Are your kids wrecking your retirement planning?

How long should you financially support your children and when do you start looking out for your own future and that of your spouse?

It's a tough question and many couples duck it, with a good chance of wrecking any hope of adequate retirement provision, says a financial planner often consulted by clients who defer serious saving for later life because "the children come first”.

Lara Warburton, managing director of Imara Asset Management SA, says sometimes a couple reach their 60s before reordering their priorities and putting their own needs ahead of their children.

"By then, even the best financial planner is playing catch-up,” she adds. "It's better late than never, but only so much can be achieved in perhaps five or eight years of provision.”

Imara Asset Management SA is often consulted by high net worth individuals who make prompt and full provision for later life, but the Illovo business is also approached by middle-income clients whose planning starts late and from a relatively low base.

A frequent cause of much-postponed planning is the priority given over many years to the needs of the children.

Warburton says four scenarios may come into play:

1.Divorce and creation of a second family, when a man in perhaps his late 40s has more children
2.Rising education costs and children who continue their education into their late 20s
3.Failure to launch from the nest; when parents meet a child's (or children's) living and housing expenses for years longer than expected
4.Financial problems encountered by adult sons and daughters who then seek parental assistance

Warburton adds: "In the divorce and education scenarios it is important to realise that significant long-term financial consequences are involved, making early planning essential.

"A dispassionate assessment is also required in cases of longstanding parent reliance. However, the heart frequently overrules the head and caring parents drift along for years, draining their own savings to help their children.”

With older clients in this situation, a seasoned planner tries to repair their finances after the damage has been done. However, Lara Warburton believes a more proactive approach – much earlier in life – should be attempted.

"Pocket money and target-setting from a young age could be the answer,” she says. "Make children responsible for saving something for themselves.

"I hear stories of instant gratification. A child wants something, goes to mum and dad and gets it … without putting in time and effort to reach the target themselves.

"It's no surprise in later life when these children get all the adult toys, over-commit themselves, get into trouble and go back to mum and dad for money.

"Build a sense of financial responsibility early on and many problems stop before they start.”