Paul Menge | How to plan for looking after elderly parents

It’s an economic reality in South Africa that many people have to look after both their parents and their children, writes Paul Menge, Actuarial Team Lead at Momentum Savings, in the wake of Family Day.

Most of us are struggling to keep our heads above water in a non-growth economy. It’s hard out there, and long-term savings seem to be the last thing on people’s minds. But I believe it’s the only weapon we have against inflation and losing even more of our buying power.

People think because I’ve studied actuarial science, I’m sorted. Yes, I have a good job and I work for a stable company. But all of us have financial challenges. To start with, I have young children. My mother has her own money, but if her health were to deteriorate, we’ll be in for a rougher ride. My father has his own business and looks after himself, but again, anything can happen and there may not be a huge pile of savings waiting if he is forced to stop working.

My parents are not unique. A study by Genesis Analytics and the Financial Sector Conduct Authority (FSCA) shows that more than 90% of retirees are unable to maintain their standard of living after retirement.

It’s not easy. But something that makes life easier, is to budget and plan. Yes, call me a numbers person, but if I know what I’m in for, I relax a little and can think clear-headedly.

My parents made sacrifices to give me and my sister opportunities, and for that I am eternally grateful. I would want to look after them if they no longer can

But my wife and I also need to look after our children. That’s why I like to list all our long-term financial goals, from our retirement to our children’s education, not neglecting the bit of joy of a well-deserved anniversary holiday.

The hungry wolf of medical expenses is one I am very wary of. I often suggest to people it’s worth your while to take out an extra retirement annuity just for that, and I call it the “ambulance RA”. The number of how medical expenses will increase over time is even scarier than that of everyday expenses. Medical inflation is often a couple of percentage points above that of normal inflation.

Where it may cost R2 500 per year per person for medical aid now, in 25 years’ time it’s going to be R10 000 per month.

Best is to educate yourself about what is coming. What help and care are available out there? What will be affordable? What does parents’ medical history predict, also taking their genes and sport injuries into account? Are there any savings, and how much? Do they own a property or not? Is there debt or not? And make sure they can recognise get-rich-quick schemes and bank fraudsters.

It’s also important to talk about these things. Should you take responsibility on your own, or rather discuss it with the extended family? Who can afford financial support, and who prefers emotional or practical support, like cleaning house or accompanying doctors’ visits?

Parents have a say too, of course. What will be ideal? And what is realistic? Hopefully, a good compromise can be negotiated.

As family matters often involve a lot of emotion, this is my advice to my future self:

• Be realistic: In the end, it will be hard and fast numbers that determine the course.
• Get advice: A friend, relative or counsellor can help you keep a healthy perspective on the situation. Plus, a financial adviser.
• Seek help: Don’t try to do everything alone. If there aren’t family members who can help, a carer or servant may make things easier.
• Keep perspective: When things don’t go according to plan, remember that you’re doing your best.

If you still have a little time on your hands, like I do, take comfort in long-term growth. Starting as early as possible and investing regularly is the best way to make a little money more. With time on your hands, you can earn interest not only on the original amount, but also on your interest. This is the magic that the world’s best investors appreciate.

 *Paul Menge, Actuarial Team Lead at Momentum Saving.