Chart: Will Your Kids Earn a Higher Income Than You?

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Parents want their children to have a better life than their own. We want our kids to eat more healthily, accumulate more knowledge, enjoy closer relationships, live longer, and – if we’re honest – make more money. However, the academic paper The Fading American Dream: Trends in Absolute Income Mobility Since 1940 by Chetty et al. shows us that earning more money than your parents has gone from nearly a sure thing to no better than a 50/50 coin flip. Via WSJ Daily Shot.

Here is a chart where each line shows the percentage of children born in the indicated year that earned more than their parents, as a function of their parent’s income percentile.

Every decade, the numbers get consistently worse. In terms of overall percentages:

  • For children born in 1940, over 90% grew up to earn more than their parents.
  • For children born in 1980, only 50% grew up to earn more than their parents.

What does that mean? Even if you as parents today earn an above-average income, there is no guarantee that your kids will grow up to earn more than you on an inflation-adjusted basis. In fact, if the trend holds, the odds are that they will end up earning less.

Very few parents have the kind of wealth that guarantees financial security for their offspring. This creates increasing stress about gifted programs, private schools, magnet schools, sports teams, test prep, and any other opportunities that can give them an edge.

We took our kids to a local pumpkin patch this weekend, and in between choosing your own pumpkin and feeding farm animals, our oldest started complaining about not having $5 lemonade. This reminded me of a simple rule:

Happiness equals reality minus expectations.

My kids should not expect to have a certain lifestyle. I hope (!) to teach them gratitude for the many advantages that they have been given, a strong work ethic for obtaining what they want to achieve, and tempered expectations of what makes a good life (not just money). Now, how do I pull that off?

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Five Wishes: A Living Will That Goes Beyond Just Prolong / Do Not Prolong Life

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People don’t like talking about money. That’s why I started this site. You know what people like talking about even less? Death.

My wife and I have already filled out a generic advanced health directive, but I recently ran across something that seems better. Five Wishes helps you document how exactly you wish to be treated if you get seriously ill in an approachable, holistic manner. In addition to choosing a healthcare proxy and filling out an advanced healthcare directive, it also guides you beyond that. Do you want people to pray for you? Do you want people to talk to you, even if you are unconscious? Do you want to die at home if possible? How do you envision your funeral?

  • Wish 1: The Person I Want to Make Care Decisions for Me When I Can’t.
  • Wish 2: The Kind of Medical Treatment I Want or Don’t Want.
  • Wish 3: How Comfortable I Want to Be.
  • Wish 4: How I Want People to Treat Me.
  • Wish 5: What I Want My Loved Ones to Know.

You can easily find “free” advanced healthcare directives online, but a lot of them pretty much come down to a checkbox of “prolong life no matter what” or “do not prolong life”. The best way to understand how Five Wishes is different is to read through this sample document [PDF].

In 42 states, Five Wishes meets the legal requirements for an advance directive. In the remaining 8 states (Alabama, Indiana, Kansas, New Hampshire, Ohio, Oregon, Texas, and Utah), you will need to fill out some specific additional forms or mandatory notices to make it legal. Often it’s just an official form you have to attach.

There is a nominal fee of $5 for both the paper and online versions. Five Wishes was created by someone who worked in a hospice and realized that there are a lot of common questions to which your loved ones must often guess the answer. Why not answer them now? It is an enormous gift to both yourself and to them.

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.