How to Help Your Parents Plan for Retirement

It’s tempting to avoid discussing money with your parents, and it certainly becomes even harder as they near retirement.  As important as it is to have conversations around financial planning for your parents’ old age, the truth is that it can be awkward and sometimes emotional for many families.

As children, even our own responsibilities and long-term plans can be significantly impacted based on how well prepared our parents are for retirement.

Advances in medicine and technology are extending lifespans, and the average person can now expect to prepare for at least two decades of retirement after the age of 60. According to Northwestern Mutual’s 2019 Planning & Progress Study data, 56% of American adults don’t know how much they’ll need to retire. On local turf, almost half of South Africans have no pension plan.

While all parents would love to leave their children with a financial legacy, the concept of inheritances is largely becoming obsolete. There might be a small minority who have created sufficient wealth to fund their retirements and still leave assets to the next generation, but for the majority, not becoming a financial burden to their children may well be the best gift they can give.  

Phil Wilson, Sales Director for Evergreen Lifestyle, a leading provider of retirement accommodation, is acutely aware of the processes that families go through when settling on a retirement plan.

“We’ve seen countless families grappling with fears, anxieties and conflicting emotions, vacillating between eagerness and apprehension, anticipation and dread,” he shares. “Sadly, all too often, we’ve seen families torn apart by opposing views and strongly held opinions.”

“After a life spent working, raising families and contributing to society, everyone deserves the right to enjoy their golden years free from stress and financial worry. But for many, the fear about life after retirement clouds what should otherwise be a restful, relaxing and rewarding time of their lives. That’s why conversations around retirement are essential between parents and their children.” 

Here are a few guidelines on how you might find out if they’re on the right path as they navigate this tricky terrain. You should also meet with your siblings and significant others to get everyone on the same page.  

Developing a financial strategy

Speaking about money can be a sensitive topic, but it is nonetheless an essential step towards understanding your parents’ financial situation and helping them strategise for the future. During these conversations, it’s vital to ascertain things like what, if anything, do your parents owe, their monthly expenses, additional income from retirement annuities, pension funds, investments and dividends, the market value of any property they own, and whether they are covered for insurance and medical aid.

While dealing with financial brass tacks, it may be worth addressing administrative issues like an up-to-date will, contact details of their financial advisor, account, estate planning attorney, and insurance agent, power of attorney and end-of-life requests and requirements. Once these financial and administrative aspects of the conversation are clear and understood by everybody, you can move on to where your parents plan to live post-retirement. 

Where would they like to live

Many retirees opt to retain their family home, but this means they’ll need to budget for ongoing property expenses linked to insurance, rates and taxes, security, garden services, cleaning, repairs and maintenance which could prove to be costly and impractical. Alternatively, they could opt to liquidate their property and purchase a smaller home, possibly within a retirement village, with the profits from the sale reinvested to boost their retirement savings. 

If your parents hail from the baby boomer generation, chances are they’ll either want to sell up and travel the world or stay put in their family home and live independently as long as possible. They might be opposed to the idea of moving to a retirement village based on preconceived notions of what that might look like. You’ll need to help them realise that today’s retirement villages are a far cry from the old-age homes of the past. Now, many villages offer spacious upmarket homes in pristine, professionally managed estates, with  hotel-like catering and hospitality, resort-style amenities along with world-class healthcare.

For many ‘young’ retirees, retirement lifestyle villages are attractive because they provide security, lock-and-and-go living, and a host of facilities like a dining room and bistro, games room, heated indoor pool, gym, salon, library and outdoor deck with braai facilities. What’s more, residents have access to a community of like-minded individuals with whom to socialise and form close relationships. 

Wilson advises, “What many people do not know is that you don’t have to wait until you’re 60 to plan for or move into a retirement lifestyle village. In fact, the earlier you do it, the more chances you have to release assets, reduce expenses and have a better lifestyle for longer.”

What are the implications of staying put in the family home? 

If they’re strongly opposed to the notion of relocating to a retirement village, you’ll need to discuss the practical and financial implications of staying put in the family home. Cooking, cleaning and gardening all get much more difficult as we age, and keeping up with home maintenance can be both onerous and costly. The chances are the homes they are living in are just too big for their long-term needs. They’ll need to deal with rust, rising damp, leaking roofs, and rotting timber frames, or replace worn carpets and curtains, all of which will make a substantial dent in already tight budgets. Many think that staying put is the most cost-effective way to retire, but the costs of maintaining a property – both financial and otherwise – soon mount up, and those big bills will be a reality for many years to come.

Ageing in place

Retirees are advised to consider the concept of ‘ageing in place’ when thinking about where to live. They need to take a long-term view and ensure that their home will accommodate their changing needs over time. Staying put in the family home may be fine while they’re fit and healthy, but what happens if they suddenly become ill, impaired or incapacitated? Having to move home or relocate under these circumstances can be particularly hard for both the retiree and their families.

Retirement villages, like those in the Evergreen portfolio, offers residents the advantage of being able to live independently in a freestanding home with the option of transferring to an apartment, assisted living suite, or even a frail-care unit, within the same village, should their health deteriorate.

Letting go of the past

Retirement can be a taxing time for everyone involved. Retirees could struggle with letting go of their past lives while their children could be burdened with the costs and implications of ill-prepared parents. Some children have to relocate into their parents’ homes or invite their parents to live with them. But the proper preparation can help alleviate some of the stress and ensure that retired parents are able to sufficiently support themselves.

Remind your parents that retirement, especially in a lifestyle village, can bring wonderful opportunities without the burden of running a household or fending for themselves. They will have the freedom to live life on their own terms, meet new people, and be surrounded by the support of a strong, like-minded community.

“While these conversations can be emotional and stressful, they’re vital in helping your parents to understand their options, and the ramifications of the choices they make. This will certainly help streamline the process and assist them in choosing the best retirement plan for the next chapter of their lives,” concludes Wilson.