How to make your parents financially secure as they grow older

Summary: How can you ensure your parents’ financial security and help them with effective retirement planning? Here are four ways to make their retirement truly golden.

12 Dec 2022 by Team FinFIRST

Financial security is essential at all ages, but its criticality multiplies manifold after one retires. Since a regular income from salary or business profit will no longer come in to fuel everyday outgoings and lifestyle expenses, it is imperative to plan ahead to ensure financial independence.

Most parents spend their entire life savings on their children’s education, wedding, business, etc., without thinking about their own future security. It is now your turn to think about them, support them, and make their dreams a priority. You can do this by talking to them about their retirement goals, explaining the nuances of effective retirement planning, and helping them invest in the best retirement plan that suits their needs.

Read on to know about four ways to make your parents financially secure:

1. Get them health insurance coverage

Degenerative and lifestyle health problems are common as we age. Healthcare coverage is imperative so your parents can get the right medical assistance when required without breaking any savings or jeopardising their financial security. Health insurance gets progressively expensive with age, so do not delay this. Not only is it cheaper to get insurance when one is young, but it also allows enough time to tide over the mandatory waiting period for critical illnesses.

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2. Allow them to reap the value of their home

If your parents are empty nesters, they may want to consider downsizing to a smaller home. Big, older homes are costly to maintain, which can consume a lot of time and money that could be better utilised. A smaller residence closer to family and healthcare options not only provides social security, but the unutilised proceeds from the sale of a bigger house also provide precious capital that you can reinvest to supercharge their retirement planning milestones.

3. Help them create a sustainable strategy

The older generation tends to be more comfortable with conventional savings instruments such as fixed deposits, PPF, etc. However, the real return on these investments does not even counter inflation, let alone generate funds to manage additional expenses and enable future security. To safeguard your parents’ finances, help them create a portfolio for short-term and long-term needs, where the majority allocation towards the long-term bucket is in equity-related instruments such as mutual funds. A systematic investment plan (SIP) allows for higher compounding while averaging volatility.

4. Invest in a robust retirement plan for them

Annuities are among the few investment options that offer a much-needed steady income post-retirement. You can help your parents buy a joint annuity as a lump sum or invest systematically and receive a fixed monthly income for the rest of their lives. Such a retirement plan not only ensures income predictability but also helps to save on tax based on the proceeds received each financial year.

Conclusion

Everyone’s retirement needs and goals are different, and IDFC FIRST Bank lets you choose and customise the best retirement plans from the top insurance providers in India as well as goal based journey in the App helps manage your goals through Mutual Funds. IDFC FIRST Bank’s investment professionals can guide your investment portfolio based on your requirements, enable secure retirement planning, and suggest an appropriate annuity plan to help you make your parents’ retirement years truly golden!

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

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