Edits: This is a distraction from the world crumbling near me.
I just want to talk equations as those are distracting.
Original: I have been thinking of Generational Wealth lately, and my thinking is ~~unrefined~~ muddy. I wish to get feedback and your thoughts.
Before I learned of FIRE, I had assumed Generation Wealth required a wildly high sum of money (hundreds of millions of USD). Anything less was just a nice retirement. (I had also assumed retiring was simply impossible.)
Like with many things about compounding, it matters critically to not spend all of one's money and to have time. Too little money or too little times and money goes to zero. Even a little more than the "balance" point, and the number go to infinity.
At 2 children per household, the number of households being supported grows at a larger rate than reasonable investment gains. The tripling time at 4% real gain is 28.01 years. (The tripling time for supported households is shorter than this. Tripling time chosen as the initial household will then become 3. Though in my scenario below the number of households in each 28 year period only doubles.)
If each new generation are comprised of twins, starts to receive on their 28th birthday, and sadly this is the day their grandparents die, then the balance seems to work out if the initial parents overshoot their FI number by about 66% either by over-saving or not withdrawing for years.
(Generational Wealth depends heavily upon how many children each generation produces. One under earner/over producer of children will sink the whole thing... )
It would seem the best I can hope to do is to give my children and grandchildren an education and a head start. They will have to live their own lives and make their own contributions to their retirements.
I would certainly think so. Money is fungible.
Lets say your grandfather gave your father $10,000 in your father's teen years, and your father used that to launch into adulthood successfully. Your father grows his own wealth while living, but also gives you (the inflation adjusted) $10,000 to you in your teen years just as his father did for him. Since money is fungible, and your father wasn't penniless when he have you money, that $10,000 effectively came from your grandfather.
I read that and thought those statements doubled down on your definition of generational wealth being only from a family's progenitor, and not also contributed to by their offspring.
I suppose there are two definitions of "Generational Wealth" also playing into the confusion. A recent one is that each generation of a family is each able to support the next. Another is that no one ever needs to work again.
I was attempting the "no one ever needs to work again", and forgot about the "each generation helping the next". I presume the "each generation helping the next" has a much lower bar, but is important in current discussions of social issues.
My goal in this thread is to discuss setting this so that no one ever needs to work again in my family. I think they should work, but should be allowed to pursue low paying jobs that benefit society and the Earth.
Requiring each generation to add money is nice, but not something I can come close to ensuring happens. I can only control what it is that I personally do. Legal Trusts get broken, laws change, and no one need great-granddad telling them how to live their life (nor even their father doing that.)
Gotcha. You should look at the history of those few families that achieve that. Many times isn't sustainable. Not because it isn't numerically possible, but by about the 3rd generation, they are too far removed from the concept of scarcity they lose the ability to manage the family fortunes well enough and lose it all by overspending.
Check out how the Vanderbilt fortune evaporated over a few generations.
Already well aware. This is like convincing someone not to save for retirement as so many people fail. Many families last generations.
I really want to discuss equations.
I'm not sure there is such a thing when you're talking about managing a wealth trust across generations. Practices that apply today could be outdated even before your death to say nothing about market/taxation across generations.