Retirement Life
13 January 2025
How to support loved ones while safeguarding your own future.
Put on your own oxygen mask first
In the event of trouble, put on your own oxygen mask before helping others.
Most of us have heard this many times on airline safety videos. In the (unlikely) event of the cabin losing pressure, we might instinctively try to help our children first - but cool rationality tells us that, in reality, this is the wrong thing to do. We all understand the logic: despite our impulse, you’re going to be much more helpful to others if you’re sorted yourself.
Not just a rule for flying
You do not have to be at 30,000 feet for this to apply. We might feel compelled to help our children financially, for instance. However, that might not be the right thing to do, particularly if your own finances aren’t in order.
Perhaps you want to help them buy a house, pay off their student loan, or strengthen their business. It’s an understandable and noble instinct, however it might be misplaced.
I was reminded of this recently when the latest Kaspanz newsletter hit my screen. Kaspanz (KiwiSaver, Annuities, New Zealand Superannuation Protection Society) is a small but vociferous organisation dedicated to retirement income policy, helmed by Alec Waugh. It produces a free, well-researched and thoughtful newsletter that does not pull punches.
The latest one covers the top 15 retirement income issues in New Zealand, one of which implores retirees not to use their retirement savings to help children.
Calculate what you could draw in retirement.

Not black and white
This is not a black and white issue. But most of us could probably tell stories of people who have done the financial equivalent of helping others put their oxygen masks on, only to find that they’re unable to get their own on before it’s too late.
The desire to help children is strong and many people end up overdoing the assistance.
You need to figure out if you have sufficient funds to last through retirement. If you’re likely to have more funds than you need, you could take pleasure in helping your children now.
However, you must remember that unanticipated events like a long-term downturn in investment markets, a home maintenance job, medical issue, or relationship failure could impact your calculations and see you without funds in your latter years.
So, be cautious and allow a good margin of safety.

Do’s and don’ts
There are a small number of do’s and don’ts that are common to most of us when considering how best to financially support our adult children:
1. Generally, it’s best to provide money as a loan. This means that you can call it back if necessary and appropriate. That could be helpful for you if you really need extra money, whether through repayments or by charging interest. It also helps if your child separates from their partner and keeps things fair among all your children when your estate is divided after you die.
2. On that note, be sure that your will reflects any gifts or loans to children. If you help one of your children, you may need to redo your will to reflect the fact that the child has already received some money.
3. It’s crucial to document gifts/loans clearly and comprehensively. You may not be around when or if it comes to repayment, which means your children will be dealing with the trustees/executors of your estate, who’ll be bound by the letter of the law. You’ll want your actions and intentions to be crystal clear.
4. There are very few circumstances where providing financial support to your child’s business would be considered wise. If you do, it should be funds that are absolutely surplus to your requirements and structured as a business loan.

Project your retirement income.
Start young
Giving grown up children a significant sum of money is not always wise. In fact, if you really want to help them, do it when they’re young, preferably starting when they’re born. This leverages the power of compound interest. One of the best things you can do for your children or grandchildren is to make regular, small and affordable contributions to their KiwiSaver accounts.
Invest with Lifetime for a retirement income managed for living.