In the current US housing market, should we help our adult children buy a house? Is it a help or a burden on retirement?

Buying a home these days is a tough sell. Not only are home prices soaring, but mortgage loans are also frighteningly expensive. According to the National Association of Realtors, the median-priced home sold for $382,600 last December. Also, when a homebuyer fails to make a 20% down payment on a conventional loan, a mortgage lender may require PMI (Private Mortgage Insurance). PMI is designed to protect lenders in the event that a borrower stops making payments, and can be very costly to borrowers.

But to put a 20% down payment on a $382,600 home, that means you’ll need to pay about $76,000. That’s a lot of money that’s out of reach for many people, especially those who are still paying off student loans and worrying about child care. If you have an adult child who wants to buy a home but doesn’t have the money for a down payment, you might want to help them out. It’s a good idea, of course. But before you shell out the cash, think about whether it will affect your own retirement or put your child on a path that he or she can’t return from.

Will buying a house for your children affect your pension?

If you already have a $2 million IRA and have a steady income that you think will keep growing in the next few years, then helping your child with a down payment shouldn’t be a problem. Even if you don’t have millions saved up, as long as you think your savings are good, it’s okay to help your child.

But don’t take money from your retirement account to buy a house for your children. If you are 59 and a half, you can withdraw money from your IRA or 401(k) plan without penalty, but if you spend lavishly on retirement funds, you may find that you don’t have enough money when you stop working.

In addition, if you haven’t collected enough retirement funds yet, don’t rush to help your children. After all, your children can wait to buy a house, but your retirement can’t wait. Moreover, in reality, many companies don’t like older employees, although doing so is actually illegal.

What’s more, no one knows whether you will retire early due to health problems in the future. So, if your retirement fund is not ready, don’t rush to buy a house for your children.

Don’t put your children in trouble

If your child just needs a one-time $15,000 or $20,000 for a down payment, then that’s fine, but if you have to keep giving money to your child to maintain housing costs, that’s another matter.