An intergenerational wealth transfer may be underway in the United States, but this doesn’t mean everyone is receiving a sizable sum of money or assets.
Those who know that a windfall, or a prospective inheritance, is not in the cards are building their own wealth. GOBankingRates spoke to three professionals who won’t be receiving a wealth transfer from their parents. Here’s what they are doing to create generational wealth instead.
‘I started a business and set an income goal.’
Ryan Kaysen, CFP at Integritas Financial, was able to attend and graduate from college because his parents paid for his education. Their financial assistance, however, pushed his parents off track for a comfortable retirement. After graduation, Kaysen chose a career in finance as a financial planner and was able to help his parents save enough money to retire comfortably. But this savings was not enough to create an inheritance for Kaysen or his sister.
Prior to their retirement, Kaysen’s parents built a successful small business. This enabled them to accelerate their savings before retiring. Based on examining his own family and others through his work as a financial planner, Kaysen decided to invest in himself. He went back to school to get his MBA — with his employer paying the tuition — and became a certified financial planner.
Kaysen utilized his education from school and his entrepreneurial parents to start a business: Integritas Financial. He also set an income goal which would allow him to save enough money to pay for his children’s education, his desired family lifestyle and to build a substantial retirement nest egg.
“Dedicating myself to achieving a high level of income and funding my goals allows me to ensure my children will either be set up financially or with education and experience which will allow them to produce an income that will support their goals,” said Kaysen.
‘We are diversifying our investments and assets.’
At age 33, Kali Roberge, chief operations officer at Beyond Your Hammock, is starting a generational wealth cycle in her family. Roberge, and her husband, are taking several steps to provide a meaningful inheritance for their daughter who is currently 19 months old.
One key step is diversifying their investment vehicles. Both Roberge and her husband have 401(k)s, various IRAs and HSAs, all accounts they max out each year. They also contribute as much as they can into a taxable brokerage account.
“Our goal is to save at least 30% of our gross income into long-term investments each year,” said Roberge.
A 529 plan has been set up for their daughter, but fully paying for the total cost of her college education — if she chooses to go to college — isn’t their highest priority. Roberge said they like the 529 plan for its tax advantages and the new ability to roll money from this plan into Roth IRAs.
‘I’m buying real estate.’
Financial advisor Jeneé Murphy grew up in a family where her father owned his own business, two prime pieces of New York City real estate and nearly six figures in liquid investments. All of this was lost due to mismanagement and poor financial decision making, leaving Murphy without generational wealth.
Murphy’s motivation for building wealth is rooted in her belief wealth is a part of her birth right. She decided to recreate what her father started by purchasing real estate. At age 18, she began establishing credit. She pursued a career in business and finance as an accountant. Once she started working full-time, Murphy saved $500 a month and learned how to live off less money. This mentality allowed her to have more than enough money for a down payment on home. By the time Murphy purchased her first house, her credit score was strong enough to qualify for a conventional loan. The entire process, from putting in an offer to closing and moving in, took less than 60 days.
“My goal is to secure my forever home by building a studio home on family land by age 40 and paying cash for it so I can use my money to invest and travel until I fully retire,” said Murphy. “Now that I’m growing in my career and business, I’m making sure not to allow lifestyle creep to inflate my expenses as I earn more so I can enjoy the additional money I make.”
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