Experts have estimated that more or less 1.5 million Australians financially support their own growing children and their ageing parents. This number may increase in years to come with the ageing population in Australia and the fact that most Australians don’t have enough funds for their retirement.
It’s not a walk in the park. But, there are steps you can take to assist your parents in their retirement without neglecting your own needs.
1. Understand your parents’ financial status
This can be a sensitive subject, but prepared families can discuss and plan their finances. Early on, you must ask your parents about their finances and how they intend to fund their retirements and aged care.
2. Family meeting
Taking care of your parents is a crucial family matter. Call a family meeting so everyone can have their input. It will be better to involve immediate family members like your siblings, in-laws, and grandkids as much as possible.
You can also ask the help of a professional aged care adviser or family lawyer, as it can be complex to deal with retirement and aged care, especially when the age pension and superannuation are involved.
3. Learn about retirement planning
Transitioning into retirement will have a drastic change in your parents’ finances. Their needs will eventually rise because of added cost for aged care or medical expenses on a limited income. Once they say goodbye to the workforce, they could depend on an age pension that may not be enough. Expect your finances to also be affected if you shoulder some of the cost.
There are financial advisers you can consult with or online guides that you can use regarding retirement planning. It is better to learn this with your parents. This can also be a great opportunity for you when you plan your own retirement.
4. Ask your parents’ permission to control some of their finances
It can be a challenge to encourage your parents to thoroughly follow a retirement financial plan. Although, you don’t want them to run out of funds later on using too much, too soon.
Discuss with your parents some major financial decisions like taking out a loan, buying a house, or moving into aged care. Consider having a Power of Attorney if appropriate.
You also have to be aware of people who target vulnerable retirees. Make sure your parents are wary of their telephone or online purchases.
5. Consult a professional adviser
Advice from professionals such as financial advisers, estate planners, tax lawyers, and aged care advisers can save you from possible losses caused by bad financial decisions and make you aware of other options available.
Furthermore, you should also consult them with your own financial plan if you’re expected to support your parents.
6. Don’t neglect yourself
The common mistake of those who support their parents is neglecting their own welfare. Don’t forget to look after yourself as well.
You should also plan your own retirement. Learn from your parents if they didn’t plan it early on. While you’re at it, make sure your children plan theirs.
7. Consider the equity in your parents’ home
About 85% of senior Australians aged 65 and above are homeowners. While selling the house is one option to release funds, another option allows your parents to access funds without having to sell.
ASAG offers a reverse mortgage designed for seniors to access the wealth of their home. Your parents may take an ASAG Reverse Mortgage to release some funds for their retirement expenses, like home renovation, debt consolidation, aged care, and more.
Receive the proceeds as a lump sum, line of credit, or regular income for flexible options. All these as you live out your retirement in your own home.
If you liked our “7 Ways to Help Your Parents Prepare for Retirement” and found the information useful, check this space for more updates on equity releases and reverse mortgages.