When elderly parents find it hard to look after themselves, it is common for their children to take on the role of carer. As we live longer, more Australians face the prospect of needing to care for their elderly parents while looking after their own family. These carers are typically women between 40 to 50 years.
The responsibility of looking after your parents can be financially, emotionally, and physically challenging. The additional expenses can take a big chunk out of the family budget and drain your own financial resources. It’s also mentally and physically demanding to juggle between responsibilities towards your parents, your family, and your work. Your emotional wellbeing can be negatively impacted by having to bear this added burden.
Without careful planning and preparation, the opportunity costs can be enormous. Caring for your parents can cause disruptions to work which means the loss of income. When your employment gets interrupted consistently, you may miss out on opportunities for promotion and lose out on extra benefits. There’s also the missed the opportunity to contribute more to your super. Your financial goals take second place as you use your own savings to meet extra expenses. Over time, it can be detrimental to your own financial future.
Managing your parents’ finances
Looking after your parents doesn’t mean putting your own wealth building plans aside. Start the planning process before crisis hits home. You need to find out as much as possible early on about your parents’ financial matters and how they wish to be looked after in old age. The more you know about your parents’ financial situation, the more you can safeguard your own.
Checklist for managing your parents’ finances
- Get the family together and start the financial conversation early. Find out what your parents’ needs and wishes are, how much money is needed for their care, and divide the responsibilities between family members.
- Ensure your parents have an updated will and organise a power of attorney if they haven’t done so. A power of attorney allows your parents to give you legal authority to handle their financial affairs.
- Know where they keep their financial records, where their savings are held, and what investments they have. Locate important documents such as:
- Bank and investment details.
- Insurance policies.
- Funeral arrangements.
- Know your parents’ sources of income and their monthly expenses. Analyse your parents’ expenses to ensure they are not paying for anything they don’t really need.
- Check if your parents qualify for any Centrelink payments.
- Get to know your parents’ professional advisors. Organise a meeting with their advisors so they can guide you on the best way to plan for the future. This ensures that everyone is prepared for the transition ahead.
Looking after your parents can be a rewarding experience
From a different perspective, caring for your elderly parents is also a rewarding experience. It’s a way of giving back to your loved ones. Creating a positive experience is possible with adequate planning.
8 Tips to maintain balance and create a rewarding experience
- Start developing a plan early. This will ensure both your parents needs and your needs are met. Divide up the responsibilities among other family members. Know your limits and don’t take on more than you can handle.
- Talk about issues openly with your family. Depression and anxiety are common – both for parents and their carers.
- Take time out for yourself to avoid burnout and depression. Look after yourself and ask for help when you need it. Looking after someone over an extended period of time can be exhausting and can result in feelings of resentment.
- Take care of your own financial future. Start by preparing a budget and don’t take on extra debt that puts you under more financial pressure.
- Ensure you have adequate insurances. This will give you peace of mind knowing that your family will be looked after if anything happens to you.
- Keep saving and contributing to your own retirement, no matter how small. The power of compounding is powerful, so make use of it.
- Sort out your own estate planning, Will and Power of Attorney.
- Seek professional advice and develop a financial plan and ensure your own wealth accumulation strategies are in place.
Juggling the responsibility of looking after your elderly parents and your family can be financially and emotionally challenging.
We can help you to develop a financial plan to meet your needs and those of your parents.
If you suffer from anxiety or depression, call Lifeline Australia on 13 11 14.
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Moiler Partners is an Authorised Representative of Count. ‘Count’ and Count Wealth Accountants® are trading names of Count Financial Limited, ABN 19 001 974 625 Australian Financial Services Licence Holder Number 227232 (“Count”) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. This document has been prepared without taking into account your personal objectives, financial situation or needs. You should assess whether the information is appropriate for your needs and consider talking to your financial planner before making any investment decision or your lawyer regarding your estate planning needs.