In our weekly series, readers can email in with any financial dilemma and enter the Money Moral Maze.
Are your friends racking up big drinks tabs and then trying to split the bill equally, is your partner overspending on your joint account? No matter your dilemma, email in anonymously, and the i money and business team will do our best to answer.
This week’s dilemma can be found below – email us at money@inews.co.uk with yours.
Dilemma
I’m in my late sixties, and I’ve worked hard throughout my life to build up my pension pot, hoping it would be enough to see me through retirement.
But now, I’m faced with a dilemma that’s been weighing heavily on me. My children, both in their thirties, are struggling financially.
One is facing a health issue, while the other has just lost their job and is finding it hard to make ends meet.
They’ve both asked me for help, and while I’d obviously love to support them, I’m not sure if I can afford to dip into my pension to do so.
I’ve always been the kind of parent who wants to provide for my children, and it breaks my heart to see them in such difficult situations.
But at the same time, I know my pension isn’t as large as I had hoped because I took time out of work during my career to care for the two of them.
With the headlines about how many people struggle to live off the state pension alone, I don’t want to risk running out of money in my later years.
I’m already living on a fixed income through income drawdown, and though I’m comfortable for now, I don’t know what might happen in the future.
Should I use a chunk of my pension to help them out in this moment of need, or should I put my own security first and let them find their own way?
Emily Braeger, i‘s money reporter, replies
What a tough situation. And it’s one that many people in later stages of life grapple with.
While the instinct to help your children in times of need is strong, it’s important to think carefully about the long-term impact of dipping into your pension savings, especially when you’re relying on that fund for your own retirement.
Pensions are typically designed to provide for your future, and withdrawing money early can significantly reduce your income later in life.
Once you start drawing from your pension, the amount available to you decreases, and the effects of that withdrawal can compound over time, especially with the potential for unforeseen medical or living expenses as you get older.
Before making a decision, I’d suggest taking a close look at your financial situation. Do you have enough savings to cover future needs, or will helping your children leave you vulnerable in your later years?
Could you speak to a financial adviser perhaps about the situation. They may be able to help you find a solution that balances both your children’s needs and your own long-term financial security.
Take a look at the Pensions and Lifetime Savings Association’s (PLSA) retirement living standards research if you need a rough guide.
If you decide to help, think about how much you can afford to give without putting your own financial stability at risk.
You might not need to give everything they ask for, and even a smaller amount can make a big difference to them without draining your own resources.
If your pension is the only source of income you’re relying on, consider other options first. Can your children access other forms of financial support, like government assistance, or family from other sides?
At the end of the day, while it’s noble to want to help your children, you must ensure you’re not endangering your own future.
It’s a delicate balance, but by carefully weighing the costs and exploring all options, I’m confident that you can make a decision that offers support to your children without sacrificing your own peace of mind.
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