According to a Merrill Lynch American survey, 80% of parents today provide some financial support for their adult offspring. In fact, they spend twice as much on their grown children as they do on saving for retirement.

Half of parents said they are willing to draw down savings and a quarter are willing to take out a reverse mortgage or other debt to provide that financial assistance.

No doubt most do this out of love, but it can still be a major mistake. Some parents won’t have enough to retire comfortably and they are denying their kids an important opportunity: the chance to struggle and succeed, as well as learn first hand what it means to do without. I think these stats would also apply here in New Zealand.   

Parents who give their children whatever they want, out of love, a desire to make up for their own impoverished childhood or a sense of guilt often find that once the tap has been opened its hard to turn it off. 

If they don’t have enough when they reach old age, are their kids going to support them ? personally I wouldn’t want to find out.

I’m sure you will know middle aged friends and neighbours who are providing serious economic outpatient care to their grown kids. Interestingly, studies show this is something most self-made millionaires do not do.   

Its great to be financially secure enough to help your kids if they get into a serious crunch but not every crunch is life-threatening and in my experience, there are valuable lessons to be learned from pulling your own weight, solving your own problems and learning to live within your own means. Help your kids if you want to, if you know that you will be secure in retirement but not if you’ll pay for it the rest of your life.

If you don’t know if you will be secure in retirement, a financial planner can help by preparing projections, a plan to follow and provide regular monitoring as things change.

This information is general.  A Disclosure Statement is available on request.