Today, Explained - Sugar daddies and mommies

Episode Date: February 21, 2025

Boomers are the wealthiest generation ever. And they're funneling trillions to their adult children for down payments, school tuition, even monthly allowances. The Great Wealth Transfer is upon us. This episode was produced by Victoria Chamberlin and Devan Schwartz, edited by Jolie Myers, fact-checked by Laura Bullard, engineered by Patrick Boyd, and hosted by Noel King. Transcript at vox.com/today-explained-podcast Support Today, Explained by becoming a Vox Member today: http://www.vox.com/members Image of candy hearts by Erica Thostesen/Shutterstock. Learn more about your ad choices. Visit podcastchoices.com/adchoices

We talk about it in whispers. Hey, um, my name? I'm not going to say it. I would like to remain anonymous if any of this is being used. Hi, um, I would like to stay anonymous. And my parents did recently buy me a house. We inquire about it gently. How can you afford this neighborhood or that school? My dad used to pay off my credit card every month up until recently. My parents did pay for my rent. They paid for some of my credit card bills, kind of my like emergency money, groceries

as well. I am in my mid-20s. I received about $1.3 million over the course of 14 years. We are living through the great wealth transfer. Her friends call her getting money from your parents. Trillions of dollars are flowing from baby boomers to their adult kids and upending American norms and housing prices. Ahead on Today Explained.

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make your mama buy your home. You're listening to Today Explained. My name is Madeline Leung Coleman, and I'm a features writer for New York Magazine. Madeline and her colleagues recently put together a package of stories on one of New York City's biggest open secrets. Something that everybody in New York City is aware of and definitely are talking to their friends about, which is the sheer number of people in New York City who are subsidized in some way by their parents.

What are some of the obvious tells? I think the most obvious tell and the thing that many people are familiar with living in New York City is when someone suddenly buys an apartment. And it's often someone who you might feel that you're kind of on the same track with. Like you have a pretty good idea of how far the salary that they make would actually go because you know from your own experience of how far it doesn't go. And then all of a sudden your friend tells you that they're looking to buy and it's like what?

It's surprising the first time and then after that you start to just be like okay, here we go. We did a series of 14 interviews with people whose parents are giving their money in some way. And that's ranging from paying for down payments to paying for child care to an allowance that's coming in every month. And the editors who are leading the charge on this were Paola Aceves and Julia Edelstein,

with some help from some freelance reporters as well. And what they found was, first of all, that many more women were willing to open up about the money that they were getting, which I thought was fascinating. But some of the stories that stuck with me included the one about a woman who works as a teacher. Her husband works in finance, and they live in Murray Hill.

And her real estate journey started when her parents bought her a studio apartment at age 24. And that led to her eventually being able to buy a two-bedroom apartment in Manhattan with her partner. You know, she's had so much help, but she's very confused about what class she belongs to. She says, I can't tell. Am I a trust fund kid or am I middle class? I don't even know what middle class is in Manhattan.

I remember living in New York for about a decade and seeing this vividly. And to be honest, because I'm kind of a busybody, I would very politely try to figure out like, oh, hey, girl, what's going on? Why do you think we get so curious about this? Like, what's the impulse behind wanting to know? I think part of it is class resentment. But at least we can laugh about it. Yeah, part of it is class resentment. Part of it is everyone's own struggles to figure out how to make it in a city that is

so expensive and so hostile to people who are not extremely wealthy. And so if you know someone who, you know, by the way, you love them, you know, they're your good friend a lot of the time when you're having these questions go through your head. And you just want to know why is it that they're able to be in this situation when other people friend a lot of the time when you're having these questions go through your head. And you just want to know why is it that they're able to be in this situation when other people you know are not. So as you were looking for themes in your reporting, what are some of the ways that Boomer parents are helping their adult kids in New York?

Finding a place to live is the biggest one. And it isn't just about buying, it's also about renting. Landlords demand that you make an income that is usually about 40 times the monthly rent, which is crazy and doesn't actually indicate anything about what you can afford. But as a result, a lot of people can't prove that, so they need to get a guarantor. That will often be apparent. I would not have been able to get the apartment I have in the city, even making almost $200,000 without my mother as a guarantor. I truly wonder how people are able to survive in New York,

probably a lot more fiscally responsible than I am. If you don't have a parent who makes that much, then you're kind of out of luck. Most of the people I know that have bought a house that are my age had help from their parents in some way. And at the same time, salaries obviously have not increased to anywhere near what they would need to to cover this kind of thing, especially when you're just starting out. But then it really goes all the way through life of the generations we're talking about. So we spoke to people who are in

Gen X through Gen Z. And, you know, even the people who are in their 40s or even in their early 50s, they say that they have to rely on their parents to help them pay for daycare. Or if their kids need to go to a specialty private school, then their parents will help them pay for that. I have three children and they are all able to attend a private school with help from my parents for their tuition. And we get a lot of help from them. It could be covering the space between when you lose your job and when you get a new job. I just was recently laid off. If I need rent money next month because of course I was laid off, I know that I will be able to get it from them.

That money is what has led me to be able to actually not want to pull my hair out. I like to think that if my mom was like, oh, I'm going to put a down payment on a house for you in New York, an apartment in New York for you, I would just be thrilled. I would just walk around on a cloud and be like, I'm so damn lucky. And yet, the emotions that you describe in your reporting and some of the emotions that we heard,

in fact, many of them, when we asked our listeners to reach out and tell us what they'd experienced, they're not walking around on a cloud. Hey, my name, I'm not going to say it, but I am getting money from my parents. They definitely support me with most of my lifestyle, including groceries, kind of everything, to be honest. It is a little bit like, not embarrassing, but I guess like, well, maybe a little bit. I actually asked him three different times, stop sending me the money because I felt guilty

about it. Guilt and shame are definitely the through line, but they emerge in ways that are kind of surprising. You might think that it only would be that people feel guilty that they have more than others or that they're ashamed because they think it makes them part of some kind of reviled class of some kind. But a lot of it is really just because people are ashamed that they can't afford everything they have on their own. Kind of like sad that I feel like I can't afford my lifestyle. I mean, I have a master's.

I thought that it would be a lot easier to kind of get a job. It's actually about that old thing of American individualism and the idea that if you can't buy an apartment on your own, then maybe somehow you're less of an adult. Or if you can't pay for your kids' school, your daycare on your own, like you may be kind of messed up somewhere, like you took a wrong turn along the way. There's a few people who talk about feeling like they were middle class for their entire lives. But then as soon as they were adults and trying to make decisions that were really expensive, their parents suddenly were like, you know what,

we could help you with that. And those people seem kind of gobsmacked at their good luck, honestly, and quite grateful. But also maybe embarrassed because they're now having to adjust to a class position that they didn't grow up thinking they were in. When you talk to people about what social class they were in, did you find confusion? Did you hear pushback? Everybody thinks they're middle class. Everybody thinks they're middle class, yes. And that could mean someone who owns their apartment in Manhattan.

That could be somebody who is living in the outer boroughs, but they are paying their rent every month, you know, and they're like, they're not behind, they're not drowning in debt. Like that could mean middle class. You could also not drowning in debt like that comedian middle class. You could also be drowning in debt and feel middle class. We hear that the middle class is being squeezed. It's absolutely true. I was doing research for this story.

I found that apparently the median income for a millennial in New York City is $59,000. $59,000. Correct. So half of the millennials in New York are making under $59,000. Correct. So half of the millennials in New York are making under $59,000, half are making over $59,000. That's right. Oh.

So there's always going to be a question of what most people have and what most people are doing. Has New York City become the kind of place where you can't survive there unless your parents are giving you money? Is it necessary to have this this kind of help? So I think it's important to say that you can survive here without your parents giving you that money However, you won't necessarily be what we might call economically secure But we know for sure that there are many New Yorkers who live here living below the poverty line. In fact, it's almost a quarter of New Yorkers. The poverty rate in New York

is about twice what it is nationally. And that won't be a surprise to anybody who lives here. But I think it's also important to say that a lot of people are just getting by. Like they, yes, they might be paying their rent. They're buying groceries, basically. Not eggs, obviously, because who can afford them? But they're buying other things. You know, a lot of people are living, but they're not making savings, okay?

Like they're not getting on stable footing. If they were to have some kind of health emergency, they would be in trouble. that they're not getting on stable footing. If they were to have some kind of health emergency, they would be in trouble. You know, if something happened to their apartment, let's say they live in a basement apartment that gets flooded during one of those flash floods that happen increasingly,

and they don't have renter's insurance, like they've got nothing to help them deal with that kind of thing. There's also plenty of New Yorkers who are living at that point and then being helped by their parents to push them over it, you know? And I think that's really what we're talking about here. Because a lot of the people who are getting help by their parents aren't living extravagantly. A lot of them are living what appears to be a pretty normal life

by the standards of what we previously considered to look like middle classness, right? Like they have stable housing, they have a, you know, what we might call a normal job, but for whatever reason, they just don't have the concerns of their peers. Like they're able to take vacations, they're able to send their kids to a private school, whatever. The difference is not usually just between not having anything or living in like, you know, a luxury apartment on the Upper East Side. It's more about are you able to live without being afraid about money day to day? Madeline Leon Coleman, she's a features writer for New York Magazine. Coming up, it is not just New York City.

The trillions of dollars are flying all over America. Who's getting what? Support for Today Explained comes from Adio. Adio as you know now is an AI native CRM built specifically for the next era of companies. Is that your company? Maybe. They say it's extremely powerful just like your company maybe. It can adapt to your unique data structures and scales with any business model.

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God! I am the eldest boy! You're today exclaimed! My dad recently decided that he wanted to start giving me my inheritance early. So he gives me and my sister about 18k every year now because that's the most money you can get someone without it being taxed. They helped me buy my first car and my first house, but really the most important thing they did was to pay for my college and my master's degree. I don't know how people with college debt do it. And they offer to just pay the $80,000 I had in debt

just to make the bankruptcy go away. It's just like a shrug of the shoulder of like, yeah, sure, why not? I'm Noelle King with friend of the show, Talman Joseph Smith. Tal was early to the story of the great wealth transfer. He's an economics reporter for the New York Times. And a while back, he wrote this viral piece where he laid out that we're living through

a decade in which $16 trillion, trillion with a T, will pass from the boomers to their children and grandkids. Rich people and their rich kids will be giving and receiving a vast majority of these riches, these trillions that we're talking about. That's everybody from the sort of succession level rich, the top 0.1%, down to kids of what I call normie affluent families. So the kids of doctors and lawyers or engineers and nice suburbs or big cities who you or I or everybody else in our listeners may have

gone to school with or we may be them ourselves. But to show just how tippy top the concentration of wealth is in America, the top 1% is the vast majority of the money flow. They hold about as much wealth as the bottom 90%. It feels wrong to be willing to accept down payment money or willing to accept, you know, even just staying on the family phone plan forever. But you know, it also seems like we're reaching this point in my household where we're realizing that all of our friends who do own property, own homes, have only been able to do so with

family money. Why are the Baby Boomers so rich? Where does all this money come from? So mainly through stocks and real estate. So the average price of the US house has risen about 500% since 1983, which is when a lot of boomers bought into the market and when we had a much, much greater housing supply.

And in the meantime, they've been able to see those assets increase and draw on them for the various forms of borrowing and often cashing out. The stock market, you know, is measured by the benchmark index. The S&P is up by more than roughly 3000% since the early 1980s. OK, so if you have spent the past 40 years as an adult, you bought a house for seven raspberries and now it's worth $3 million, you can sell it or you can borrow against it. And also, if you put money into the stock market in the 1980s, it again, your return

has been incredible, especially compared to, you know, what we think of in the last decade or so when the market has also been good, we should note. So let me ask you, we're saying boomers broadly here, but it makes me, well, I know personally, it's not all boomers. Love you, mom. Which boomers are able to give to their kids? Is this like the 1% that we're talking about? Yeah, so it's mostly the top 10 and top 1%. And of course, the top 1% encapsulates top 10%. That's where the vast majority of this is. SONIA DARA-MARGARET All right. So the boomers who are giving inheritances, who are part of the $16 trillion transfer, are in the top 10% in America. And that

would mean, I'm guessing, that demographically, they have one big thing in common. Yes, they are. One of the demographics here. Yeah, yeah. They are disproportionately white. The vast majority of the wealth transfer will be contained within white families. But deep focus on race in this transfer can sometimes distract people from class really being an equally if not more stark story here.

To put it simply, most rich people are white, but most white people are not rich. And when you think of the plurality of working class and poor people in this country, they are white. So there's a lot of nuance. What are the implications of all this? Some chunk of younger Americans are getting a lot of money from some chunk of older Americans. And we should care about that. Why? There's that old saying, right, of the rich are getting richer and the poor are getting poorer. And that has been true at times in America. But in the past decade, it's actually not been. The poor are much less poor. In some cases, the hot labor market just before the pandemic and right after it, for example, helped boost incomes

across the board. A lot. But the thing is, the issue is, the rich have gotten richer, much, much richer, tens of trillions of dollars richer, and that has enabled them to manage a higher cost of living, higher home prices, and so on. All the things that people get frustrated by, housing, rent, health care, child care, elder care, all of those things are easier to manage if you have passive forms of income heading your way, often through no work of your own. Not that that's something to be ashamed of, but it's just a fact of life.

And there's a real question of how sustainable that is for our economy, that when the upper middle class and the sort of normie professional affluent can no longer swing it, when being sandwiched between feeling like you can't afford kids or having kids and it being a real challenge to give them all that they want and need, while also realizing that you're going to have to take care of your parents, is that pressure cooker ramps and ramps and ramps up? Presumably there's some point at which the political winds will change and that very important cohort of the top fifth of the population, the top decile,

will say, okay, we need a reset here so that more people can swing it and feel upward mobility in their and their families' lives. Joe Biden got slammed for releasing almost $2 trillion into the economy over a couple of years and causing inflation, right? If 1.6 trillion is being transferred a year for the next 10, getting us to 16 trillion, is this actually inflationary? trillion is being transferred a year for the next 10, getting us to 16 trillion. Is this

actually inflationary? I'd say yes and no. No in the sense that the rich do not have a high marginal propensity to spend, which is economic speak for saying rich people tend to save and invest most of their extra money. So it's not the the velocity of it isn't constantly flowing, as much as people living paycheck to paycheck who do and in some ways must spend the money as soon as they get it. So there's that. But yes, also it could be a little bit inflationary because the class of very well-to-do people in this country is growing substantially. And we're already seeing an economic data.

Just within the past year, when inflation is really back to relatively calm levels, the rich may be becoming more price insensitive because of how rich they are. Meaning, in real terms, that the family goes on vacation and it's like, God, these margaritas at the bar are expensive, or God, the kids' swimsuits cost this much now, or and on and on and on, or the plane tickets cost this much now, well then, what do the rich in America do? You complain about it, but you still purchase it.

You pay, yeah. Whether it's a product or a service, and that has a lot of economists, of all stripes, a little bit worried. A couple of people have pointed out that you can't really blame people for passing money on to their children, right? This is the way it's always worked from time immemorial. You get stuff and you give it to your kids, maybe just your sons, maybe just your first son, but like this is how life works. So why is now the time to pay attention to this?

Is it just for fun, because it's kind of fun to talk about, or are there real reasons to be watching very carefully as this happens? I mean, I think we all love a little bit to gawk at wealth. Oh, yes. It's an American pastime. I don't think it's a coincidence that, you know, I've been lucky enough to have a few stories that have gone viral and, you know, this one kind of blew things out of the water, and I don't think that's a coincidence.

I think it's important because both economically and morally, what does it mean for a nation to have $200 trillion in wealth and for there to still be so much self-reported need and for people to be so frustrated? I think a lot of people are fairly asking, is it not possible for us to, even if we can't solve inequality, for us to raise the baseline standard of living for a greater amount of people without risking the things that we love about the dynamism in our economy and ambition in our economy. We'll find ourselves going back to this question of how almost immeasurably richer we are than our ancestors and yet we're still struggling with some of the same sort of problems. Talman Joseph Smith, New York Times. Tal's writing 2026's most hotly anticipated by me book,

Clout and Capital. Victoria Chamberlain and Devin Schwartz produced today's show, Jolie Meyers edited, Laura Buller checked the facts, and Patrick Boyd is our engineer. Here's what else you need to know today. On Sunday, March 9th, you'll be getting a treat in this feed, Explain It to Me, hosted by John Quillen Hill. We'll be dropping now every Sunday. Hey, J.Q. Hey, Noelle.

Tell me about Explain It to Me. OK, so the show is really centered around questions from listeners. You call in about things that matter to you. You know, maybe it's how to save for retirement or how to make friends or whether or not now is the right time to buy a house. Then we talk to experts and bring you the answers you need. What's coming on March 9th? OK, so next Sunday for our first episode

we're sharing in the Today Explained feed, we'll be talking about men and dating. We actually got a call from a listener who's struggling to get a date. You know. Girl. The struggle. I don't have to tell you.

You know, the rules of romance have changed, and some guys are having trouble keeping up. We also have an episode around the corner about women. We'll be talking about Gen X women in sex. You know, Gen Xers are out here getting some. We've seen it on Baby Girl. We've seen it all types of places. And you know, we're wondering if the media has something to do with that.

Gen X ladies, is any of this impacting your sex life? What's going on over there? And how do people reach you? We have a hotline. Just call 1-800-618-8545 or send a voice memo to askvox at vox.com. Explain it to me. We'll be right here in the Today Explained feed every Sunday starting March 9th. Catch us here. Music