I came across a simple yet impactful quote on the internet: “Never complain about what your parents couldn’t give you. It was probably all they had.” A beautiful and profound way that leads one to think, what can we give them as a way to thank them for the sacrifices they made in their lives for us? It’s not about building a big house for them or taking them on a long vacation. While these are amazing things to do for one’s parents, there is also a more significant return gift that would sustain your parent’s dignity of living: financial planning.
While one wishes to take care of their parents, it is also important to ensure that one is saving for one’s retirement. This is where a nest egg fund plays an essential role. Therefore, this blog will tell you about financial planning for ageing parents and maintaining a nest egg fund.
Maintaining A Nest Egg Fund While Supporting Your Ageing Parents
Balancing your nest egg while supporting your parents who are ageing by the day requires a thoughtful approach. Let’s look at some of the strategies:
Assess your finances and your parents’ finances:
Take the first step by currently evaluating your current financial health including what you are saving for retirement. Also, check whether you have any debts such as outstanding credit card payments, loans, mortgage payments, EMIs, etc.
If your parents are still earning then understand their current income, existing retirement savings, and current expenses. Once this is done, you can easily assess their health insurance coverage and potential future medical requirements.
Allocate funds
Now that you have a clear understanding of where you and your parents stand financially, prioritise and compartmentalize the funds. You can do this by building two emergency funds, one for you and one for your parents. This will help manage unanticipated expenses without draining any long-term savings.
Make contributions to your nest egg fund as well, which pertain to your retirement savings. Over time, try increasing the contribution amount.
Look for other financial options for your parents
Creating emergency funds for your parents is good but these funds are meant for emergencies only. Therefore, you do not want to fall into a situation where such funds may be utilised for other purposes in the absence of emergencies. This is why, you must also consider exploring options such as government schemes for senior citizens with attractive interest rates and tax benefits.
Reach out to a financial coach to help you understand which is the best government scheme from which your parents can benefit.
Furthermore, continue to review the current investments made and adjust towards safe options like low-risk debt funds or fixed deposits. Also, while reviewing your parent’s health insurance coverage, make sure that their plans have enough coverage for senior citizens.
Streamlining your parent’s expenses
If you further wish to save more money for your parents, help them also to identify areas where they can manage different areas of spending. For instance, sometimes, a parent may think that bulk buying is cheaper than buying a single item. However, the item is likely to only be used once. Therefore, help your parents identify areas where the buying versus utilisation ratio is fairly adjusted.
Consider if you want your parents to live with you or a sibling to minimise additional rent expenses. Of course, this decision has to be made mutually and unanimously keeping both the parent’s sentiments, budgeting status, and your family’s perspective at the same time.
Also, it would be wise to consult a financial advisor regarding your retirement plan as you build your nest egg fund. Remember that with a nest egg, you can maintain your desired lifestyle without solely relying on pensions. Also, retirement can last for two to three decades. Therefore, a nest egg can help cover unexpected medical costs and other emergencies.
Most of all, as you cover expenses for your parents, your future retirement days are covered as well, giving you the peace of mind you deserve.
FAQs
1. What are some good financial means to build a nest egg?
Consider the following financial ways to build your nest egg:
- Employer-sponsored retirement plans
- Individual retirement accounts
- Mutual funds
- Exchange-traded funds
- Automated-investment platforms
2. When is the best time to start saving for the parent’s finances?
It would be best to start planning to create savings for your parents from the time you start earning. However, if you are in the mid part of your life and you have just started realising, it is never too late to begin saving for your parents. Remember that even small contributions made over a consistent period can accumulate significant amounts.
