innovative.

More kids, more millennial money problems

Many people—and most members of the FIRE community—will tell you children and financial freedom don’t mix. It’s easy to imagine why. Food, clothing, healthcare, school, school supplies, toys, a bigger house, a bigger car, increased transportation costs… The expenses add up.

According to the U.S. Department of Agriculture, millennial parents can expect to spend an average of $233,610 on a kid in the first 18 years of that kid’s life.

Ouch, nearly a quarter of a million bucks? And that’s not including college. Nor is it accounting for inflation.

It’s no surprise that tons of early retirees—including Think Save Retire founder Steve Adcock—choose not to have kids. This isn’t to suggest the decision is only or primarily a financial one. Rather, for those millennials already disinclined or on the fence about starting a family, the DINK or SINK lifestyle feels like a natural decision. A foregone conclusion.

If you don’t want kids, why waste the money, emotional energy, and years of your life just to make yourself (and your offspring) miserable? Especially at a time in our society when it’s more acceptable than ever to live childfree?

As Steve wrote on the blog earlier this year:

“Our lifestyle free from children has a big impact in what we’re doing now. For my wife and I, our lack of kids is a huge reason why we were able to retire early at 35 and 33. There are no two ways about it. If we had kids, we’d be working. We didn’t choose kids, and therefore, we’re retired and are living our dream life.

Them’s the facts.

Naturally, this doesn’t mean that I’m criticizing your decision to have kids. If kids are right for your family, that’s great! Have them. Love them. Raise your children the best you can. I won’t bat an eye, trust me.

…

If kids are for you, great! They just weren’t right for us. We pocketed that money instead and invested it in the stock market and went on about our lives.”

Unlike Steve and Courtney, I have always known deep down that I want to be a parent—or, my long term goal, a rich grandma—but I’m not here to convince Steve or anyone like him that they’re wrong. If you don’t want kids, don’t have kids.

But let’s assume you’ve always wanted kids or are considering having them. Maybe you haven’t made up your mind just yet. You’re weighing the costs of childrearing against the dream of an early retirement. Is it possible to have both?

Could the tweet above be onto something?

Yes, parents can achieve financial goals—especially when the whole family works together

The idea of allocating the responsibility of a family’s financial future across every generation is nothing new. Humans have been doing it for millennia.

Back in the old days—before the era of safe, readily available contraception—having kids was hardly ever a luxury or a choice. Couples became parents whether they wanted to or not. And they expected their children to start contributing to household income as soon as possible.

In many families, kids were seen as a means to improve the family’s financial and social status in the long term. For millions of people today, including countless first- and second-generation immigrants, that’s still the reality. It’s part of why so many parents want their kids to become doctors or lawyers.

Conan O’Brien recently explained this phenomenon on an episode of NPR’s Fresh Air:

“Every generation is trying to better their circumstances from the previous generation. So my people come over from Ireland. They worked in the mills in central Massachusetts. Then, if you can get out of working in the mills, you’re doing what my grandfathers did, which was you’re either a traffic policeman in Worcester, Mass., or you work your way with no college education—as my other grandfather did—into being a teller at a bank, to being the person sort of organizing the bank, to being someone who's helping to run the bank.

And then what are their kids do? Their kids get full scholarships and go to college, and then go on to graduate school and get a law degree and a medical degree. And so everyone's bettering the situation that they inherited and raising the bar for the next generation.”

Of course, O’Brien took a different route. He became a late-night host, earning millions of dollars every year. He didn’t raise the bar for his kids—he vaporized it.

Plenty of millennials see their parents in a similar—although far less dramatic—light. Baby boomers are the wealthiest generation in history. And for the first time in many of our lifetimes, we may witness children underperform their parents financially. People currently in their 20s and 30s have a lower median adjusted household income than young people did in 2001.

Which raises the (literally) million-dollar question.

Will children of millennials be better off than their parents?

That is: Can you entrust your financial future to your kids?

The easy answer is “no.” You shouldn’t expect that your kids will become millionaires. You can hope they will, you can encourage them to make lots of money—as long as it’s doing something they love—but you can’t bet your retirement on your kids.

But let’s back up and return to the original #MillennialRetirementPlan tweet. Leah Williams Fitch wrote that her plan was to “cultivate [her] kids so they can become successful millionaires and live off of them.”

The operative word here is cultivate. She’s taking an active role in teaching her children about money and success and developing their financial literacy.

Conan O’Brien’s parents didn’t raise him to become a talk show host—not intentionally, at least.

However, for one well-known momager, her children’s fame and fortune was the plan:

Kris Jenner, the 63-year-old media mogul has worked hard to transform her kids into mega-celebrities. First it was the Kardashians—Kim, Kourtney, Khloe, and Rob. Then came Kendall and Kylie Jenner, the latter of whom recently became the world’s youngest billionaire.

Unconventional as her family may be, there are many pearls of parenting—and business—wisdom in Kris’s trajectory of going from another well-off LA family to a pop culture phenomenon and Hollywood dynasty.

How did Kris Jenner build a family empire?

Janet Mock asked her that same question in an interview a couple years ago. Here’s what Jenner said about helping Kim launch her career (yes, it’s safe for work):

“We sat down, as we do every year and I do with all of my kids individually, and said, ‘What is your goal for the year? What are your dreams? How high do you want to set the bar?’ Going through a series of questions and really trying to figure out what was realistic and what I could help them accomplish from my end, and then they can take it away and fly.”

Although the whole interview is fascinating, I want to focus on this brief quote. I mean, it’s a remarkable chunk of parenting insight. It encapsulates everything about raising children for financial success.

Let’s review:

Kris helps her kids set concrete goals.

She asks them what they want to accomplish and frames the question in a practical way by putting a timeline on it. Most people, particularly children and young people, go blank when they come up against the question: “So, what do you want to do with your life?”

Instead of trying to figure everything out at once, Kris takes her kids through just the next year in their lives. What’s great about this approach is that it necessarily causes the person answering to start considering the next year, and the next. Before they realize it, they’ve outlined a five- or ten-year plan. Start small, focus on the details, and the big picture will emerge faster and more fleshed-out.

She shows them that money has a purpose.

Kris knows that money is a means to an end, not the end itself. As regular readers of this blog know, early retirees rarely give up working. They retire from a job—not from life, not from being productive.

By centering the conversation on her kids’ goals and dreams, she shifts the focus from money to what to do with money. It’s easier to stay motivated when you’re chasing purpose rather than cash. It’s about controlling your money—using it to accomplish your objectives—rather than allowing the money to control you.

She doesn’t limit her kids’ dreams.

This one is key. Parents usually try to control the course of their children’s lives. Kris knows that her kids’ aspirations may be impractical—which is why she helps them figure out what’s realistic—but she wants to hear them. She wants her kids to feel safe and supported sharing their dreams.

In other words, the way the conversation begins matters. It’s not “here’s what you can’t or shouldn’t do,” but “here’s what you want to do, and here’s what’s possible.”

Another important question is “How high do you want to set the bar?” Many parents don’t realize their personal blindspots and failures of imagination. Your plans for your kid are probably nowhere near as massive as what they can imagine for themselves.

She knows when to support and when to step back.

Here again, Kris shows awareness of her own limitations and boundaries. She helps as much as she can with her resources and perspective and then switches into hands-off mode. She doesn’t drag her kids down by over-involving herself in their careers—even if it may seem that way when we see it on TV.

Parenting is an investment, but is it a viable millennial retirement plan?

You don’t need to go to such extreme lengths as Kris Jenner has in order to solidify your family’s financial security. You also definitely shouldn’t put that kind of pressure or expectation on your kids. Again, please do not have children for the sole purpose of putting on the Disney Channel or Nickelodeon (or worse) to make money.

The takeaway here is that having children doesn’t mean you can’t achieve aggressive financial goals such as retiring from the rat race before 65. And the life lesson is that helping kids succeed financially hinges on mutual trust and respect.

The best relationships, especially between a parent and child, are collaborative partnerships. Show your kids love, teach them the value of work, and raise them with integrity—and they’ll take care of you in your twilight years.

At the end of the day, how much money they make matters less than what they choose to do with it. Try to raise a good kid, not a rich kid.

After all, not all rich kids have rich parents. Just because they make a bunch of money doesn’t mean they’re obligated to share it with you.