Lots to do for the sandwich gen

One of the nicest calls I answered on my weekly TV show recently was from a 20-something kid from the US who wanted to plan out her parent’s finances. Mum had retired, dad was going to soon and daughter wanted the best advice for her parents on cracking their retirement nest egg. As a proportion of calls and mails, I find a large chunk of callers worried about their parents’ future. Most of these are in their 20s, are not married and are very eager to give back to their parents in whatever way they can. What the well-intentioned 20-something kids find out when they hit their 40s is a little different. By now there are spouses, own kids and their own lives to lead, own retirements to fund and holidays to take. By their 50s they discover that it is no longer just money-linked issues that they need to deal with—it is ongoing care. A friend in his 50s caring for parents in their 80s talks of having more helpers in the house who take care of his ageing parents—both of whom need 24-hour care—than family. Another talks of the tough decision he has to soon make of either coming back to India, leaving a promising career, or convincing his reluctant parents to make the inter-continental, cultural shift. One road means a reworking of the nuclear family goals and aspirations, the other wrenches parents out from all that is familiar.

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The story is old—of the wheel of age turning—but the way the urban mass affluent Indian deals with it and the equations in it have changed. The biggest shift is the conversion of old rules that made parental support a social duty to being a choice. The ageing 60-year-old too is less liable to make lifestyle changes to fit into the 30-something’s household. Rising incomes that make people buy homes by the time they are 30 make the earlier equation of “if-you-look-after-me-you-have-the-house” defunct. The reverse mortgage, as a final tool, also makes the senior citizen more secure in her independence. So the equation is well balanced and there are more degrees of freedom for both oldies and the younger family. More choice frees up a lot of the contractual baggage around parental support and there are smart new ways in which the 40-something urban professional can look after ageing parents. This spans across the most obvious, like making sure that your parents are adequately covered with health insurance products. You can now buy them a health cover online if you live in a different city or are abroad. A minimum cover of ₹ 2 lakh each is good private medical care. Top-up with a family floater of an additional ₹ 3 lakh.

Those in their 60s and 70s are more familiar with zero-risk, assured-return products such as fixed deposits and are not sure of using contemporary products such as equity funds. You can help manage their finances—this includes preventing them from buying financial products not needed such as life covers linked to investments—and ensure that their retirement pot is well invested in a mix of senior citizen bonds, fixed deposits and a small part in equity funds. At least 20% of the portfolio in equity funds—balanced and large cap—works well.

Nudge them into getting online with their banking and investments. Online banking, bill paying and investing are not just fascinating new toys for them to play with, but are actually tools for far-off oldie control. It is a subtle way you can help. Most people already have systems in place, but online bill paying gives you the opportunity to pitch in financially without making it very obvious. Online cash transfers take the bite out of handing a cheque or cash over. This is the generation that just escaped the post-1990s boom in India and are stuck to pensions or corpuses that are pre-1991 thin. Online investments can be done quietly. So can bills be paid and premiums funded. Use technology to reach out.

The tougher nudge is to get the will written. The topic of wills and nominations is not easy to broach, but must be done. The bank accounts and other financial investments such as funds should have nominations, the location of the papers must be known and the will must be in place. Watch out for early signals of disease that makes the hand unsteady. An old colleague’s mum got Parkinson’s and the shaky hand could no longer make the smart swish with the pen any more and more than a year was spent to get this sorted out.

On the show, the mails and calls are fewer from people in their 40s than in their 20s and 30s, but the good news is that the proportion of those wanting to reach out to the older gen stays the same.

Monika Halan works in the area of financial literacy and financial intermediation policy and is a certified financial planner. She is editor, Mint Money, and can be reached at expenseaccount@livemint.com