A few years ago, the Williams Group said that 70% of wealthy families lose their fortune by the second generation, 90% by the third. That’s corollary to another assertion: the idea that the first generation creates the wealth so that the couple of generations after them can burn through it.

Part of the problem is that children might not always know how the wealth they are spending was created. In times of plenty, they likely think the money grows on trees. Another problem is the parents very often built their wealth with their children in mind, and they believe that spending, squandering, wasting on the kids—whatever verb you choose—was always the point.

They’ll follow this logic to the bitter end. Michael Ross of Financial Connection in Boca Raton, Fla., recalls a widow he worked with in the 1990s whose son had substance abuse problems, and he would ask her to cut big checks like $20,000, sometimes twice a year. “He was constantly hitting her up for money. I would get this call, ‘Son needs money.’” Investments were tapped and money shuttled to bank accounts. He was an only child and there were no siblings to complain. Ross warned her to no avail that she was likely running through her annual gift tax amounts.

Financial mediators say family wealth can be both tonic and poison to children, especially children with addictions like drug or alcohol problems (or perhaps a gambling itch), since money makes it easier to feed these problems, pursue harmful hobbies, or simply stay at home and do nothing.

But simply blaming the children for their failure to launch might be unfair when you put it in the context of today’s economy—when escape velocity is harder to achieve. Wages have lagged, while the price of things like food and housing have gone up. Many clients’ adult children entered the labor market during or shortly after the Great Recession when jobs were scarce.

Last year, the Federal Reserve reminded Americans in a paper called “Are Millennials Different?” that the younger cohort lags its predecessors in income. “Millennials are less well off than members of earlier generations when they were young, with lower earnings, fewer assets, and less wealth,” said the paper, written by economists Christopher Kurz, Geng Li and Daniel Vine. Gen Yers have higher levels of student debt and are less likely to own houses.

“Average real labor earnings for young male household heads working full time are 18% and 27% higher for Generation X and baby boomers, respectively, than for millennials after controlling for age, work status and a number of demographic variables,” the Fed authors wrote. “For young female heads of household working full time, these generational gaps in labor earnings are in the same direction but somewhat smaller—12% and 24%, respectively. For family income, the regression shows that Generation X and baby boomer households have a family income that is 11% and 14% higher, respectively, than that of demographically comparable millennial households.”

“In the last several years, we are encountering more and more situations where clients are needing to help their adult children,” says Bob Kargenian, president of TABR Capital Management in Orange, Calif. “Some of this may fall into the category of ‘aimlessness.’ … But most of it falls into the category of where the kids need the money. Several are living at home into their late 20s or even later; many perhaps don’t have enough income from their jobs, and so Mom and Dad help pay house payments and even college and high school tuitions, some of which run into the $20,000 and even $30,000 per year norms. Or they help with deposits on new homes, or even pay the mortgages of their kids. The list goes on and on, and has become more common in our practice.

“Living here in Southern California, and having our 25-year-old son attend New York University and graduate there in four years, the cost of housing is very different than for me 40 years ago,” Kargenian says. He says he sends the book The Gift of Failure by Jessica Lahey to clients, reminding them that letting their kids flounder is part of helping them grow.

Britta Koepf, an advisor with Practical Financial Planning in Chagrin Falls, Ohio, says, “When approaching a conversation with a parent who is providing excess assistance to their children, I frame this discussion around the future of the child, not the parent. In most cases, a parent is providing this support because they care more about their child’s future than their own, so focusing primarily on their financial well-being gets us nowhere.”

If the parents are destroying the terra firma of their own retirement, Koepf tries to flip the logic, and remind them that if they run out of money, they will end up hurting the children anyway, because the kids will end up taking care of or housing a future impoverished parent. “I frequently tell the clients that the best gift a parent can give their child is the confidence that they won’t end up needing to support their parents financially in the future. Most parents would hate to have their children discuss who will take Mom in when she runs out of money, but those conversations occur all the time.”

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