How to manage your parents retirement corpus?

Pension | admin | September 22, 2011 at 5:08 am

Tarun Sinha's parents are in their early 70s and live off a government pension and a comfortable corpus that they had built over their working years.

However, off late, Tarun has been worried about their ability to manage their finances. He recently found a bank statement with a large sum lying idle in his parents' savings account. His father has also been discussing investment in a real estate project.

Besides, he finds that his father has become forgetful and tends to lose track of things. Tarun realises that it may be time for him and his younger brother to take a more active role in his parents' financial lives. How can he go about doing this?

Tarun is justified in being concerned about the management of his parents' finances. As they grow old, they are likely to be reluctant to take decisions related to money, can get influenced to make inappropriate financial decisions and can become forgetful about those that have been done.

However, Tarun must realise that it is not going to be easy for a man of his father's age and independence to accept that he needs help. He must handle this very delicately and in small steps. He should get his mother and brother involved in it from the beginning to avoid misunderstandings later on.

One of the easiest ways to begin is for Tarun to help his father with those aspects of his finances that he is likely to find most tedious, such as paperwork and taxes. This will also give him a good understanding of where his father has invested his money.

Tarun and his brother should also help their parents invest the surplus funds. This is another task that older people find very difficult to undertake. While evaluating the various investment options and making decisions, Tarun should consider his father's age and stage in life, not his own.

Once their father is comfortable with the idea of involving others family members in his financial affairs, it may be a good idea for Tarun or his bother to get a power of attorney (PoA) executed in their favour. This document should be registered with all the investment providers that have been enlisted for investments and will make it easier for Tarun and his brother to manage these in the future.

While Tarun reduces his father's monetary responsibilities, the latter should not be made to feel helpless and should be consulted on all decisions so that he still has a feeling of control.

The idea behind the exercise is to ensure that the parents' financial stability and comfort is taken care of and he should be able to convey this in a caring manner.

Source: Economic Times