Don’t drain your pension to support adult children

Question: As parents, are we facing uncertain retirement and a lower standard of living as we use our savings and pensions to help our children get on the employment journey?

The financial impact of supporting your children as they enter the workforce can vary greatly, depending on your circumstances and choices. It is important to remember that while supporting your children is admirable, do not sacrifice your financial well-being to the extent of jeopardising your retirement and lowering your standard of living in later years. You need to balance and plan your finances to navigate this challenge well. Below are some key considerations.

Financial planning

Planning for retirement is essential. It is vital to have a clear understanding of your financial goals, including how much you need to save for retirement and to create a financial plan that includes budgeting, saving, and investing for the future. Also, be realistic regarding your current expenses, which include supporting your children as they seek employment.

Ensure that you also have an emergency fund to prevent you from dipping into your retirement savings when unexpected financial needs arise. An emergency fund should adequately cater for your expenses for three to six months. Remember, planning your financial security should be a priority.

Balancing support

While it is natural to desire to support your children, it is also essential to find a balance between providing assistance and maintaining your financial security. You can help your children while ensuring it doesn't jeopardise your retirement savings.

For instance, higher education will position your children well for work. However, do not exhaust your assets and pension income to educate them. Strive to balance meeting your obligations and saving for your sunset years. Remember, you have already established a lifestyle and need to work towards ensuring you make enough money and have sufficient savings to maintain the same lifestyle even on retirement.

If you are self-employed, make sure you contribute to retirement savings accounts consistently. If you are still employed, be keen to complement your employer's retirement savings by increasing your contributions, thereby saving on tax and securing your retirement.

Education Costs

Education is the sole responsibility of a parent and a fundamental right. Consider saving for your children's school as soon as they are born. You can save school fees in an insurance education plan, money market, reputable Sacco or any income-gaining asset such as treasury bonds and bills. When you plan and save well, you will have enough to take your children through school without suppressing your current and retirement income at each academic stage.

Most importantly, be practical and ensure your children's school of choice falls within your budget. Refrain from trying to keep up with the Joneses or strive to outdo your peers to prove a point.

Alternative education solutions

The world is evolving, and vocational and technical skills have also proven to be important in society. Having a degree could open job opportunities, and so will technical knowledge. Encourage your children to take vocational courses within technical institutions if you cannot fund their university education at the moment.

Financial Independence

Encourage your children to become financially independent by teaching them about money management and budgeting. Encourage accountability for the money that you give and help them draw a budget on how they will utilise their income.

Teach your children to harness their skills and capabilities, which can help them get jobs and sustain them in their employment journey. Teach them the importance of excelling in each job they get as that will open up better opportunities for them. Encourage your children not to despise humble beginnings at work as that may instill in them the art of perseverance and critical skills to help them thrive in every industry they are in.

Financial aid options

Your children may also explore financial aid options such as scholarships or student loans like HELB to fund their education or job-seeking efforts. There are options for applying for fully funded scholarships locally and internationally, thereby reducing their reliance on you while they are in school.

Encouraging your children to apply for work-study programmes will teach them responsibility and enable them to earn while in school. Teach them the prudent use of the opportunities they get while studying, which include attachment, internship and part-time work, as that will prepare them well in their employment journey.

Open communication

It is crucial to have open and honest discussions with your children about your financial situation and expectations regarding their financial independence. Set clear boundaries on what you can fund to stay within your resources. Most importantly, encourage them to stay focused in school and work, and not compare themselves with their peers who may be more financially stable. Make it your responsibility to affirm your children and instil confidence in them, especially in this era of social media and fear of missing out (Fomo).

Such open conversations make your children to be more self-aware and ensure that they do not have unrealistic expectations of you or themselves. Remember, you can support them in their employment journey without compromising your financial security. Plan for your children’s employment journey as well as your retirement without neglecting either!

The extent to which you may face an uncertain retirement and lower standard of living due to supporting your children depends on your financial choices, family dynamics, and individual circumstances. Proper financial planning and responsible money management can help you balance supporting your children and securing your retirement. It's also important to stay informed about changes in economic conditions, investments, and retirement planning strategies to make informed decisions.

The writer is an investment analyst at Zamara and can be reached via Email:

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