IN RETIREMENT YOU SOMETIMES HAVE TO BE CRUEL TO BE KIND…
A look at some real-life scenarios that all families need to discuss and respect.
This article is probably going to stir some emotions and get the tail feathers up of some, but this is not a popularity contest; it is a space where we need to get real and call it as it is.
The scenarios that I am going to refer to are real-life scenarios and ones that many people can probably relate to. Some of my comments will hit close to home and maybe even be hurtful. If this is the case, then I apologise. I do not want to offend anyone, but I think these are issues that all families need to discuss and respect.
I want to focus on three areas:
Retirees and their children (and grandchildren);
Children and their retired parents; and
Married retirees.
As parents, we want to give our children only the best, and it is our responsibility to make sure that they are educated, clothed, and fed and that they grow up to be responsible adults who respect others, have high moral standards and are plain good citizens. We do not want to see our children suffer. We want to see them flourish. All this is fantastic; however, there comes a time that our children must get on the wheel of life and pass the baton on to their own children just like we did.
Can I ask that retired parents please stop giving away their livelihoods to their adult children? If you have excess wealth and your gift will not impact your sustainable lifelong income, then give by all means. Just make sure that your calculation of how much you need for the rest of your life is correct. Also, make sure that your children understand the implication of a potential inheritance (or lack thereof) if too much is given away too soon. This is often underestimated…
I often encounter funding for children for home purchases, business ventures, elaborate holidays and general assistance to overcome financial hardships. When I pose the question to retirees what they will do when their funds run out and if their children will assist them financially, their response is unanimous: “No, we will not want to be a financial burden on our children”. Well then, children must not be a financial burden on them either. Children will benefit sometime in the future when parents pass on.
Be very careful of a “living inheritance”. It may just have unintended consequences.
Consider some of the implications:
Often a ‘struggling’ child receives financial help from parents causing ill feelings among other children. Try and always treat all children the same at all times.
‘Giving’ to only one child while you are alive makes future distributions complicated if you want to be fair. Inflation calculations must be brought into consideration, often leading to disputes.
Donations tax becomes payable when giving while alive.
The unintended consequence is that you underestimate how much capital you will require for the rest of your life. You may just run out if you give away too much too soon…
I often make the statement that money is the destroyer of families. Don’t let this happen to yours. By trying to do the right thing for your child/children, you may just be doing the wrong thing for your family. Perceived inequality when inheriting has some dire consequences…
To the children of retired parents, please read the above. Please treat inheritance as a privilege and not a right. Children (some) are manipulators of note. From a young age, children have the ability to spin their parents around their little fingers. Unfortunately, children remain children as parents remain parents. Please don’t manipulate your retired parents. You know exactly how to extract gifts, funding and whatever you need from your parents. Playing the victim and putting your parents on a guilt trip is cruel.
There are many fantastic adult children who carry their parents in their hands in many ways, including financially. Kudos to you. Unfortunately, there are also those who will drain every drop from their parents if they can. Fortunately, they are in the minority. I don’t think children do this with the intention of squeezing their parents dry; I think it is a matter of habit and how things were while growing up. Mom and dad always give so they can continue doing it. Well, no, they can’t!
Take the time and make the effort to understand how much your parents actually need to make ends meet for the rest of their lives. Unless, of course, you are happy to fund them or let them move in with you sometime in the future… Please become their financial confidant and help them with their financial decisions. Stand on your own feet, don’t knock your elderly parents off theirs. You will be shocked at what we, as financial advisors, encounter…
Apart from the money aspects, children must provide their elderly parents with guidance in an honest way. No one likes the thought of getting old and frail and that they will become reliant on someone else in their daily lives. If your elderly parents are starting to lose their ability to carry out daily tasks or they become a danger to themselves (like I caught my aged mother trying to remove toast from a “live” toaster with a knife), the discussion about moving to a retirement home with care facilities must start in earnest. Don’t delay it too long. The longer you wait, the more difficult it becomes. Strangely, aged parents tend to listen more to their children than to anyone else…
To married retirees. You can read all the above together. Some may see their lives in my comments. Can I ask that you have regular ‘get real’ discussions? Decide and agree on a fair ‘transition’ age or occurrence. While you are healthy and active, talk about the ‘what if’ scenarios.
Are both of you capable of looking after each other if either of you gets injured or falls ill? If you are not, then maybe moving to a retirement village with care facilities is not too far off.
How long can you still live in your home with the stairs and a big garden? If living in your home becomes a hassle, then maybe it’s time to move on. In many cases, there are differing opinions between spouses regarding when it is the right time to move on. Sometimes one party must take the lead and make that decision. It is not fair for an aged person to take the responsibility of caring for their frailer partner. While one still has the ability to do it, it may seem fine. But just for one minute, imagine while caring for a partner, you yourself end up in a situation where you can no longer do so, and you need assistance yourself…
The above decisions are tough. It may be wise to talk to your professional financial advisor, who also focuses on lifestyle and transition planning.
Good luck with those tough decisions, and be kind to your loved ones.
