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According to a 2013 report by the United Nations Department of Economic and Social Affairs (UNDESA), the global population of older people (aged 60 years and over) will surpass the population of children under 15 years by 2050. In Nigeria, the proportion of the population aged 65 years and above is currently 3.1%, which is approximately 6 million people. It is projected to reach 6% by 2025 and 9.9% by 2050.
While population aging is considered a significant achievement in human development, it has implications for various aspects, including labour markets, healthcare, and financial strain on the younger generation. This highlights how important it is for young people to have a comprehensive understanding of their parents’ finances to empower both themselves and their aging parents, while also avoiding any unexpected financial challenges in the future.
Here are practical steps that young people should consider taking while their parents are still independent, to ensure their financial well-being:
- Understand their assets: Gain knowledge of your parents’ assets, such as retirement accounts, investment portfolios, real estate, and any outstanding debts or loans. This information will help you assess their financial situation and plan for their future needs.
- Identify income sources: Determine your parents’ income sources, including pensions, rental income, and other retirement benefits. This understanding will enable you to plan for their future expenses and ensure they have sufficient income to support their needs. Also, consider if they have any additional part-time or freelance work such as coaching or consulting that provides income.
- Discuss estate planning: Have open conversations about your parents’ estate plan, including their will, trusts, and any other legal documents outlining their wishes for asset distribution after their passing.
- Plan for healthcare costs: Anticipate potential healthcare expenses as your parents age, particularly long-term care. Explore options for managing and financing these costs in advance.
- Consider living arrangements: Discuss with your parents their preferences for living arrangements in their old age. Determine whether they may require a caregiver or if they plan to live with you or your siblings during retirement. Addressing this aspect early on will help avoid undue financial burdens on family members.
- Seek professional guidance: Engage the services of a financial advisor specialising in retirement planning and intergenerational wealth transfer. A knowledgeable advisor can assist you in navigating the complexities of caring for aging parents while managing your own financial goals.
Understanding and actively managing your aging parent’s finances is an essential step towards securing their financial well-being and avoiding unexpected challenges. By gaining insights into their assets, income, estate plans, healthcare needs, and living arrangements, young individuals can take proactive steps to ensure a smooth transition and financial stability for their parents.
Collaborating with a knowledgeable financial advisor adds an additional layer of expertise, enabling you to navigate the complexities of intergenerational financial planning with confidence and peace of mind. If this is something you would like us to set up for you, then send an email to us at info@themoneyafrica.com
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