Almost all of my clients come and ask me “How am I supposed to assume what will I require in the future and then put a year and number to it?” I smile and say “And I am expected to manage your money to make sure you achieve goals you have not set!!”

Goal setting itself is a very tedious exercise, to think as to what you expect from your future and then assign a number to it while wondering if that would hold true in the future is definitely not easy. To myriad goals that a person or family has which would include travel, house, education, marriage, retirement, etc; one must keep in mind their parents also. Our grand-parents were dependent on our parents for their retirement needs but our parents did not want to be dependent on us (their children) for the same. Chances are that most of our Parents are self-sufficient and manage their day to day requirements on their own. But they would need our help if an emergency or a medical requirement arises. Below are 4 simple steps that will aid you in creating financial security for your parents:

  • Creating an Emergency Corpus for Your Parents: This will act as a contingency fund for them. This could be utilized for medical emergencies which otherwise could get difficult for them to manage on their own given that the medical inflation is the highest at around 12%. This could also act as temporary liquidity arrangement for an urgent need which otherwise could involve a distress sale of an asset. This corpus can be invested partly in short-term funds and partly in hybrid funds.
  • Include them in Company Insurance: Nowadays most of the companies whether private or government, provide health insurance covers for employee’s parents and or parents – in – law. If you have the option of including your parents, please go ahead and do so without a second thought. A group medical policy may vary from company to company, some may ask the employee to pay an additional premium in order to have their parents included while some may not. In both cases include your parents. Over and above this, if your company provides an option to increase the health insurance cover, again without a second thought do so. The advantage of a group medical policy is that there are no exclusions and waiting periods. All illnesses are covered from day one. Further, depending on the age and health of your parents, getting a personal health policy could get difficult and or unaffordable.
  • Educate them on the importance of a Will – Creating a Will aids in distributing assets as per the wish of the testator (the person who is writing the will) else the estate will be distributed as per the law of the religion the person belongs to. And yes, this would mean different things to different religionsHence, Will and succession planning is essential to be able to preserve wealth for generations, to support a charity or a cause and minimize taxes and expenses that can go along with the transfer of assets.
  • Educate them on the importance of a Living Will – a Living Will is a legal document that is used to state the writer’s preference regarding end-of-life medical care in case they are unable to communicate their decisions or are incapacitated. It has absolutely no power after death. A living will provide directives to health care providers which could forbid the use of various kinds of taxing medical treatments. This also helps the family to keep calm and stand by the individual’s personal choice without having to juggle through the financial and or moral battles.

Our culture is deep routed and somewhere the idea of making our parents financially secure comes from there. Financial Freedom of our Parents must always be a part of our Goals; this one thing can be done whether our parents agree or not. Happy Investing!

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    • Thanks, Smriti! However, Living Will is easy to make but difficult to enact when the time comes. Hence, the person who holds PoA needs to be a strong individual who can respect the decision of the medical directive of the loved one.

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