It’s critical to plan this key transition carefully to ensure your own finances stay on track and to maintain a healthy relationship with your parents.
Financially preparing for ageing parents is an important responsibility that requires proactive planning and open communication, says Stian De Witt, CFP®, executive head of financial planning at NMG Benefits. By starting early, establishing budgets, understanding healthcare costs, seeking professional advice and regularly reassessing the plan, you can make a major impact on your parents’ financial stability.
Here’s how to help your parents ensure their long-term financial security and well-being.
Start the conversation
This is the first and most crucial step to helping your parents with their finances. Have an open discussion with your parents about their financial situation, including their income, savings, investments and any debts they have. This will help you to understand their current financial situation and how much support they will need.
Estate planning is important for the entire family
Create a budget
If your parents don’t already have a budget, help them to set one up. Ask if you can look at their bank statements to make sure there are no hidden costs, such as banking charges. See if there are ways for them to save money, like downgrading their cellphone contracts. They could also trade their car in for a more economical model.
Assess their healthcare requirements
This is a key element of financial planning for the elderly. What are the future healthcare costs you need to consider? Do your parents need chronic medication? Will they need specialised treatment in future? If they have a medical aid, make sure they’re on the most appropriate plan for their budget and needs. Here, the help of a financial planner could make all the difference.
Get their estate planning up to date
Estate planning is important for the entire family. If they don’t already have one, encourage your parents to create a will and get all their financial documents and policies together in a safe place. This is a vital step to make sure their wishes are respected. It will also help avoid delays and legal complications that arise when an estate is wound up without a will in place.
Get professional advice
Speak to a professional financial advisor about your own financial plan, and that of your ageing parents. Regularly review and update these plans as your circumstances change. Make sure you stay involved in their financial matters to provide ongoing support as they need it.
Be sensitive and empathetic
This is a difficult time for your parents as well. Make sure they understand you’re not trying to take away their independence, and that any assistance you provide is based on their preferences and needs.
“Being prepared, having a plan in place and monitoring your plan regularly will give your family the best chance at achieving your financial goals and keeping your loved ones financially secure,” says De Witt.