Help! My ageing parents have no retirement savings

Are you feeling sandwiched between looking after your adult children and elderly parents?

Maybe you find yourself facing financial demands from both your own young family and your older family? You're not alone.

Welcome to the life of the Sandwiched Generation.

Read in this article

Feeling Sandwiched?

It's a daily reality for over 1.5 Million Australians (and that number is growing daily) who are currently feeling the pressure from both sides of caring for their family.

• These members of the new Australian Sandwich Generation feel well and truly caught in the emotional and financial middle.

Caught in the emotional and financial middle

They often find themselves;

• supporting their adult children; who may be studying, working and perhaps trying to save a deposit to buy increasingly expensive housing (or who have moved back home - with their own kids in tow), and
• at the same time supporting their elderly parents; who may be frail aged, sick or disabled and who require an increasing amount of care, time and money.

The hidden cost of being stuck in the middle

Adding further pressure, members of the sandwich generation are:

• likely to be in paid employment and at an age in their own financial lives where they expected to be now enjoying a level of greater personal financial security and free time,
• feeling the pressure to leave (or scale back) their own employment to look after their families
• predominantly female, many of whom have already spent time intermittently out of the workforce raising children and therefore already have lower personal super funds themselves.

All are struggling to juggle the increasing demands on their limited time and financial resources.

Their children are delaying independence because they might be in tertiary education, or house prices are preventing them from moving out, and their parents are not only living longer but living independently rather than going into aged care. As a result, that age bracket where you have kids needing care and parents needing care has expanded.Australian demographer Mark Crindle

Can you afford for your parents to retire?

A lot of us are worried about our parent’s retirement and how they’re going to cope.

You don’t have to be a genius to understand 'facing retirement and not having any retirement savings is a bad situation to find yourself in,’ especially if you get sick, and frail, and especially if you’re still renting a home.

• But what if it’s not you, but your parents who have no retirement savings?

Life never quite works out just like we expected, so that’s why we all need to continue to build our practical understanding of money matters, and how to use financial tools to help us get the best chance of not falling behind.

We all need to model good financial behaviour to our kids; your ageing parents may need you to do that the most.

Feeling sandwiched between adult children and ageing parents?

Retirement is a future state for many that’s understandably very hard to visualise.

• Like getting a tribal barbwire tattoo around your neck when you’re 20, it’s hard to comprehend what that’s going to look like when you’re 60.

The reasons why many people approaching their retirement years do not have much put aside can be wide and varied - but they all usually end in anxiety, increased stress, guilt and sometimes misplaced shame.

What you can do and what behaviours can you model

Having 'the money talk' with your ageing folks can be tough.

Once their retirement reality is out in the open, they can often become resistant to change. So why not consider bringing an outside professional in to speak with them privately first?

Here are some proactive things you can do to encourage your parents.

1. Encourage them to save as much as they’re able and to get to know their super better.

Without having dependent children of their own (hopefully), they can direct more of their income into savings.

• You might even consider helping them establish a percentage-based budget. Any money they can save will have a positive effect on their retirement.

Saving an additional $50,000 over the next 10 years will provide a sizable emergency fund for unseen medical expenses. In addition, the opportunity to focus for 10 years on a saving goal might help rekindle the habit of saving.

Case Study Launching a New Family Currency. Terry's parents are on track to a shaky-looking retirement but still, have 10 years left to make the most of what they can. All their adult children have now agreed together as a family unit that all Grandparents' future Christmas gifts should be limited to only grandchildren and no longer include independent adult children.
A new ‘family currency’ has been launched formerly agreeing all grandparents’ home-made cakes, biscuits, jams and Christmas cakes are now officially recognised and considered the highest valued currency (and most prized personal gifts in their family).
This new family thinking about giving has increased their parent’s ability (and willingness) to save more for their retirement.

2. Encourage them to be purposeful in their spending

For a lot of people with no retirement savings, it’s often a matter of learning to make some regular better spending choices and you might be able to encourage them to relook at this.

• The more people can lower their living expenses the more they can save for retirement.

3. Encourage them to get out of bad debt fast.

Our culture tends to promote credit-driven lifestyles today over creating certainty about our ability to afford a happy tomorrow.

The reality is we all need to spend less than we earn and approaching retirement is an ideal reason to get out of consumer debt, before you’re out of the workforce.

• Paying off bad debts is usually the single best way to lower your living expenses.
• Paying out the credit cards will not only lower the cost of living but once the debt is paid out the surplus funds that would have gone towards those repayments can be diverted to savings.

4. Learn what are the implications if they were able to delay their retirement.

Deferring retirement, (even for a few years) and continuing retirement savings into super, (while not ideal or even on their wish list), can make a significant difference.

Understanding the financial implications of working each additional year can help clarify decisions about using the extra time to reduce debts and make additional contributions to super while they’re still active in the workforce.

5. Learn more about the government Super Downsizer Contribution program.

This is a new Super law that allows some people to contribute a portion of the sale of a home into super.

Preparing for the worst-case scenario?

If you’re facing the worst-case scenario and you’re ageing parents have absolutely no retirement savings or plans, the best thing may be to prepare yourself first so you’re in the best financial shape possible in case you find you need to step in and help.

Start by increasing your own financial literacy

Begin increasing your personal financial literacy – regularly reading this blog will help you learn new skills and bring to the front of your mind some of the practical financial skills you’ll need to understand to give yourself the best chance.

This will increase the time you have to prepare and position yourself to be able to help them while minimising the risks, to your own financial future.

Pro Tip: Learn how to use the government's online Smart Money Retirement Planning Calculator. It can help you see what income you’re likely to have from super and the age pension when you retire.

Remember your retirement has to be your priority

The three difficult realities we all face are;

1. You can’t pour from an empty cup
2. Your own savings, investments, and super are to position you and your partner for your own strong and stable retirement.
3. If you're feeling sandwiched in the emotional and financial middle, you’ll need to focus your remaining limited time and resources on finding a way through this difficult time without taking on risks that can bankrupt your own retirement future capacity: - that would merely continue the same problem to a new generation.

Drew Browne is a specialty Financial Risk Advisor working with Small Business Owners & their Families, Dual Income Professional Couples, and diverse families. He's an award-winning writer, speaker, financial adviser and business strategy mentor. His business Sapience Financial Group is committed to using business solutions for good in the community. In 2015 he was certified as a B Corp., and in 2017 was recognised in the inaugural Australian National Businesses of Tomorrow Awards. Today he advises Small Business Owners and their families, on how to protect themselves, from their businesses.  He writes for successful Small Business Owners and Industry publications. You can read his Modern Small Business Leadership Blog here. You can connect with him on LinkedIn.  Any information provided is general advice only and we have not considered your personal circumstances. Before making any decision on the basis of this advice you should consider if the advice is appropriate for you based on your particular circumstance.