Seven Ways to Help Your Parents Prepare for Retirement

04 May 2017

Although there is no official data from the Bureau of Statistics, experts estimate that there are more or less 1.5 million Australians who belong to the ‘sandwich generation’ or those who have to support their ageing parents and their growing children. This number is projected to balloon in the coming years with the ageing population in Australia and the fact that many Australians don’t have enough money for their retirement.

The situation where you need to support your parents in their retirement may raise some issue of guilt, and even shock for some that their parents failed to plan ahead in their finances, and the pressure on both sides for those who are also supporting their own children.

It is not easy, but there are several key steps you can use to help your retired parents without the need to forego your own needs and welfare.

1. Understand the Current Financial Status of your Parents

While this can be a touchy subject, prepared families plan ahead and discuss their finances openly.  As early as now, you should ask your parents about their finances and how they intend to find their retirements and aged care if required.

2. Call a Family Meeting

Taking care of your ageing parents is a crucial family issue. Hence, you should involve your immediate family members such as siblings, in-laws, and grandchildren as appropriate. Call a family meeting so everyone can input in the decision.

It is ideal to ask for help from a professional aged care adviser, or your family lawyer, as dealing with retirement and aged care can be quite complex, particularly when dealing with the age pension and superannuation (refer 5).

3. Learn Retirement Planning with Your Parents

Financial needs will drastically change during retirement. For your parents, their needs will rise because of added cost for medical or aged care, and their income will be limited. Once they stop working they could depend on an age pension, which may not be enough. Your finances will also be affected as you might be expected to shoulder some cost. One way to prepare for this is to learn more about retirement planning with your parents. There are online guides and/or financial advisers who specialise in retirement planning. This is also a good learning opportunity for you so you can also create your own retirement plan.

4. Take Some Control of Your Parents’ Finances

It can be a challenge to encourage your parents to follow a financial plan during retirement. The last thing that you want to happen with your parents is to run out of money later in retirement by using too much, too early.

You also have to be vigilant as there are people who target more vulnerable retirees. Advise your parents to be wary of their online or telephone purchases. As much as possible, you should be present when your parents have to decide on a major financial decision such as moving into aged care, buying a home, or taking out a loan. Your family should consider whether having a Power of Attorney put in place is appropriate.

5. Seek Professional Advice

Professional advice from estate planners, aged care advisers, financial advisers, and tax lawyers can save you from potential losses caused by bad financial decisions and open you to options you didn’t know were available.  We see some customers who are not receiving the aged pension but should be. Moreover, you should also use them to consult on your own financial plan if you are expected to support Mum and Dad.

6. Don’t Forget Yourself

One common pitfall of those who are members of the ‘sandwich generation’ is that they usually sacrifice their own needs and welfare so they can take care of their children and support ageing parents. Remember to also look after yourself as you also need to prepare for your own retirement. If your parents have somehow failed to plan ahead, you should learn from the experience and make sure that your children don’t have the same experience.

7. Consider the equity in their property

85% of Australians aged 65 and over own their own home. While selling the property is one option to realise funds, there are considerable benefits to ageing in your own home. Heartland Seniors Finance offers a reverse mortgage, a financial product designed for seniors to unlock the wealth of their home. If your parents have already paid off their mortgage, they may benefit from taking a reverse mortgage to access some funds to shoulder some retirement expenses such as aged care, home renovation, debt consolidation, and more.

The loan proceeds can be received as a lump sum, an income plan, or a line of credit, so your parents have flexible options depending on their preferences and needs. One of the benefits of a reverse mortgage is that your parents can stay in their home for as long as they choose.

For more information about reverse mortgage, you can download Heartland’s comprehensive guide for FREE here, or you can call our reverse mortgage experts on 1300 889 338 for a chat.



Information provided is accurate as at 04 May 2017 and may change from time to time