How to balance helping your parents retire and saving for your own future?

Generally, it is seen that our parent's generation is poorly acquainted with the idea of investments and savings. The reason was simple- Lack of knowledge and information about how to plan their finances to end up with a good dependable amount after retirement, they rather end up with less or even no savings for that matter. And thus, a lot of retired people depend on financial support from their children.

Knowledge of saving and investing is necessary to sustain a self-dependent and financially stable life after retirement. The burden especially falls on the youth because of the rising prices, the cost of living of self as well as the family, and also assisting retiring parents. So a common question arises in the minds of youth today, “how do balance helping your parents retire and saving for your future”? In this blog, we will try to address this question and help you to assist your retiring parents while saving for your future. Read till the end.

To create a balance between helping your parents retire and saving for your future, you must take some initial steps, which are mentioned below-

1. Have a conversation with your parents about their financial status

The first and foremost step in helping your parents retire would be to openly talk about their finances, keeping the awkwardness aside. Having a clear picture of where their finances are at the current moment helps avoid a lot of freakouts, or will help take quick steps to make things better. This way, you'll understand how much your parents have saved and invested over the years, and if they have debt. This will help you make an informed decision about your parent's retirement.

Early conversation with parents about their finances will also help you to sort out the matter at the earliest and you can get back to planning your finances and savings as fast as possible. On the other hand, you might realize that parents are good to go with their finances, so instead you can now turn back your focus to your savings, thus creating a balance between both.

2. Try to increase a parent's savings by making the best use of government schemes

You can help your parents by finding ways to decrease taxes and increase savings. It would be better if savings were started as early as possible. Various government schemes allow you to save taxes and increase your savings for retirement.

For instance-

• 1. Section 80CCC and Section 80CCD(1B) of the Income tax act 1961 allows you to avail tax deductions up to ₹1.5 Lakh + 50,000. These deductions can be availed through investments in certain specified programs, like NPS. Also, if your parents invest in NPS, Section 80CCD(1B) of the Income Tax Act covers the additional deduction of ₹50,000.
• 2. Section 10(10D) of the Income-tax act states that investment in Life Insurance is eligible for a tax exemption of ₹1.5 lakh.
• 3. A tax exemption of ₹1.5 lakh is permissible via Section 80C if the investment is made by your parents to ELSS.
• 4. Under Section 80C, investment in PPF is eligible for a tax exemption up to ₹1.5 lakh. Under Section 10 of the Income-tax act, interest and maturity are relaxed from tax.

3. Align your financial planning along with helping your parents retire

You must make sure that ways of helping your parents retire are aligning with your financial planning. This means that you must look after your wants, aspirations as well as loans and debts before assisting your retiring parents. This way, you will know how much you can contribute towards helping your parents.

4. Avoid delays

The earlier you start helping your parents in their retirement planning, the more benefits your parents can reap. Also, it would be beneficial to you too. Your parents will be able to generate more savings if early planning is done, and hence financial dependency on you will be lowered.

Review your financial situation

To help your retiring parents, you must be financially aware of your situation. Take note of the following-

• 1. Your retirement goals- You must have a clear picture of what your retirement goals are. This includes the age at which you wish to retire and your aspirations and dreams after retirement. Having precise information about all this will help you calculate how much you need to keep as savings, and how much you can contribute to help your retiring parents.

• 2. Creating a budget- Creating a budget for your daily lifestyle and needs helps you to be in a constraint and not spend too much on unimportant things. This way, you can save more as well as assist your retiring parents.

• 3. Investments and savings- To save for your future along with helping parents retire, you must be smart enough with your investments. You must analyze which investments give you the best returns. Investments also include investments for your retirement as well.

Seek Professional help from PensionBox

Retirement is a crucial phase for your parents, and since you are helping your parents retire and saving for your future, it becomes a hassle to manage all this. Hence, professional aid helps ease the process. PensionBox is happy to help you with your retirement by providing the best guidance.

If you are in a dilemma on how to balance helping your parents retire and saving for your future, the article above is for you. Retirement comes with a lot of chaos and confusion, especially when it's your parents who are retiring and you are the one helping them retire. It's always best to have firsthand information about how to go through with all this beforehand, to avoid any blunders later. Visit PensionBox for the best financial advice and make your retirement happier.