For many people, a huge transition takes place when their parents enter into old age. In order to repay them for all the years of looking after us when we were young, we gradually learn to look after them as they begin to enter a different stage of their lives.
However, it seems that many people do not have very accurate knowledge of their parents’ finances, with many thinking that their parents are actually better off than they really are.
So, what can advisers offer these retirees who are worried about their finances?
Financial situations
Recent research among consumers with retired parents showed that many people are happy to look after their parents through their retirement.
However, while tasks such as running errands and ensuring their heating is working are easy to remember, a lot of people fail to check up on their parents’ finances.
The research highlighted that nearly one in three respondents did not know how much their parents’ annual income was.
However, the majority believed that their parents were getting by on the state pension and did not think that they were facing any financial struggles.
Unfortunately, it seems that this is, in some cases, far from the truth. Two-thirds of the over 60s who were spoken to during the research admitted that they were getting by on less than £10,000 per year, and as a result had to scrimp and save to ensure their money would last throughout their retirement.
This means that their standard of living may have had to decrease and many admitted that they had cut back on socialising and other outgoings in order to account for their small retirement funding.
This research shows that some retired home owners are struggling with their finances, while their offspring find it easy to assume their parents do not have any financial problems.
In actual fact, many retirees are worried about the state of their finances. So what can advisers do to ensure that anyone coming to them with questions about their parents’ finances – or indeed, retired customers themselves – are given the best option to suit their needs and help them ease the financial strain?
Active involvement
Firstly, it is a good idea to ensure that all necessary parties are present when dealing with retirees’ finances. Therefore, ensuring that the retirees’ offspring are involved with any decisions is vital, so that they can help them with their choice.
Considering that many financial decisions involving retirees will often affect their children’s inheritance, it would be advisable that they are actively involved in the decision stage.
Secondly, it is important to ensure that all of the available options are made clear to them, to allow them to decide what method of retirement provision would suit them best.
Thirdly, financial jargon can be problematic for the even those who keep up-to-date with the latest products and market fluctuations, so it can be a daunting prospect for those who do not.
Supplementing income
Equity release is one such option that could help retirees who are looking for a way to supplement their retirement income. As many retirees have benefited from the huge house price increases over recent years, they can use equity release as a way to unlock the cash tied up in their home.
This can be a great benefit to retired home owners who have paid off their mortgage and would like to use the equity in their home as a way of increasing their standard of living through retirement.
This method of retirement provision will inevitably reduce the amount that will be left to the family in their estate and therefore will affect the amount of inheritance they are able to leave to their family.
However, it works well as a method of helping retirees to use money that would otherwise have been left tied up in their home, and we have found that many children are happy for their parents to free up this money to enable them to have a more enjoyable retirement. Of course, equity release is not for everyone, but it should be examined as a possibility.
A big responsibility
Advising consumers to ensure that they are keeping a watch over their parents’ finances is another point highlighted by this research, as it seems many have overlooked the fact that their parents may not have such a comfortable financial situation as they expected.
Advising those in the over-60s market involves a high level of responsibility, and ensuring that family members are involved in the process will enable everyone affected by the decisions to take an active role in helping their loved ones have a more comfortable and enjoyable retirement.
Answer ten questions to win Amazon vouchers
Get the daily news delivered to your inbox
Find the latest industry jobs
