How can you help your parents prepare for retirement?
In this day and age, there’s a lot of talk about parents helping their adult kids buy a house – but how can we repay the financial favour and help our parents prepare for retirement?
According to Naimul Chowdhury, from BenWest Investments, on behalf of Dynasty Private Wealth, the answer is in education.
Over the course of the last 18 years, the financial advisor has found that Gen X and Gen Y do a lot of research around finance. This is in large part due to the wealth of resources that are now available.
Before the internet was around, says Naimul, people had to read books or take classes if they wanted to find out about the world of financial planning.
Now, countless sources of information are available online and you can study financial planning at university.
Millennials are making it happen.
Not only are the younger generations more financially educated, they are also good at taking action on their financial goals.
“I think they’re more prepared to take risks with their finances – and they pay it off because there is a lot more information out there,” says Naimul.
Another reason the youth of this country have become financially savvy is because they have the odds stacked against them.
“I do believe it is a lot harder financially these days to live,” says Naimul.
Whereas a yearly salary of $40,000 to $50,000 was enough to live on 20 to 30 years ago, in order to buy a house and enjoy a decent lifestyle in today’s climate, the average person needs to earn about $100,000 a year.
If you live in Sydney and want to buy a house the conventional way, you would need to save a $200,000 deposit and pay more than $1,000 a week in loan repayments for the next 25 to 30 years – and this is just the starting point.
The older generation are strong savers.
While Millennials are generally more educated regarding financial matters, their parents’ generation are good at saving.
They know how to put aside money each month and patiently watch it grow over a long period of time.
Uniting our strengths.
The best way millennials can help their parents prepare for retirement is to share their knowledge with them, says Naimul.
“They can do some educational courses and pass that information onto their parents in order to educate them.”
“There are different vehicles that can help you reach your goals which a lot of people do have access to.”
“But, at the end of the day, it is all about education.”
Knowledge about the world’s financial markets is more readily available now than it has ever been, he says.
There is also a lot of conflicting information out there to consider. By educating ourselves and analysing each side of the debate, we have the power to come up with our own answers.
Seeking a financial planner.
Younger people can also use their knowledge of the financial world to help their parents find a good financial planner.
They can help them navigate through the financial services guides of each professional they consider and check up on the different products and strategies the planners may recommend.
Reaping the rewards of a well-thought out strategy.
“What you put in is what you get out,” says Naimul.
When it comes to planning a sound financial future, education and action go hand in hand.
Just as our parents taught us about the importance of savings, we can teach them about minimising risk and following through on well-thought out strategies.
Because parenting is not a one-way street. It is up to us to help our parents thrive – just as they have done for us.