Make sure your retirement is taken care of before you help out your adult children.

Themba writes:

I have just sold my home for just over R 1 000 000 and would like advice on how to invest the money in a responsible way. In December this year I will also be receiving payouts from my investments made with MTN, Sasol and Southern Sun and should receive a further R300 000.

I am 60 years old and have been self-employed for about 20 years now. Part of the money I would like to give to my son to buy a flat for himself.

Maya replies:

Considering that you are now 60 years old you need to first consider your own retirement plans. This R1.3 million should all form part of a holistic financial plan. Only once you know that your own retirement is secure can you afford to consider giving your son this money.

Some parents give their children a lump sum from their retirement money in the hopes that the children will then in turn support them in retirement. This is not a fair arrangement.

Firstly there is no guarantee that your child will be able to support you and secondly many retirees overestimate the income they would receive from a lump sum and therefore put financial pressure on their children. For example R1 million would generate an income of around R5 500 per month yet the costs to provide for a parent may be far greater than that.

Rather have your own retirement plans and do not become a burden on your children – that is the greatest gift you could give them.