How You Can Help Your Baby Boomer Parents Retire
Baby boomers set to retire during the pandemic may be facing multiple challenges, not least as a result of the challenging financial scenarios of late. Members of the younger generation are stepping up to the plate to support their parents to retire well. André Wentzel, Head Client Solutions Savings at Sanlam has been doing just that: helping his father retire. The qualifying criteria to do so is not necessarily personal financial know-how, but rather the understanding of how the right support and advice from the right people can assist you with your retirement planning.
He also suggests that the answer is not to tell your parents what to do with their savings and income. “Rather focus on helping them understand the potential consequences of the decisions they may make, especially those around lifestyle and budgeting. The critical thing to get right is to understand what income they require. This turns the conversation into one about their expenses, spending, and assets.”
Wentzel says the experience of helping his father retire was an eye-opener. “I started having discussions with my father when the market was volatile after the lockdown during the pandemic,” he explains. “The process is manageable if you have a good understanding of what to consider, but this may not be the case for most people. This is where partnering with financial experts comes in.”
He shares his tips on how the younger generation can help their parents with their retirement planning:
Get them good financial advice
A financial planner can help them identify the post-retirement savings products that are best suited to their needs. It is vital to form a good relationship with a financial planner who understands their needs and circumstances to suggest a more robust and realistic approach. Attending these meetings with your parents allows you to bring another perspective as someone who knows their circumstances.
Empower your parents!
The focus should be on supporting your parents to take control of their own finances, not for you to step in and take over. Remember that your parents have had decades of experience managing their own finances – the last thing you want is for them to feel disempowered at this next stage of their lives. A financial planner can help them create a plan that is realistic and that they are comfortable committing to. For this to happen, there needs to be personal accountability to make it work.
Healthcare in retirement
Healthcare costs can be significant in retirement and are often unplanned. Statistics of a profile of older persons in SA show that 38% of South Africans over the age of 60 use chronic medication. If these costs are not entirely covered by medical aid – or if your parents do not have medical aid – you may need to step in. This is especially true in the case of retirees who are living off a fixed income and do not have emergency savings. Your parents will need to understand the various medical aid options so that they may budget appropriately and, hopefully, avoid an emergency.
Easing into the next chapter
Some retirees find it easy to settle into a new routine and find things to keep themselves busy, but others may find it harder. Help your parents ease into their new lifestyle by guiding them to find new hobbies or asking for their help with things that are within their ability and reach. But be careful not to overdo it – you need to respect their time and be mindful that they may need a break after a long working career.
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