Helping your children without risking your retirement

Pre-retirees and retirees often want to help their children get ahead, but they also need confidence that their own retirement lifestyle, healthcare needs, and future aged care costs won’t be compromised.

How to support the next generation while protecting your own financial future

For many Australians, helping their children financially is one of life’s greatest rewards. Whether it’s contributing to a home deposit, helping with education costs, or providing support during challenging times, parents and grandparents are increasingly stepping in to lend a hand.

According to Finder.com, parents advanced approximately $35 billion to their children, making the ‘Bank of Mum and Dad’ one of Australia’s largest lenders. Rising property prices, cost-of-living pressures, and economic uncertainty have made it harder for many young adults to get ahead on their own. As a result, parents are playing a bigger role than ever before.

But while helping family can be incredibly rewarding, it’s important to ask a critical question:

Can you afford to help your children without putting your own retirement at risk?

The balancing act many retirees face

Most parents naturally want to see their children succeed. However, many retirees and pre-retirees are facing their own financial challenges.

People are living longer than previous generations, retirement can last 25 to 30 years or more, and future expenses such as healthcare, home support, and aged care can be difficult to predict.

It’s not uncommon for parents to provide financial assistance from savings, investments, or superannuation without fully considering the long-term impact on their own financial security.

What begins as a generous gesture can create unintended consequences later if it reduces the income or capital needed to support your own lifestyle.

Start with your retirement plan

Before making any financial commitment, it’s important to understand what resources you will need throughout retirement.

Consider:

• How much income you’ll require each year
• Whether your savings are likely to last throughout retirement
• Potential healthcare and aged care costs
• The impact of inflation on future spending
• Whether you have adequate emergency reserves

The priority should always be ensuring your retirement remains financially sustainable. Remember, helping your children should not mean you becoming financially dependent on them later.

The ‘Bank of Mum and Dad’ is no longer just a lending issue. It’s a family planning issue. Contact us today to talk about how you can best support your children without compromising your retirement in the process.