When you hear the words ‘debt-free,’ what is it that comes to your mind? Most probably, a feeling of lightness, which brings a smile; no more home loan EMIs (equated monthly instalments)! Isn’t that a situation that you would love to be in? Come to think of it, debt is not something we carry lightly and, over the years, it tends to wear you down.
Let us, for the moment, forget about loans and talk about another kind of debt. What about your indebtedness towards your parents? Do you plan to take care of them financially and physically as they move forward towards their sunset years?
Somehow, in our society, while it is understood that a man needs to take care of his parents, it is not the case with the woman. It is strange when you think of it, since an equal share in property after the demise of parents is accepted by all including your in-laws, but an equal share in responsibilities is not so easily accepted by most people. That said, the woman has the same instinct and would like to be there for her parents, financially or otherwise, if required.
Before you decide to skip this, let me clarify. In our practice, we have seen many parents who are financially independent in the normal course, and hence kids get complacent. But when there is a medical emergency, they are unable to cope. There are parents who have the financial resources to cope both with medical and other emergencies as well as normal living expenses. They, however, need your time and physical presence for a long period of time, may be for many years. Look around at the families of your relatives and friends and you are sure to find a lot of people who have had to put their life on hold to take care of parents who cannot be left alone.
That brings us to the point on how you should plan so that you have the resources to help out when you want to.
When your parents are dependent
In this case, it is important for you to have this conversation with your spouse, preferably before marriage. You need to spend time understanding the income and expenses of your parents and calculate the amount which you would be required to pitch in with. You should start saving for this goal as soon as you start earning. Ensure that you do not dip into it unnecessarily. Keep in mind that life spans are increasing, and with today’s health care facilities and quality of living, planning for a life expectancy of 90 would be prudent.
The financial side of it is the simpler of your problems. Dealing with the spouse’s/in-laws’ mind-set of why a daughter needs to support her parents is a different story altogether. If you still have not tied the knot, now is a good time to bid goodbye to your awkwardness around money and discuss. We have interacted with a couple whose marriage broke up within two years primarily because of this issue, as her spouse’s contention was that her brother would take care of the parents and all her earnings should be deployed towards the couple’s goals. It wasn’t a pleasant parting and caused a lot of anguish to both partners who could not see the others point of view.
Preparedness for an emergency
Many of our clients belong to this category. They have parents who do not expect financial support. This somehow lets the children relax, believing that all is well. Many of them don’t try to find out how expenses are being met, and what the provisions are in case of a medical emergency. As a result, when there is a medical emergency, they are grossly under-prepared.
First, ensure you include your parents in your corporate group cover. Take personal health insurance despite having a cover provided by the company. Remember, you may decide to take a break at some point in your career and getting insurance at that point for an older person with pre-existing ailments such as diabetes or hypertension can be a difficult task. Further, you also need to keep in mind that not all expenses will be covered by insurance. Your insurance cover may not suffice and it is important that you set aside a decent sum as emergency medical corpus for parents. Keeping in mind today’s increasing costs of medical care, a sum of Rs 10 lakh would be prudent.
Emotional needs of the financially free
We have quite a few customers who belong to this category. Their parents have managed to accumulate substantial assets to take care of their day-to-day needs as well as unplanned emergencies. What we notice increasingly is that, despite being financially independent, there are situations where they require assistance. With age also comes ailments such as Parkinson’s and Dementia.
We just interacted with a lady who had shifted to a house in the same apartment as her parents’ since both parents had dementia and one of them was bed-ridden. Her sibling was abroad. She had to arrange for care givers on a constant basis – there was a day nurse, night nurse, people who come to make conversations and keep the brain ticking. Despite her best efforts, things never went smoothly as expected. There were days when the help did not turn up. There were times when the nurse quit and it took a while to replace her. At 50, all she could do was make her schedule according to the convenience of her parents. This almost drove her to depression. But luckily, she found solace in yoga and has done a good job of accepting her situation with the help of her spouse and child.
These are not one-off cases. We have interacted with several women who quit their jobs, stopped socializing, and put all holidays on hold to care for an ailing parent or in-law. The worst part is, it is not temporary, and this phase could last for years. No amount of planning can help you in a situation like this. Being aware of such a possibility is important so that disruption to your life does not come as rude shock!
When we have a family of our own, sometimes we get so busy and caught up in our own chores and needs, maintaining our lifestyles and servicing our financial debts that, sometimes, we lose sight of the fact that the biggest debts are not necessarily for these material things. Settling those debts that despite our best efforts can never be fully repaid, is also something we have to plan for. As financial planners and wealth advisors, when we make financial plans, this is usually a question that our customers very rarely expect from us.(The writer is a Certified Financial Planner and Founder of Finwise Personal Finance Solutions)