I have been thinking about how one might approach this question. It's probably a series of targets
I don't really know the right figures, but I think that this could be a good framework for approaching this interesting question.
Step 1 - set Targets for what you will need on retirement at 65
Target 1. Work out a reasonable minimum wealth and income to have on retirement.
Aim to have a suitable home mortgage-free home
Assume you will have the state contributory pension which provides just enough to meet the basics - for a married couple over the age of 65 that is €430 per week or €20,000 a year.
So your Target should be to pay off your mortgage by retirement.
You won't have enough money to run a car or to do much socialising and holidaying, but you will certainly meet all your shelter and food needs.
If you only achieve Target no 1, you are exposed to a lot of risks
- The country is effectively insolvent already and may not be able to continue to pay the €20,000 a year
- You may need nursing home care. You will get it from the state but you might prefer a private nursing home
Target 2 - Provide more than an OAP standard of living
You should have a private pension to supplement your old age pension
I would have thought that a reasonable target for this would be around €30,000 on top of the €20,000 Contributory OAP.
A healthy, independent couple, who have no accommodation costs should meet most of their needs on €50,000 a year.
Target 3 - If you don't have a guaranteed pension, you will need a reasonable fund or independent wealth
The biggest uncertainty is your longevity. If you own your home and you have an inflation linked annuity pension, then it's not an issue. But if you have a Defined Contribution pension fund,then it most certainly is an issue.
Of course, the return on your pension fund will be a big issue as well. If you leave it on deposit, it will probably get slowly degraded over time. If you put it in shares, you may do very well, or there could be a long-term sustained reduction in value.
Target 4 - you should provide for private nursing home care for 5(?) years.
How long do people stay in nursing homes? I would say that few stay much longer than 5 years, but I don't know. So 5 years at €70,000 would be €350,000 in today's money.
If both of you are in a nursing home, you won't need your home, so that could be sold to pay the nursing home fees.
So how does all this affect you?
If you are not going to hit Target 1 and be mortgage-free by retirement, you should be cutting back now to try to hit that.
If you are on track for Target 2 or 3, you should be enjoying life to the full. Travelling and socialising as you see fit, without squandering your money.
If you have achieved Target 4 - i.e. no accommodation costs, a healthy pension and enough money for your retirement home, then you can afford to help your kids if they need help.
Should you help your kids?
If you have put aside €350k for your nursing home fees, and one of your children is about to lose their home as they can't afford their mortgage, you could certainly consider lending them your nursing home money. Or you could consider buying a home and letting them live in it rent free.