Retirement over children: why parents must prioritise themselves

There has to be a balance between saving for the future and spending money on your children. Picture: August de Richelieu/Pexels

There has to be a balance between saving for the future and spending money on your children. Picture: August de Richelieu/Pexels

Published Aug 7, 2023


Parents want to give their children everything they can, but should not do so at the expense of their own financial futures.

Providing enough resources for their children while also trying to save for the future can be a difficult balancing act, but experts warn parents against sacrificing retirement plans to give in to their children’s wants.

They should also prioritise their retirement savings over leaving behind a legacy for their children, in the form of an inheritance or asset.

While this can, understandably, be an emotional subject for parents, Heather Bell, business development manager at retirement income specialist Just SA, says it’s important that you don’t become a financial burden on your children.

After all, not only are we living a lot longer these days, but life is expensive, the mother of three states.

“This makes it difficult to save as much as you might want to, which can lead to the risk of running out of money in retirement and increasing the possibility of leaning on your children to help with your expenses later in life.”

One way to avoid this is to start as early as possible to teach your children about the financial realities of your household – what is affordable for your family, and what isn’t. The next step is to help them distinguish between wants and needs.

“In our family, we, as parents, provide for our children’s needs, but they are encouraged to acquire the means to provide for their wants themselves. This can make for some very interesting discussions when your children try to convince you that something they want is really something they need.

“Food, shelter, education, and medical care are some of the needs that parents should cover. But when it comes to the latest toys, gadgets, or fashion, these are good examples of items that are ‘wants’,” Bell says.

While you may strive to give your children everything they ask for, it’s not always worth overspending at the expense of your own financial future, or at the risk of showing your children, incorrectly, that unnecessary spending is fine, she adds.

Pocket money, rewards for getting good grades, and extra money from birthdays and other celebrations are all potential sources of income for young children. And as they get older, you can encourage them to seek part-time work to help support the family financially.

“Of course, some treats or ‘wants’ may occasionally fall within your budget as a parent, but it’s important to draw firm, consistent lines on what you can and can’t buy, and what is an everyday expense and what is a treat.”

Finding a healthy balance between looking after yourself and looking after your children is the goal. Even if your children won’t mind looking after you in your golden years, having financial independence is empowering and can lead to less stress in your relationships with them when they are adults.

The decisions you make now, Bell says, will help you achieve a balanced outcome. It will also determine the healthy habits you instill in your kids which, in turn, will create a legacy in how they view and use money

She notes that it is a good idea to regularly work with a financial adviser to reassess your current personal financial situation, and to revisit your retirement goals as your needs change. Keep in mind that a general rule of thumb is to plan to have enough income to support yourself in retirement for about 30 years – to age 95 if you’re male and age 100 if you’re female.

“Instead of scrimping and saving throughout one’s adult life to leave money for your children, at Just SA we suggest parents rather focus on reducing their risk of depending on their loved ones in their golden years. Once you know you have enough, then any additional funds or assets you might have can go to your children.”

Bell adds that retirement legislation requires you to use at least two-thirds of your savings to buy an income-generating product, such as a life or a living annuity. There are pros and cons involved and it is important to assess all your options, preferably with a financial adviser, to ensure you make an informed decision.

IOL Business