How much capital do I need to retire comfortably on ?

[Beagle]

Beagle, you have lots of common sense and would appreciate to hear more. Partnering, is this joint ownership? or do you help repaying loans?

Thanks. I use the word partnering with your kids in the loosest possible way as this can take many forms. A partnership where ownership is joint, or co-ownership in a company or family trust are the main ownership vehicles. Unless you are super comfortable financially I think any investment in a house through a co-ownership arrangement should place the sole emphasis on the occupant being able to service the bank mortgage. If they can't fund it themselves at the current interest rate then you probably should look at buying something more affordable unless the parent(s) are well prepared to meet the ongoing burden of chipping in for mortgage payments and (seeing as they can't afford the mortgage) this leaves them also exposed to meeting the ongoing burden of other running costs including maintenance, insurance and rates. Parents should think very, very long and hard before putting their head in an ongoing perpetual liability situation for their kids in my opinion as this can lead to nasty surprises down the track. For example what happens if there's some deep cycle maintenance required such as a full repaint inside and out..who pays for that ? What about if there's some moisture ingress issues ?...do parents want the long term exposure of the risk involved and are they financial comfortable enough to afford this as well as look after their own financial needs comfortably ?

Another possibility is where parents partner with their kids by helping them save for their deposit and then the parents contribution is then treated as a loan either with or without interest and is repaid over time. I think this is the most common sort of help as most parents are not super wealthy and while they can help with the deposit they probably need that money paid back over a period of time for their retirement needs. I recommend loans be formally documented as kids relationships with their partners often end badly and parents need to protect their financial interests as well as the interests of their own child.

Yet another possibility is this partnering is simply a process whereby wealthy parents partner with their kids to help them save the deposit, usually 1:1 contribution but sometimes 2:1 or even 3:1..but as mentioned above its very important that the kids do put in some of it and then the parents gift the money they've contributed either all at once or over a period of time with conditions, (such as the kids keeping the bank's mortgage payments up to date, rates, repairs and insurance current)...this sort of thing might be appropriate where parents want to help their kids heaps but feel they need to keep "trainer wheels on the bike" for a while so to speak.

I don't think any one solution is the perfect generic fit for all. For example one might have very serious concerns, (I think many parents have some concerns lol) about their kids choice of partner, so ownership in a family trust with your own child as the primary beneficiary might give some much needed peace of mind if one feels their kids relationship with their partner is rocky or likely to end badly. What percentage of marriages (or unions if you want to call them that) fail these days...50% ?
Maybe people should plan for the risks associated with that ?

Hope that gives you some food for thought....but I will add one final note of caution. I have seen quite a few families of modest means go way out on a limb for one or more of their children and it can go very very wrong with very sad consequences. Business entrusted to one's child to run, run into the ground and worthless at the loss of hundreds of thousands of dollars of much needed capital, one example and rental properties so badly damaged by methamphetamine use and consequent other wild party damage the repairs nearly bankrupted one of my clients and nearly ruined their marriage, (both kids involved with both properties were step children of one and natural child of the other client which caused massive friction in and of itself). When things go wrong they usually go very very wrong so whatever help you are prepared to give your child to get into a house I think one is best to seriously consider the chance you'll never see that money again and limit one's help to what you're prepared to gift or lose. The other thing from a relationship perspective is if you really go out on a limb for your child and they let you down so badly it seriously affects your ability to have a comfortable retirement then its harder to have a good relationship with them going forward. Best to take a carefully measured approach making sure you look after yourself and your partner properly as your first priority...along the lines of the advice below, in my opinion.

An old retiring accountant once gave me this very sage advice when I was a very young starry eyed bean-counter "Love many, trust few and always paddle your own canoe"