How to talk to your parents about their retirement

You might put off talking to your parents about their retirement and their financial plans – it just seems like one of those tricky conversations that could get uncomfortable. But don’t avoid the topic! It’s important for you to know their preferences and plans, and if you approach it right, your parents might welcome your input.

We consulted the experts and came up with 6 tips to help you tackle the retirement talk.

#1 Get off to a good start by being calm and respectful

Be calm, caring and ready to listen. Tell your parents you want to talk about their retirement because you want them to have as comfortable a retirement as possible. Assure them you have their best interests at heart and want to know where and how you can help them manage their retirement.

#2 Find out what your parents want

Let them express their wishes before analysing what they can afford. Nothing closes a conversation quicker than an immediate rejection. While it might be true that an ideal retirement is unaffordable, it is something you need to talk about. You need to know:

Ask your parents what retirement wishes are before analysing what they can afford

  • How your parents feel about retirement in general
  • What they would like to do – they might want to do some paid work, start a new business venture, do volunteer work, or even learn a new skill or complete a university degree
  • Where they would like to live, including if they want to move to a smaller place, move to a retirement home or live with family
  • How they would like healthcare matters dealt with if they become seriously ill, for example would they be willing to move to an assisted living unit or would they prefer a carer at home?

#3 Analyse your parents’ financial position

Together, assess your parents’ current financial position looking at debt, income and investments.

Debt includes anything currently being paid off, such as a home loan, car finance, store account, credit card or personal loan.

Investments and income include any money they have invested in shares, unit trusts, fixed deposits and savings accounts, as well as a pension fund, provident fund, retirement annuity and living or guaranteed annuity. Your parents may also earn income from part-time work or rental income from a property they own. Consult with a financial adviser to work out what their monthly income is and how long it will last.

It is also advisable to ask your financial adviser to look at where the funds are invested, if the investment returns are reasonable or if there are better investment opportunities, and how fees can be reduced if they are too high.

#4 Draw up a budget/retirement spending plan

When you know the details of your parent’s debt, income and investments, you can draw up a budget together. Detail expenses such as housing costs, including utilities such as electricity, transport, food, personal care items and healthcare. If your parents’ expenses exceed their income, they may have to cut expenses, or find ways to increase their income.

Don’t forget about tax!
If your parents’ income is more than the tax threshold set per age group, or they earn interest and dividends on investments, they may be liable for income tax. You can find the tax thresholds on SARS website here and the information on when interest and dividends are taxed here.

#5 Identify where and how you can help

Once you understand your parents’ current situation and retirement plans, you can begin making plans for what you can do to help them if they need assistance.

Always remember to have a clear picture of your own finances so you know whether and to what extent you can contribute to or support your parents if necessary.

“It can be difficult to help your parents financially if you are struggling with your own debt obligations (personal loans, credit card debt, or providing for your own family), but ignoring the inevitable isn’t the solution, preparation is. It is possible to assist your parents without going broke,” says Mduduzi Luthuli of Luthuli Capital. He adds monetary support isn’t the only option – you can also help your parents in non-monetary ways.

#6 Get help if you need it

In addition to their expert investment advice, a financial adviser can help facilitate a conversation about these delicate topics, Mduduzi says. You can also ask a respected family member or friend, or even a legal expert for help – with your parents’ agreement of course.

Tackle the topic today

Tough tasks are often tougher in our minds than in practice. With these tips you can tackle the retirement talk without too much stress. You – and they – will likely feel much happier having a good picture of their financial situation, and a plan in place for a happy retirement that suits your parents’ wishes and pocket.

Share post