No one wants to talk about money with their parents, but it’s essential. Here’s how you can help your parents enjoy a stress-free retirement. 

It was a quiet Sunday afternoon when my phone rang. On the other end was a close friend, her voice sullen. “My parents had to sell their ancestral house,” she said. “Now, they have to choose between having a smaller house to stay in and having enough money to manage their retirement expenses.” 

My friend, like most adults, thought her parents had sorted out their retirement. After all, her father worked in a bank and she and her brother never seemed to be wanting anything. Though their family never talked about money, my friend’s father soon realized that his children’s education, their weddings, gifts for grandchildren, travel, taxis, and a medical expense (a heart surgery, no less) had depleted his savings, putting retirement on the back burner. And now the only choice he had was to sell his ancestral house, a decision he had hoped he didn’t have to take in his lifetime.  

My friend’s situation is no exception. Do we all, have it planned for the unknown unknowns? According to a survey, 67% of Indians feel ready for retirement, but only 33% are saving for it (PGIM India Mutual Fund Retirement Readiness Survey,2023). 

The harsh reality of retirement in India

India’s population is ageing and ageing fast. By 2050, over 20% of the country will be 60 or older (India Ageing Report, 2023). That’s a lot of people relying on savings, pensions, and, often, their children.  About 70% of Indians expect their kids to support them financially in retirement (HSBC Future of Retirement Survey, 2017). In many eastern societies it is the norm for children to take responsibility for their old parents. But this means that children must not only plan for their own retirement, their children’s education, buying a home, and other responsibilities, but also save for their parents retirement. Most millennials today are caught between providing for their parents and providing for their children.  

So why is retirement so hard?  

• No more steady pay checks: Retirement means the end of a regular income for a lot of seniors. Suddenly, seniors are living off their savings, pensions, or investment, and it’s rarely enough.  
  
• Life expectancy has increased. People are living longer with life expectancy reaching 85-90 years. Women live longer than men. According to Max Life Insurance Survey, 2024, 57% Indians fear their retirement savings will deplete in 10 years. If retirement age is 58, and savings last till 68, seniors still have to account for the last 20 years of their life when expenses can be huge due to failing health. 
  
• Expenses don’t stop: Sure, seniors are not commuting to work anymore, but healthcare costs skyrocket, home repairs pile up, and inflation quietly eats away their savings. 
  
• Healthcare is a wildcard: A single medical emergency can wipe out years of savings. When one is earning, one tends to look at lower premiums rather than calculating how much medical insurance is needed. The ACKO India Health Insurance Index 2024 shows that healthcare costs in India are increasing at an annual rate of 14 per cent. It also reveals that 23% of hospital costs are funded through borrowings while 62% of health care expenses come out of pocket. A large percent of Indians don’t have adequate medical insurance too. 
  
• The emotional turmoil: It’s tough for seniors to admit that they need help, especially with money. They might feel shame and guilt for burdening their children and adopt an austere lifestyle to live within their means. This can affect their physical and emotional health, besides being heartbreaking for their children.  

How to have that conversation 

Talking money with senior parents can feel awkward, but it’s necessary. An ideal scenario would be that they are well-prepared for their retirement, and you are too. However, some parents may need an intervention. 

Here’s how you can prepare for it. 

• Empathy first: Begin by acknowledging how hard it must be for them. 
  
• Asking the right questions: Gently nudge them to share their financial situation and let you know where they stand – how much do they have saved, what their monthly expenses are, do they have any debts or financial obligations?  
  
• Create a realistic budget: Help them map out their monthly expenses. Cutting back on non-essentials can stretch their savings further.
  
• Explore extra income: If the situation permits, suggest ways they can earn an income. Popular options being, renting out a room, taking up part-time work, or even monetizing a hobby. It’s not about working themselves to the bone but creating inflows by doing what they love. 
  
• Get professional help: A wealth manager can be a game-changer. They can help seniors optimize their savings, explore options like the National Pension System (NPS), and consider equity exposure for potential returns. While a small pool of money may make equity exposure riskier, but it’s a risk worth taking. Failing to do so could mean missing out on valuable growth opportunities. Additionally, they can assist in setting up a Systematic Withdrawal Plan (SWP) for a regular income stream. The possibilities are numerous. 
  
• Plan for healthcare: Healthcare is the biggest wildcard in retirement. Leveraging the right insurance plans and taking advantage of applicable government schemes or rebates helps de-risk. 

So, what did I tell my friend? I shared an in-depth conversation with my friend about her parents’ retirement planning, and together we outlined a tailored solution that she is now putting into action. It’s important to remember that every family is unique, and so is everyone’s situation. Therefore, while these guidelines can provide a helpful framework, they should be adapted to meet the specific needs and circumstances of each person. 

Finding clarity in uncertainty 

Making sure one is successfully set up to enjoy a happy retirement should begin with one’s first pay cheque. As the son or daughter of senior parents, first ensure you are investing wisely before you take on the responsibility of managing your parents’ money. Putting measures in place to make senior parents feel secure will give them and your family peace of mind. Their golden years should be free from financial worries. 

Conversations around money are never easy. But it’s one conversation we can’t afford to avoid. With open communication, professional help and lots of empathy, you can help your parents retire right.