Retirement is an important milestone, and like any other event of life it has implications on finances. Indian parents typically do not discuss their finances with their children. However, as adults it is our responsibility to ensure that our parents are ready for their retirement phase. The status of our parents’ future finances influences our lives as well. We should start taking initiative to understand if our parents are ready for retirement.
The four questions below will help us understand the situation better:
How do you plan to cover your medical expenses?
Cost of medical care will increase over a period of time due to inflation. Considering that medical expenses also tend to increase with age, planning for medical care is essential. Ask your parents if they have a plan to fund their healthcare post their retirement age. Try to know if your parents have an adequate health cover to meet their estimated medical care requirements. Do they have a liquid fund in place to tide over medical emergencies?
What are your plans to meet your expenses?
Post retirement a plan to manage one’s expenses is essential for everyone. We should try to estimate our parents’ post-retirement expenses and check their plans to fund them. Ask your parents if they are going to cut back on spending. Check whether they would like to close any debts. Ask them if they would like to take up a job after retirement which can generate additional income.
How do you plan to use your retirement benefits?
After their retirement your parents will cease to get the benefit of a regular salary. So a good assessment of their existing savings and assets must be carried out to estimate their post-retirement earnings. Ask them how they have invested their retirement benefits. Estimate if their retirement income is sufficient to meet their retirement expenses. Check if the future cash flow from their retirement benefits will suffice their growing needs.
Have you planned your estate and written your will?
Estate planning is a necessary tool to take care of the rights of the beneficiaries of one’s assets. The rights of the surviving spouse and children over the assets have to be clear and spelt out. Ask your parents if they have prepared a will and registered the same. Also ask them if they have explicitly asked someone to be in charge of their financial matters. If yes, does the person in question have the experience related to handling such matters?