If your parents’ savings and assets aren’t enough to support their retirement it could become, or already is, your problem. And the financial effects of the pandemic are likely to be felt for some time to come, thus impacting any retirement plans that were in the pipeline.

As a result of this, you may be forced to put your own retirement plans on hold while focusing on your parents’ financial wellbeing instead. But this may have a counter-effect.

That is, sacrificing your own retirement savings to help your parents may in turn cause you to rely on your children for support….And so the cycle continues.

Fortunately, there are some steps you can take to assist you through this process.

Here’s a few things you can do to help both yourself, and your parents, in having the best chance of retiring comfortably.

Do the maths on your/their retirement savings

For your parents:

You’ll need hard numbers in order to assess the situation properly. Developing a budget spreadsheet of your parents’ expenses and income, will enable you to see exactly where they stand financially and how long their money is likely to last. You can also use a retirement calculator to help you with this. It’s also important to include the financial consequences of COVID-19 and how this has impacted superannuation and investments.

If there is a deficiency in their income, you might want to consider working with them or consulting a financial professional to help them to better manage their money. This may include setting up an emergency fund to cover medical expenses for instance. They may also want to consider downsizing their living arrangements by selling the family home.

For yourself:

Identify how much you’ll need in retirement and whether you’re on track to meet it by using a retirement calculator. If you are impacted financially by the pandemic, you are likely to have a number of years to recover from any financial effects or losses so that your retirement plans will not be negatively affected.

If you find that you’re going to fall short, you may want to consider investing more into your retirement savings than just the compulsory 9.5 per cent employer contribution.

By contributing additional amounts into your super from your take home pay or your before-tax income, you can get access to substantial tax benefits and potentially move closer to achieving the lifestyle you want when you retire. Superannuation is a long-term investment so any COVID-19 impacts are most likely to be short-lived and recoverable by the time you retire – all market downturns are temporary and markets do recover over the long term.

Insurance to cover medical expenses in retirement

One of the most important things you can do, if nothing else, is to ensure that your parents have appropriate insurance.

Why? If you don’t invest in financially protecting your parents now, you may end up paying a lot of money later on to cover basic retirement expenses. Healthcare costs in particular, are becoming increasingly expensive so it may be in your best interest as well as theirs.

If you find that they may not have enough insurance to cover medical expenses, long-term care and other retirement costs, you may want to consider putting this in place.

Discussing elderly care in retirement

While your parents may want to retain their independence in retirement, at some point assisted care may become necessary.

Retirement homes and assisted living facilities can be expensive, so if this isn’t going to fit within your budget, you may need to consider other options. One option could be, that they move in with you or a sibling for instance. You may also want to investigate whether they meet the requirements for government funded housing support.

Getting professional help with retirement planning

Sometimes it can be difficult to manage these pressures alone, especially when it affects your financial stability.

Enlisting the help of an expert, such as a financial adviser, may assist you in developing appropriate strategies to ensure you’re meeting your own retirement objectives as well as those of your parents. They may also identify if your parents are eligible for tax concessions or other government benefits.

Finally, set boundaries to ensure your own retirement doesn’t suffer.

While you may want to help your parents, it’s important to consider setting boundaries and to be clear about expectations so it doesn’t affect your own financial future.

There’s nothing wrong with being willing and able to help, but be clear about what that help consists of. If you help them too much, then it could be your children who pay the price.

Peter Speechley is HLB Mann Judd Wealth’s Accredited Aged Care Professional and can assist in helping people through the maze known as Aged Care.

Peter Speechley and HLB Wealth Pty Ltd are Corporate Authorised Representatives of Paragem Pty Ltd ABN 16 108 571 875, Australian Financial Services License 297276, Level 15, 115 Pitt St, Sydney NSW 2000.