What comes first – kids or retirement? Plan now or suffer later
Most parents take the responsibility of caring for their kids very seriously, but does care mean financial support and if so, how much? Most parents love their kids. Most kids love their parents. Most parents take the responsibility of caring for their kids very seriously, but does care mean financial support and if so, how much? How much money is enough to retire? Only you can figure that out It’s a financial question that people either strive to answer or choose to ignore. But since scary headlines tend to attract more attention than rosy ones, one has to wonder if all the talk of a retirement crisis is causing people who are otherwise financially independent and have enough to retire to delay retirement unnecessarily. A Manitoba Agriculture study in 2004 estimated that the average cost to raise a child to age 18 was $166,761 at that time. A subsequent 2011 study by MoneySense pegged the cost at $243,660. Either way, it seems an annual average budget between $9,000 and $13,000 is a fair estimate. Those average costs tend to be higher in the earlier years (due to child care costs) and lower in the later years. Like many other family expenses, those with higher incomes tend to spend more on their children on average than those with lower incomes.
How will Canadian seniors deal with lack of funds in retirement?
For some, a reverse mortgage is often the only solution to financial crises The lack of pension reform combined with seniors living longer than ever is leading to a lack of finances in old age – a troubling issue that needs to be discussed in families across the country. That’s according to HomEquity Bank experts, provider of the CHIP reverse mortgage. “Canadian seniors want to remain in their homes as they age. However, there are many that could lose their homes because they haven’t saved enough for retirement, some will be forced out due to a lack of information on options and many of them have the answer in front of them and don’t know it,” explained HomEquity Bank VP National Sales, Jeff Spencer.
Should you give your child a down payment to buy a house?
When it comes to money decisions, it can be hard to figure out the right thing to do. Money is about power, emotion, morality, and security, among other things. So in this space, we gather personal finance luminaries to weigh in on a financial quandary. This week’s question: Should you give your child a down payment to buy a house? Kevin O’Leary, author of Cold Hard Truth on Family, Kids & Money: Giving your child a down payment for a house is an incredibly bad idea. Invariably, your “gift” will be like the first taste of a drug — and before you know it, your son or daughter will be a full-fledged debt addict. Your down payment in most cases assumes that they will be taking on a mortgage for the rest of the home’s value. This may be on top of the student loan they already have, plunging them further into debt. Many people make the assumption that buying a house with mortgage debt is always a good idea because the home value will appreciate over time. This assumption made sense over the last 25 years, as rates did nothing except go down. The direction of real estate’s value during periods of rising rates is far less certain. My bet is that home values will be stagnant over the next five to seven years, which is the average time that people own a home. That is because interest rates are likely to rise over the same period.