The temptation is huge to just get her an enormous bouquet of her favourite flowers, chocolates or tickets to a show this Sunday.
But what about giving her a gift that will help make her golden years a lot less financially difficult?
“Depending on which paper you read, it’s either only 6 or 7% of retirees who can afford to retire financially independent,” Ester Ochse, product head at FNB Integrated Advice, tells Drum.
Gifts such as the latest kitchen gizmos or taking her out to lunch or on a trip are all fine. But with the prime rate at the highest level since 2009 (11,25) there are other gifts that could help ease your mom’s burdens for longer – if she’s approaching or reached retirement age afraid of how she’ll survive financially in the future.
“I think that it’s a great idea, because very often what happens when it comes to Mother’s Day is you invariably buy a present or a bunch of flowers or something like that. And that’s forgotten in six months’ time. The flowers are wilted and dead.
Here are five ways you could help Mom worry less about the future, according to Ester.
1) Pay off one of her retail store cards or any other short-term debt that she has
This gives her a bit of breathing room if her monthly budget is already tight. “But it’s not just a case of saying, ‘Listen, mom, I’m going to pay for all your retail store cards’ or ‘I’m going to pay off all your debt.’”
Read more | 13 ways to reduce your living costs in SA with prime rate at 11,25% – the highest level since 2009
Be specific, Ester suggests. “Say, ‘Mom, I’m going pay off your retail store credit called your short-term debt.
“‘I’m doing this to free up your cash flow so that you can put that money towards your retirement. You could also put that towards your savings.’”
2) Help her be financially prepared for emergencies
“Start a little bit of an emergency fund for her,” recommends Ester.
“The idea there is to have one to three months’ worth of income that’s in a fund so that when something does happen, you can use it.
“You do need to get tax advice on this as the minute that you get above R100 000, you start going into the donations tax space.”
Read more | Handle Black Tax Like a Pro author Ndumi Hadebe explains why choosing debt over boundaries is unwise
3) Help her start or boost her tax-free savings account
The limit is a R36 000 yearly tax-free contribution to this type of account. Any South African can open and have it untaxed, provided they don’t exceed the annual contribution limit, and save up to R500 000 over their lifetime.
“If Mom hasn’t started saving for retirement, this could be quite a nice option for them,” advises Ester.
If you have R36 000 to spare over the next 12 months, that would be a great Mother’s Day gift.
“They can contribute to that on a monthly basis and any growth on that is tax-free as long as they remain within the limits.”
4) It’s never late to invest
“You can consider just a normal unit trust investment,” Ester recommends, adding that you need to consult a financial planner to help you help Mom – even if it’s just a standard unit trust investment.
“You can say, ‘Listen, Mom, I’m prepared to contribute R1 000 a month to set you up for financial resilience. But I want us to go and see a financial planner or a financial adviser because then it’s going to be the right advice from that person.’
“And, of course, there are plenty of advisers out there. Obviously, you just want to make sure that you get the right financial plan and obviously someone linked to a proper financial institution.
“You could contribute R300 a month into your unit trust depending on your time horizon and you can either get something that’s more defensive or something that’s slightly more aggressive.
5) Give her seed capital to turn her hobby or side-hustle into a business
If you give a man a fish, you feed him for a day. If you teach a man to fish, you feed him for a lifetime, goes the maxim. And there’s truth in it.
About one in nine retirees will not be ready for retirement when the time comes, so helping them be self-sufficient through investing in their mini micro-enterprise could help them be less afraid of the golden years ahead.
“If you look at where retirees are at this moment in time,” says Ester, “94% or 93% of retirees are going to need to have a side hustle.
“So seed capital for side-hustler mom? Absolutely! I think it’s a great idea.”
