These conversations often surface in a financial planning office in a fairly ordinary way, usually framed by good intentions and a sense of responsibility that has stretched on longer than expected. A couple in their late fifties or early sixties will explain that they have worked hard, saved consistently, and done ‘all the right things’, yet their own retirement plan still feels as though it is slipping further away. More often than not, the cause is not a market shock or an unexpected illness, but the ongoing, incremental support of adult children who are still finding their footing. The irony is that these parents are seldom careless with money in any other part of their lives – they are diligent, responsible, and anxious not to be a burden on anyone. And yet, without meaning to, they can end up building a retirement plan that relies too heavily on things working out, because they are using today’s retirement capital to resolve someone else’s immediate financial pressure.
The emotional logic behind this is easy to understand, because parenting doesn’t end when your children turn eighteen. And when you’ve spent decades stepping in and helping them out, it is deeply unsettling to watch your children make bad financial choices – especially when you know you have the means to relieve the pressure. The reality, though, is that the years leading up to retirement are not just another phase of saving – they are incredibly important compounding years in which you are supposed to be shoring up liquidity, paying down debt, and reducing future dependencies. When these years are repeatedly interrupted by helping out adult children, the impact is often larger than the rand amount suggests, because you are not only giving away money, you are also giving away growth, future income, and the margin of safety that protects you from future unforeseeable events.
What complicates the issue further is that pre-retirees are often not just assisting their children, they’re inadvertently enabling them. When adult children are repeatedly protected from the consequences of overspending, poor career decisions, or lifestyle inflation, the lesson they absorb is that there will be a bailout. The parent who covers the shortfall on a bond repayment, tops up a credit card, pays a deposit on a new car, or funds a temporary living expense during yet another transition, may believe they are buying their child time. The reality, however, is that the adult child’s financial independence becomes more elusive because the environment has been engineered to keep them dependent.
From a retirement planning perspective, the most obvious risk is a financial one, knowing that your retirement fund is not a bottomless pit. Unlike your adult children, you are not able to extend your working years without consequence. When support to adult children is funded from surplus income, it may feel manageable – but this surplus can dissipate quickly as retirement approaches and expenses shift. Medical costs rise, illness strikes, parents age, and the financial commitments you thought would taper off often do the opposite.
On the other hand, when support is funded from capital, the risk becomes even more acute – because retirees do not just need enough money to retire; they need enough money to stay retired. Drawing down capital earlier than planned – even with the promise of it being paid back – can set in motion a sequence of withdrawals that your portfolio was never designed to absorb.
Support that is offered in the form of a loan may appear to be a more responsible option because it feels structured and fair, yet in practice, it can be one of the most dangerous compromises. We have seen loans that were meant to be short-term become decade-long stalemates, with parents quietly carrying the debt on their balance sheet, adjusting their own lifestyle, and trying not to create conflict at family gatherings. And even when a loan is documented, it does not automatically become repayable in a way that supports retirement, because repayment depends on the child’s cash flow, discipline, and priorities, and the uncomfortable truth is that if they were able to manage money consistently, they might not have needed the loan in the first place.
The estate planning risks are often also underestimated. When a parent lends a large sum to a child, it becomes a loan account in the estate, which can look perfectly sensible on paper – except that estates don’t settle on paper; they settle in cash. If there isn’t sufficient liquidity to cover costs such as executor’s fees, taxes, and debts, the family may find itself under pressure to sell assets or, worse, to demand repayment from a child who cannot repay it. And if the loan is quietly ‘written off’ at death, it effectively becomes an early inheritance, which can create real resentment between siblings if it was never clearly addressed in the estate plan.
From experience, we’ve found that sibling dynamics play a massive role in these arrangements. Often, the child who receives financial assistance experiences it as love, rescue, or entitlement, while very often the child who does not experiences it as favouritism or punishment. Sadly, the parents are inevitably left to manage the tension, hoping to avoid conflict by not talking about it. The reality, though, is that secrecy rarely prevents conflict – it simply postpones it. And when the truth eventually emerges – often during the estate administration process – it feels more difficult to bear because it has been concealed.
There are other risks that deserve mention precisely because they are so easy to miss when you are focused on helping. Firstly, supporting adult children can delay your own downsizing decisions, keep you financially tied to a family home you can no longer afford to maintain, or prevent you from paying off debt at the very moment you should be reducing future fixed costs. Further, it can distort your tolerance for market risk in that you may feel pressured to take on more investment risk than is appropriate. Perhaps the most sobering risk, though, is that if you compromise your retirement too deeply, you may eventually become financially dependent on the very children you have been supporting, which can create a full-circle burden that nobody intended, and which can strain relationships in ways that are far more painful than saying ‘no’ would ever have been.
So, what do we advise, especially to pre-retirees who recognise themselves in this pattern and feel trapped between love and logic? We start by reframing the question from ‘Should we help?’ to ‘How do we help without harming our future selves?’ That means setting a clear boundary that your retirement funding is non-negotiable, in the same way that your medical cover or your ability to keep a roof over your head is non-negotiable – and then working backwards from that boundary to define what is genuinely affordable.
If you choose to assist, we advise that you do so with structure. Decide whether it is a gift or a loan, document it properly, be explicit about repayment terms if it is a loan, and ensure your estate plan records the intention so that fairness is not left to interpretation later. Importantly, be sure to have the
uncomfortable family conversations early, while everyone is alive and able to hear one another – because transparency early on is almost always more palatable than secrecy discovered too late.
And perhaps most importantly, consider shifting the form of support away from cash bailouts and towards building capability. While paying a bill may relieve short-term stress, it does nothing to encourage the adult child’s future accountability. Supporting your adult children is most certainly not wrong, but if it comes at the cost of your own financial security later in life, it’s worth asking if the help you are giving is actually helping at all. Sometimes, the kindest thing you can do for both generations is to protect your own retirement.
Have a super day.
Sue
