But wait a minute. How far do they go? How many trips to China are enough? (Arguably, one trip to China is not enough because all you get on the first trip is urban grit, the Great Wall, a billion people on bicycles and aching feet.) Ditto for body massages in Breckenridge or Telluride, golf at Big Sur, museum hopping in London and Paris, shopping on Rodeo Drive. You do those things once, and you are going to want to do them again.
OK, you’ve earned it. No one questions that. And you’ve already given a lot to your children besides life. (One Smith Barney couple sends four offspring to Ivy League colleges, which, without scholarships, comes to about $640,000.) But still, when do you ease off giving to yourself and start conserving for children, grandchildren and even beyond to charitable good works?
For answers, we turned to the Center for Wealth and Philanthropy at Boston College and director Paul Schervish. A Detroit native and University of Detroit graduate, Schervish counts himself as one of that rare breed, a lifelong Detroit Tiger fan who watched games at what was Briggs Stadium, as well as a boyhood connoisseur of White Castle cheeseburgers at Woodward Avenue and Davidson. He has written enough papers about care and giving and wealth transfer to plaster several vaults in any Motor City bank.
We turned also to McClain Bybee, managing director of LDS Philanthropies for the Church of Jesus Christ of Latter Day Saints in Salt Lake City, one of the wealthier institutions on the planet -- $30 billion in assets in a 1997 TIME magazine estimate. Bybee’s work supplements the tithing required of Mormons. LDS Philanthropies is responsible for donations to the church and its linked institutions, such as the two-year LDS Business College and Brigham Young University’s campuses in Provo, Utah; Laie, Hawaii; and Rexburg, Idaho. For the university alone, LDS Philanthropies last year raised about $96 million.
And we talked, too, with James Gregory Lord of the Philanthropic Quest of Cleveland. A former journalist and PR exec for money-raising groups, Lord teaches workshop participants how they can make contributions that sometimes don’t include money. Some of his clients are teachers. “If people can see what good they’ve already done,” he says, “maybe they can also see where they want to make more of a difference.”
All three men consult routinely with superwealthy families about distributing their wealth in a moral and sensible manner, but all three are interested also in less well-heeled individuals who do not have as much choice as Fords or Rockefellers or, for that matter, Gateses and Ellisons.
The milieu in which all this functions is that U.S. retirees control nearly 30 percent of the nation’s personal wealth. As those retirees die and leave money to their children, they are driving the greatest intergenerational wealth transfer since the Big Bang: $41 trillion by one unimaginable guesstimate by Schervish and his colleague John Havens.
This puts retirees, in varying degrees, in positions of stewardship for that wealth. That responsibility flows naturally to the superwealthy, but, in our universe of morality, we are all charged with seeing to it that the $41 trillion goes where it will do the most good.
The good news here is that those big bucks are going to transfer to children pretty much no matter what. Yes! You can indulge at Amazon.com and the Golden Door and not, at least in general, wreck your children’s inheritances.
Sound too good to be true? Well, yes. The operative phrase is “at least in general.” Schervish and Havens point out that families both above and far below net worth of $1 million spend like crazy at the onset of retirement, but then something miraculous happens. At about 70, even though they have spent some of them down, the superwealthy’s assets begin generating more wealth, countering the less wealthy -- the rest of us -- who keep spending without replacing. Result: That $41 trillion stays intact.
But that still leaves the rest of us with the responsibility of deciding individually what to do with our money. We can’t eternally splurge just because Bill Gates’ $50 billion today will be worth, say, $200 billion in 2052.
Making sense of all this is harder than it looks. As American wealth has increased since World War II, the pressure to allocate that wealth wisely and morally has increased proportionally. At the same time, modern gremlins get in the way of doing this -- “the dialectic between security and insecurity,” as Schervish puts it -- anxiety, memories of the very old of the Great Depression, debt, White House pressure to change Social Security, rising medical costs, even television. CNN brought the terrible Christmas tsunami into our living rooms, generating some $2.5 billion in charitable contributions. At the same time, the tube delightfully brought us “Sex and the City,” where $400 Jimmy Choo shoes were standard issue, prompting indulgent consumption.
Selfishness versus selflessness -- ultimately what we’re dealing with here -- is a tension that’s raged in the soul since there have been souls. Within the context of Christian morality, Schervish says the best overall guidance comes from Ignatius of Loyola’s Teaching on Christian Decision Making. The master of that was the late Jesuit Fr. Jules J. Toner of the Institute for Jesuit Resources of St. Louis. Mincing no words, Toner defines caring as meeting the needs of others. As he said in The Experience of Love(1968): “Care, then, is an affirmative affection toward someone precisely as in need.”
Schervish, in his 2001 Boston Area Diary Study of giving, mentions Alexis de Tocqueville’s civic concept of “enlightened self-interest” observed in his travels in 19th-century America. Americans “enjoy explaining almost every act of their lives on the principle of self-interest properly understood,” writes de Tocqueville. “It gives them great pleasure to point out how an enlightened self-love continually leads them to help one another and disposes them freely to give part of their time and wealth for the good of the state.”
Ignatius and, for that matter, Martin Luther, gave Toner and others much to think about. The best giving, the best sharing of physical assets, Ignatius said, is “that which is more deeply consoling,” says Schervish, as compared to that “which is temporarily or superficially consoling” like what you walk out of Best Buy with.
And that is the linchpin in deciding how you spend in retirement with half your mind on where your assets go after you die. Schervish hears this need for generating deep consolation everywhere -- but principally from “wealth-holders who are doing charitable giving in their own households, taking care of parents, of children, of relatives who have had strokes.”
Example: If you have children who are debilitated, the decision may be not to contribute to yourselves or charity but to them instead. On the other hand, if you have children who are wildly self-sustaining and earning more inflation-adjusted money than you ever did, your money might be more usefully left elsewhere. Your children, in fact, might prefer that you consider that, rather than taking still more from you on your demise.
Few of us have the problems of one of Bybee’s family clients, where there was genuine worry that too much money passed on to children would wreck them and force them into lives of nonproductive leisure. The parents realized if they gave everything to their kids, “they may as well destroy them,” Bybee recalled. “The children would never have the same kinds of struggles that the parents had.”
The solution: A “family bank” to let those children take out loans for such productive things as starting a business or getting a college degree, with the requirement that the money be paid back. “The kids are not wealthy,” Bybee says, “unless they produce themselves.” Another client, a wealthy single mother, set up a system whereby she would match every dollar earned by her son.
Here are some guidelines -- not hard and fast rules like Martha Stewart and Judith Miller discovered in prison, exactly, but guidelines:
-- Think first of self. You do not want to be a “burden to your children.” That tattered cliché still holds, especially now when few of us live on farms with huge families to support us in our dotage. So this calls for self-care first. Not mindless indulgence or splurging, maybe just a little indulgence and a little splurging for flavor. If you’ve got to see Tiananmen Square or the Forbidden City, then do it on the cheap with one of the heavily state subsidized travel services. Tend to the mundane. If you have access to affordable Medigap insurance beyond Medicare, buy it. Draft a will, if you haven’t already. If you’ve built unsecured high-interest credit card debt and can’t pay it down substantially, try eliminating it with lower-interest home equity credit; the rising value of your home will help offset it.
-- Think next of family. This means principally children, but it could also mean parents, even grandparents. And it means thinking of family in the context of the real world where everything from pushpins to education and housing is vastly more expensive than it was when you were cheering for the original Hank Greenberg (the star 1930s and 1940s Detroit Tiger first baseman, not the ousted boss of insurance giant AIG). A house today in any modestly desirable section of the country is going to be breathlessly expensive, and help will almost certainly be required.
Schervish in his 2001 Boston Area Diary found that some of it is on the way: A stunning 93 percent of 44 survey respondents in all incomes gave an annual average of $7,092 to relatives, with $4,834 of that going to adult children or grandchildren. Indeed, that study also says that people gave more care to their family than to their friends and more to their friends than to others through either religious or nonreligious organizations.
-- Think finally of charity. Doing so is probably inbred. You grow up seeing the power of caring for others and you want to do it yourself. It just comes naturally. Bybee recalls the case of Jewish immigrant Nathan Cummings who amassed great wealth in several banks and corporations. He learned charity from his grandmother, who cared for homeless Jewish people in Nova Scotia. Cummings told Bybee: “I don’t ever remember a Sabbath where my grandmother didn’t have a stranger at the table with us.” He went on to become one of the greatest philanthropists in Arizona history.
And what of people of lesser means who can’t give money at this third stage? There are other ways of giving -- of time, talent, work hours -- anything that causes them to refocus lifestyles toward something outside themselves. Says Lord: “If you can get people to recognize their contributions, to see that part of their identity is being a giving person, then there’s the chance to leap from that to other ways of giving.”
How one applies these guidelines has much to do with how one views the world. If you see scarcity looming, you might react by being miserly. Recalls Bybee: “I’ve seen people who are almost billionaires who are scared to death that they’re not going to have enough money, and they won’t share it with anyone.”
On the other hand, if you think that tomorrow will be bright with opportunity, you might react by giving all you can. Overall, the U.S. record is good. Writes Schervish: “Far from being a negligent society, we are an intensely caring commonwealth and there is an ample foundation on which to build even stronger ties of moral citizenship.”
As Steven Covey put it in The 7 Habits of Highly Effective People: “The mission of our family is to create a nurturing place of faith, order, truth, love, happiness and relaxation, and to provide opportunity for each individual to become responsibly independent and effectively interdependent, in order to serve worthy purposes in society.” Until death do us part and, for heirs, especially thereafter.
John S. DeMott, a former writer for TIME magazine, thinks of his grandchildren every time he buys something for himself on Amazon.com.