Here’s How Much Boomers Are Giving Their Kids
Money has always tended to flow from parents or grandparents to children and grandchildren, whether it’s as outright gifts, help with living expenses or paying for things like school. But the pace of that inter-generational transfer of wealth has picked up in recent years — and it could be threatening the retirement prospects of some baby boomers, according to a new report from the Employee Benefit Research Institute.
The report finds that the number of cash transfers going from older households to younger family members increased from 1998 to 2010. High-income households are more likely to provide support to their adult children, but middle- and low-income families are also providing cash to younger family members. Overall, from 2008 to 2010, households of adults aged 50 to 64 gave an average of $8,350 to younger family members, and households age 85 and older gave $4,787 to younger family members.
“For older households, cash transfers can reduce their retirement assets, raising concerns about retirement security, particularly for low-income groups,” EBRI research associate Sudipto Banerjee said in a statement.
Related: Sandwich Generation Squeezed Once Again
In just 5 percent of families, wealth is passed from the younger generation to the older, and the amounts are far smaller. During the same period, households age 85 and older received an average of $359 from those in younger generations.
The EBRI numbers confirm a trend highlighted in other recent reports. A 2013 Pew study found that about half of adults ages 40 to 59 have provided some financial support to at least one grown child in the past year, with more than a quarter of them providing the primary support.
Obviously, the economic climate of recent years may be a big reason for the increased cash flowing from parents to their grown children. More than half of parents of millennials think that it is harder for today’s young adults to live within their means than it was for them, according to an April Bank of America survey.
Wages Are Finally Going Up, Sort of
Average hourly earnings last month rose by 2.9 percent from a year earlier, the Labor Department said Friday — the fastest wage growth since the recession ended in 2009. The economy added 201,000 jobs in August, marking the 95th straight month of gains, while the unemployment rate held steady at 3.9 percent.
Analysts noted, though, that the welcome wage gains merely kept pace with a leading measure of inflation, meaning that pay increases are largely or entirely being canceled out by higher prices. “The last time unemployment was this low, during the dot-com boom, wage growth was significantly faster — well above 3.5 percent,” The Washington Post’s Heather Long wrote. The White House Council of Economic Advisers this week issued a report arguing that wage gains over the past year have been better than they appear in official statistics.
Cost of Trump’s Military Parade Rising Fast
It looks like President Trump’s military parade is going to cost a lot more than the initial estimate suggested – about $80 million more.
The Department of Defense pegged the cost of the parade at roughly $12 million back in July, but CNBC reported Thursday that Pentagon officials have increased their estimate to $92 million. The total consists of $50 million from the Defense Department and $42 million from other agencies, including the Department of Homeland Security.
The parade, which President Trump requested after attending a Bastille Day military parade in Paris last year, is scheduled for November 10 and will reportedly include aircraft, armored vehicles and soldiers in period uniforms. Abrams tanks, which weigh roughly 70 tons apiece, will also be included, CNBC said, despite concerns about heavy military equipment ripping up the streets of Washington. A Pentagon analysis apparently found that the armored vehicle’s treads would not cause any damage.
The parade is expected to begin at the Capitol, continue past the White House and end at the National Mall, according to earlier reports from NBC News.
Quote of the Day: Time to Raise Taxes?
“Tax revenue as a percentage of gross domestic product is expected to be 16.5 percent next year. The long-term average in a full-employment economy is 18.5 percent of GDP; if revenue were at that level for the coming decade, debt would be $3.2 trillion lower and the 10-year fiscal gap would be halved. Returning to past revenue levels, however, will be inadequate over time, because an aging population will increase Medicare and Social Security costs. This need not pose a problem: Revenue was roughly 19 percent of GDP in the late 1990s, and economic conditions were excellent.”
– Former U.S. Treasury Secretary Richard E. Rubin, writing in The Washington Post
Quote of the Day: When Tax Cuts Pay for Themselves
“You … often hear the claim that a lot of tax cuts will ‘pay for themselves,’ that they’ll cause so much additional economic activity that the revenue feedback from that activity will fully offset the direct revenue loss caused by the tax cut so that you end up making money for the federal government, or at least not losing any money. Now, of course that is theoretically possible and it would happen at extreme rates. I mean if a country had a 99 percent flat rate income tax and lowered it to 98 percent, I believe that they almost certainly would collect more revenue at the 98 percent rate than they did at the 99 percent rate. But the idea that this type of effect would occur at today’s tax levels just requires responses that are much bigger than statistical evidence would support and I think much bigger than common sense would indicate if you just ask people how they themselves would react to the tax cut.”
-- Alan Viard, tax policy expert at the American Enterprise Institute
Map of the Day: Gas Taxes
It’s summertime and the driving is anything but easy if you want to get to your favorite beach or mountain cabin for a well-deserved break. As lawmakers consider a plan to raise federal fuel taxes by 15 cents a gallon, here’s a look at the current state-level taxes on gasoline, courtesy of the Tax Foundation:
