Many adults in South Africa, and in fact worldwide, are finding themselves wedged in a new generation that is known as the “sandwich generation”. This group of working adults faces the double challenge of financially supporting their children, as well as their beloved aging parents. With the rising cost of living, increasing inflation, longer life expectancies, and certain cultural beliefs, this generation is certainly feeling the pinch. Not only is it a challenge for them to plan and save for their own retirement years, but the heavy financial burden it places on their multi-generational household can also stifle their mental well-being and negatively impact their quality of life.

The harsh reality is that for many of the sandwich generation and other adults who don’t have children but who are also supporting their parents financially, life has given rise to unforeseen circumstances that have resulted in their parents having no choice but to rely on their adult children. Whether you share a home with your aging parents or they have a place of their own, taking care of some or all of their financial needs is an important responsibility and a common reality. In South Africa, it is also a common cultural and societal belief. To complicate matters, every family’s situation is unique, so it becomes essential to tailor an approach based on your parent’s specific circumstances.

Even though caring for aging parents has always been commonplace in South African society, the global economic impact of Covid-19, the war in the Ukraine, rising inflation and the local economic impacts of load shedding have compounded the situation. “Aging parents who were on track to retire comfortably may have unexpectedly found themselves in a tough financial position compared with pre-Covid times. Stats SA reported that just over 1 900 businesses and companies were liquidated in 2022 – a sad state of affairs when you consider how many of those owners thought that their business would carry them through retirement.

Financially preparing for aging parents is an important responsibility that requires proactive planning, open communication, and a comprehensive approach. By starting early, establishing budgets, understanding healthcare costs, seeking professional advice, and regularly reassessing the plan, you can make a marked difference in your parents’ financial stability. You can help your parents to protect their assets and provide them with the support they need as they age. Through empathy, understanding, and careful consideration, you can help your parents navigate the complexities of financial planning and ensure their long-term financial security and well-being.

This is what you can do to help your aging parents with their finances

1. Start the conversation: this is the first and most crucial step to helping your parents with their finances. An open and honest discussion with your parents about their financial situation, including their income, savings, investments, and any debts they could have. This will help you to understand their current financial situation and how much support they will need. You also need to encourage transparency for improved control over finances.
2. Create a budget: if your parents don’t already have a budget, help them to establish one. You may need to ask if you can take a look at their bank statements to make sure there are no hidden costs that they have not included in their breakdown of expenses, such as banking charges. See if there are ways for them to save money such as downgrading their cellphone or wifi contracts since they are no longer working. They could also trade their car in for a make and model that’s more economical on fuel.
3. Assess their health and their healthcare requirements: it’s important to understand that there is a need to plan for healthcare costs in retirement. What are the healthcare costs you need to consider in the budget? Do your parents need chronic medication? Is there a possibility that they will need specialised treatment in the years to come? It is also important to make sure that if they have a medical scheme, they are on the best-suited plan.
4. Get their estate planning up to date: estate planning is very important for the whole family. If it is not already in place, encourage your parents to create a will and get all their financial documents and policies together in a safe place. This step of preparation is also important for making sure their wishes are respected. Furthermore, it will assist you if there are legal complications or if an estate is wound up without a will in place.
5. Get professional advice: speak to a professional, financial advisor about your financial plan and about the fact that you are in a position where you need to financially provide for your aging parents. You should also encourage your parents to speak to a financial advisor to receive guidance tailored to their unique situation.
6. Regularly reassess and review your and your parent’s financial plan: regularly review and update your and your parent’s financial plan as both your and your parent’s circumstances change. Make sure you stay involved in their financial matters to provide ongoing support as they need it.
7. Be sensitive and compassionate: your parents will need ongoing support and understanding. Be aware of the possibility of them feeling vulnerable and helpless. Always approach these discussions with empathy, sensitivity and a focus on their well-being.
8. Transfer their life insurance: Your parents might face difficulties in maintaining their life insurance policies. Instead of canceling the cover, there's a smarter solution you might want to consider: transferring ownership of their life policies and taking over the premiums. This not only helps your parents in challenging financial situations but can also provide you with a valuable opportunity to bolster your own retirement planning.

Our parents helped us with getting a start in life, it is only fitting that we should help them to live out their sunset years with minimal financial pressure. Professional financial advice can help you make your money work harder and smarter for you and your parents. Being prepared, having a plan in place and monitoring your plan regularly will give your family the best chance at achieving your financial goals and keeping your loved ones financially secure

NMG has professional, accredited financial advisors who can sit with you, review your and your parent’s financial status and help you formulate a plan to make your money achieve the best outcomes. If you are interested in speaking to one of our advisors.

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