5 smart strategies for supporting your adult children – without hurting your retirement

You never truly stop being a parent, even when your children are old enough to look after themselves.

The urge to help your adult children is natural and, most often, comes from a place of genuine love. But good intentions can put your retirement savings at risk if you don’t have a plan.

Here are a few smart strategies to protect your nest egg while also offering financial gifts and support to your adult children.

1: Help them secure a home

I speak to many retired parents who want to help their adult children get a foothold in the property market. One of the best ways to do this is to act as a guarantor on their home loan. A limited guarantee means you’re putting up the equity in your own home as security for your child’s deposit, rather than handing over cash. This can help them avoid paying Lenders Mortgage Insurance, which can run into tens of thousands of dollars. Ideally, your own home should be fully paid off before you go down this path because it’s difficult to guarantee someone else’s loan if you’re still carrying your own.

2: Gift money now, while it matters most

As Warren Buffett once said, “Give your kids enough to do something, but not enough to do nothing.” It’s a philosophy worth taking to heart. If you have surplus money and a clear financial plan, gifting earlier – when your children actually need it – often makes far more sense than leaving it all as an inheritance.

The good news for Australians is that there is no gift or inheritance tax, so you can transfer money to your children without any direct tax implications. The key thing to keep in mind, however, is the impact it may have on any Centrelink entitlements. Under current rules, you can gift up to $10,000 per financial year, or $30,000 over any five-year rolling period, without it affecting your Age Pension. Gifts above those thresholds are counted as assets for five years, so timing matters.

3: Formalise gifts with a loan agreement

For larger financial gifts, it’s worth considering a formal loan agreement, even if you never intend to call in the loan or charge interest. If your adult child goes through a relationship breakdown, a documented loan sits outside the pool of assets that could be divided in a settlement, affording them some financial protection. There is specific legal wording required for these agreements to be enforceable, so seeking professional advice is important.

4: Protect grandchildren from the tax trap

Many retirees like the idea of setting up investment accounts in their grandchildren’s names. In Australia, investment income earned in a minor’s name is essentially taxed at the highest marginal rate of 47 cents in the dollar. This trap can be avoided by considering whose tax file number is quoted or by selecting products such as investment bonds.

5: Make sure your own nest egg comes first

Perhaps the most important strategy of all is also the most personal: your financial security must come before anyone else’s. The goal is to give your children a boost, not carry them. Think of it as adding the cream on top – you want to be in a position where your support is a bonus, not a lifeline they depend on.

Every family’s situation is different, which is why a conversation with a qualified financial adviser is the best place to start. The right plan will help you give generously, protect your retirement and enjoy the very real satisfaction of watching your children thrive.

Mark O’Flynn established Oxlade Financial in 2022 as a proudly independent and people-first boutique financial advice firm. As Managing Director and Principal Adviser, Mark is driven to simplify financial advice, optimise his clients’ goals and make a meaningful difference in people’s lives. He was named the 2025 Financial Advice Association of Australia (FAAA) Certified Financial Planner® Professional of the Year and was also recognised as one of the 50 most influential Financial Advisers in Australia in the 2023 and 2024 FS Power50 Awards.

Any information in this article is general in nature and does not consider any of your personal objectives, financial situation and needs. It is as intended, to be of a general nature only and NOT a recommendation to you. You should consider whether the information is appropriate to your needs, and where appropriate, seek personal advice from a registered financial adviser.