Supporting your children after you have retired
Taking care of your children can be a job for life. For many parents, even when they are getting old, they still feel responsible for their children, including having to provide for them financially. This is the case even when those children have their own children, their own responsibilities and their own lives.
The Cost of Caring
After you have retired, what happens if your children or other family members need your financial help? Have you ever thought about the costs involved? Please see the following examples.
Mr and Mrs Chan have one son and they love him very much. As he does not earn much money, every month they give him a few thousand Hong Kong dollars to help him get by. Their son, however, takes this money for granted and expects to still receive it even after his parents have retired.This need to give money to their son every month worries the Chans. They are concerned that they will not be left with enough money to support them through their own retirement years.
Knowing that it is often difficult for young people to buy their own homes, Mr Cheung decided to help his son buy an apartment of his own. Soon after his son began work, Mr Cheung applied for a loan pledged against his own property in order to secure a down payment and offered himself as the guarantor for his son's mortgage.
Mr Cheung, however, didn't realise that he could lose his own home if his son failed to repay his mortgage loan. As the guarantor, Mr Cheung is responsible for his son's mortgage and has to pay it if his son cannot and this would affect his retirement life. If he could not afford his son's repayments, he could end up with a poor credit rating or even be made bankrupt.
Finding a win-win solution for all the family
Giving financial support, though, might not always be the best way to help when your children or other family members are in difficulty. There can be different options to think about.
- In the case of young couples who cannot afford a down payment on their own property, they can always move in with their parents. The money they save by not paying rent can then be used towards their own down payment.
- When asked by your children or other family members to take out a second mortgage, think about the following...
- Do you have enough income to meet the repayments?
- Is it more than you can afford? If so, what could go wrong? Will you end up paying a very heavy price for your kindness?
- Is it something you need to discuss with other members of your family?
- Can you let your children know what difficulties you may face if it all goes wrong?