If your parents are pensioners and are still very independent, it may be difficult to bring up the topic of how sound their finances are. Chances are that if they’re living on their own and enjoying a certain standard of living they’ll be averse to any “interference” on the part of their children. But how do you make sure your parents are okay? How can you check if they’re making unwise investments or losing some of their financial savvy?
Pensions are often targeted by fraudsters — it’s a good idea keep your parents abreast of some common fraudulent schemes that they may not be aware of (they may know how to send an SMS, but may not know anything about SMS scams).
First, realise that your parents don’t want to be spoken to as though they’re children. If you broach the topic, do so with caution and stress that you don’t want to tell them what to do. Nor do you want to compromise their independence.
They may fear you want to make changes in their life that will prove more convenient for you, so you have to assure them they should ultimately make the decisions — provided they are still capable of sound judgement, of course. If not, one parent may seek power of attorney to look after the other’s affairs, or appoint someone else to do so.
Secondly, although your parents may be in good health now, it’s a good idea to suggest they consider what will happen if one or both should fall ill. Do they have contingency plans in place?
Are their wills up-to-date? Have they thought about estate planning? It’s important that, if they do have bequests or particular wishes, these should be spelled out in legal documents so there is no ambiguity or a chance that their final wishes may not be carried out.
Where can their important documents be found in the event of an emergency? Is there sufficient money available for medical bills or extended medical care? Perhaps having a discussion about health could lead you to chat about broader topics.
Finally, check if there are any opportunities they have become excited about recently: offers of anything free, promises of holiday schemes or sectional title schemes to buy into. Do they have a financial adviser to steer them away from any too-good-to-be-true offers — or is their adviser pressing them to consider these?
The best idea is to sit down with a reputable financial adviser and consider their financial position: look into assets, income, debts, spending, insurance, medical aid, plans for long-term medical care, pension schemes and retirement annuities.
Pensioners are vulnerable, especially if their capital has been eroded over time, so the more legal and financial protection they have, the better.
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