Why Relying on Your Children for Retirement is a Big Mistake

A disturbing trend of senior citizens getting cheated by their own children is happening in Singapore. Here's why you shouldn't depend on your children's financial help when you retire.

The Straits Times has reported that more senior citizens are being cheated by their own children. TRANS Safe Centre, a non-profit that looks after senior citizens, said in 2008 there were two cases of financial abuse of the elderly. In 2015, there were 11 such cases.

This disturbing trend show us that it’s a huge mistake to rely on your children’s financial help when you retire. Here are 5 reasons why:

1. Changing Financial Situations Can Completely Alter Personalities

No matter how well you think you know your children, money can make them unrecognisable in an instant. Studies have shown that just bringing up the concept of money is enough to alter behaviours, let alone real financial situations.

Whether your children get richer or poorer is besides the point: it’s possible for your children to get rich and become less empathetic or compassionate as a result of wealth. As for getting poorer, desperation can have a detrimental effect on character. While it’s an ugly generalisation, poverty can drive some people to become more calculative and deceitful.

As your children go through the same phases of life you do (from school, to work, to the peak of their career and the various ups and downs), their financial situation will fluctuate. As a result, their personalities and beliefs will also change. However well you know them now, financial realities can turn them into completely different people.

For that reason, it’s never safe to assume your children will be the same generous, giving types that they are today. Hope for the best, but prepare for the worst.

2. Your Children May Be Unable to Support You Even if They Want To

Life is unpredictable. Your children, like you, will run the risk of unexpected job loss, sudden medical emergencies, or underperforming businesses. In dire circumstances, you may even be faced with an inverse situation: you could end up having to support your children again in your old age.

Now, we’re not saying you should plan your retirement around supporting your children forever (unless you are very wealthy, that is almost impossible). But rather, do not assume that your children--however much they want to support you--are somehow superhuman recession-proof machines. They too will face financial challenges, some of which might floor them for a few years.

During these times, they may be unable to support you. And you may want to take the weight off their shoulders, by having surplus savings for such cases. This is where it’s important to save as well as invest, so your money keeps working even when you stop.

Most financial advisors are able to help you with investing, so you can have a source of funds even without your children helping.

See Also: 4 Best Places to Keep Your Retirement Savings in Singapore

3. Handling Your Finances Allows More Privacy

There may be certain details you don’t want to disclose to your children. For example, some people don’t want to disclose certain medical conditions to their children, for fear of inflicting financial burdens. Privacy in these matters is assured by your own financial independence.

When you become financially dependent on your children, many aspects of your life become visible to them. This can cause conflicts and awkwardness in certain areas (e.g. your children disagree with causes or religious institutions you donate to, when they are the ones providing your retirement income).

Above all, don’t forget that you will probably need to live under the same roof. If you depend on them for your retirement, chances are you cannot afford to move out and find a place of your own. This, of course, gets in the way of any desire to live privately.

To put it simply: even if your children can support you financially, you may not want them to. It is difficult to live your own life when your activities and needs are exposed.

4. You May Not Want to Be a Burden to Your Children

Regardless of how you feel now, you may regret deciding to lay your financial needs on your children. When your grandchildren come around, or your children face difficulties in their career, it can feel terrible to realise you add to their liabilities.

By the time you are past retirement however, it will probably be too late to try and reverse or undo your decision. It will remain something you have to live with.

If you plan your finances well however, you can do more than just be independent of them. You can leave them a legacy in the form of a nest egg, funds for your grandchildren’s university education, or help with paying off your children’s early debts.

5. You Know Your Retirement Needs Better Than Anyone Else--Even Your Own Children

How much do you need to have a happy retirement? Not just an adequate one (you don’t want to spend your twilight years living out of soup cans), but a truly happy one before the end?

It’s not fair to make your children guess. Perhaps you are content with a S$2,000 a month retirement, but your children surrender their own aspirations to provide you a S$5,000 a month lifestyle (faithful children never believe you if you tell them you need less).

Of course, the opposite can also happen--your children may believe a less than adequate amount will suit your purposes, and it can be awkward to ask for more.

In the end, you have the best idea on what you want from life. It’s best if you take the necessary steps to make it happen.

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