Personal financial planning tends to focus on saving and investing for your own future – basically covering the costs of raising a family and eventually being able to retire independently. But what about black tax? What if you’re already carrying the responsibility of supporting your extended family… And what happens if your parents gets sick?
Picture this: You suddenly have to take time off work, plus contribute to (or completely cover) a parent’s medical aid, transport, doctor’s visits, meds… There may also be bills of a part- or full-time carer, assisted living facilities or a nursing home. Factor in lockdown conditions and it all starts to feel a little overwhelming, right?
Personal finance website JustMoney offers advice on planning for and navigating this tricky situation.
1. First off, have a plan
Have a family sit-down with your parents and siblings as soon as possible, preferably before any health issues develop. Aim to get a clear idea of your parents’ financial needs, assets and wishes. You might find they’re actually relived to talk openly about it at last…
2. Consider downsizing to a smaller house
Navigating a house sale in the current market conditions might be a little nerve-wracking. Arm yourself with the facts: do your homework on a suitable asking price and the costs involved. Good to know: Senior citizens who are registered owners of residential properties can qualify for reduced property rates, depending on the gross monthly household income.
3. Update your folks’ wills
Check that your parent has a will, and that it still fulfils their wishes. If it doesn’t make sure it gets updated. Tip: National Wills Week runs in September every year. During this week, many law firms will draw up your will for free. Find a list of attorneys who regularly participate in National Wills Week on the Law Society of South Africa website.
4. It’s also a good idea to have a living will
Most people have strong opinions about not being kept alive by artificial means, while still being kept pain-free, when there is no chance of recovery – so it’s important to talk about this tricky subject and decide whether or not to draw up a living will. A person must be 18 years or older and ‘compos mentis’ (having full control of their mind) when making such a declaration.
5. Get power of attorney
This note gives you authority to act on your parent’s behalf and make decisions. It can be a general, broad directive, or limited to specific matters. It can be very useful when, for example, your mom or dad is too frail to sign documents. Power of attorney is no longer valid if your parent is no longer ‘compos mentis’. In this case, you can apply to be the administrator or curator of their affairs.
6. Check if your parents’ medical aid covers them properly
Read the fine print of your parent’s medical aid scheme and ascertain what it covers. You may decide to upgrade to a different package at the year-end to better suit their needs.
7. Find out if your parents qualify for a state old-age pension
Your parent could quality for a state old-age pension, provided they pass the means test of the South African Social Security Agency. Currently, senior citizens receive R1 780/month, or R1 800/month if they are older than 75 years ‒ plus R250/month for six months from May 2020 due to the COVID-19 pandemic. Your parent must be a South African citizen or permanent resident, 60 years or older, not receive payments from another social grant, and not earn more than R82 400/year if they are single, or R164 880/year if married. Assets must not exceed R1 174 800 if they are single, and R2 349 600 if married.
8. Teach them about virtual fraud
We’ve all become more tech-savvy during lockdown, and this includes our parents and grandparents! But they could be easy targets for online con artists. Discuss some of the most common scams and the importance of not opening attachments or clicking links on unknown emails, as well as keeping user names and passwords secret. If they still fall prey to a scam, try not to make them feel worse than they already do. Focus on helping them to recover what they can.
9. Avoid running up extra debt
While caring for your parents, do your best not to run up more expenses than you can afford, for example on your credit card. Continue contributing to your own retirement, even if it’s a small amount every month.
Sarah Nicholson, Commercial Manager of JustMoney, says: “While juggling the financial responsibilities of caring for a much-loved parent, your own needs can fall by the wayside. Try to give yourself regular breaks and small treats. Ask for help instead of struggling alone.
“Recognise signs of stress and find support, be kind and patient with yourself, make time for other relationships. Friends and family can be a great resource. Also, there are times when it’s worthwhile taking on the services of professionals in the ageing network. Their guidance could prevent you being derailed by caregiver stress and could actually save you money in the long run.”