r/UpperMiddleFinance

TL;DR : We subsidize most of the expenses for our daughter and her fiancé. We feel that our daughter will learn a valuable financial lesson in saving, budgeting and planning if they pay for their own wedding without our help.
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I (63yo F) and husband (64yo) FIRE’d 7 years ago. Our NW is so much higher than expected with investments and we are on track to having way more as time goes on. We are trying to give our sole child (25yoF) $ now when she can benefit most rather than wait until we die. (Yes, we read Die With Zero).

We have always made it clear that we valued education, safe housing, health, and safe transportation when it came to spending money. We fully paid for her undergraduate college education, have fully funded her ROTH to its limits once she began working in hs, and continue to fund her ROTH with the excess 529 balance ( but will still have a large balance leftover for her future use ). Recently we have started an investment account for her and max out gifting to it for a future home purchase.

We recognize that the economic situation is very challenging for recent non-STEM graduates and our daughter is working part time as a restaurant server because it pays better than working entry level front desk jobs ( with no chances for advancement). She moved to a VHCOL state so her fiancé could return to college for engineering. ( They live together and both work pt at the restaurant). She still hasn’t determined what she wants to do with her future, but we aren’t concerned as that will take time.

My daughter has never asked for anything. We have just volunteered because we saw the stress and impact on her mental and physical health when we didn’t initially help after college. She knows to pay off credit cards fully every month. She has no debt. She and her fiancé pay for food, utilities, insurance, gas, pets, and entertainment. Her fiancé is very appreciative and good with financial planning and saving. My daughter is also very appreciative but has no interest in investing and happily spends any windfall $ that comes her way.

We are happy for their future wedding, but it’s not a priority for us ( we paid for our own wedding as poor graduate students back in 1990). We think they will prioritize better the size and cost of their wedding if they have to save and spend their own money.

I go back and forth between feeling guilty and feeling comfortable with this. What do you think?

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Addendum: thank you everyone for your thoughts. It has turned out to be a very wide ranging discussion about whether supporting adult children is appropriate, helpful, harmful or just bad policy. Very interesting and I appreciate all the comments. We help because we can, think it is the right time in her life when it is needed, and feel that she has motivation and smarts to gain financial independence in years to come as she matures. The COL is roughly 80-90% higher in HI than the national average. They don’t plan to stay after her fiancé graduates. We don’t want her under housed or underfed until then, and have not promised future help when they move.

But anyway, I think we will sit down with the kids and explain our reasoning. They appreciate all we help and I think they will recognize that they can save because of our help, and the value of planning their own wedding.

Most likely we will gift towards a honeymoon.

2nd addendum: for those who fear my naivety, I have read the advice and will certainly communicate financial limits. Article link:
👉 advice on risks of financial help for kids.

There was a common chart going around that showed the middle class is shrinking, the upper class nearly doubled in percentages, and the lower class more or less stayed the same. This was from a Pew Research study published a few years ago. The problem is: the definition they used for the classes is misleading. It measures RELATIVE class distributions, relative to the annual median income.

Here is their definition as follows:

>“Middle-income” households are defined as those with an income that is two-thirds to double that of the U.S. median household income, after incomes have been adjusted for household size. For a three-person household, the middle income range was about $42,000 to $125,000 annually in 2014 (in 2013-14 dollars). Lower-income households have incomes lower than two-thirds of the median, and upper-income households have incomes that are more than double the median."

Or to put it more compactly:

• lower class: <⅔ of the annual U.S. median household income

• middle class: ⅔–2× of the annual U.S. median household income

• upper class: >2× of the annual U.S. median household income

The problem with that definition is it really only defines how people are doing relative to each other, not on how well their quality of life has improved and the things they can afford. It's not a wrong definition. Just misleading; if you want to understand what percentage of people have moved from actually poor in 1971 to what would be seen as middle class lifestyle in 1971, you'd need to base your definition against the median household income in 1971, and adjust for inflation.

So I used the same data that Pew Research used, and graphed the chart again. I then created another chart using the following definition of classes:

• lower class: <⅔ of the inflation adjusted 1971 U.S. median household income

• middle class: ⅔–2× of the inflation adjusted 1971 U.S. median household income

• upper class: >2× of the inflation adjusted 1971 U.S. median household income

As you can see by the new chart, the upper class has grown from 11% to 28% by 1971 standards, and the lower class has shrunk from 27% to 16% by 1971 standards. The middle class shrunk a bit too, though not as much as the Pew Research chart would suggest.

This is good news: more Americans are actually better off in terms of real wealth than they would be in 1971. But it also puts a damper to know the middle class has barely moved the needle in all that time.