Financial Planning

5 Steps to help your parents plan their retirement

Our parents have done their best to provide what they can for us until we are adults. As we grow up and move on to build our own family, it is important to remember that our parents are also getting older and moving towards the next milestone of their lives - retirement.

As adults, the process of building our own family can mean a whole new level of financial responsibilities - servicing a mortgage loan, paying for our child's education and of course, getting the right insurance protection for the entire family. As such, we forget that our parents may need our help to plan for their retirement needs as well.

Many of our parents may not have the necessary financial knowledge to know how much they need for their retirement. While we want to do our best to provide for them in their golden years, the reality is that our resources are limited. It is thus important to help them understand their needs and plan ahead.

Speaking about money can be a sensitive topic for traditional families, but it is no doubt, an essential step towards understanding our parents' financial situation and safeguarding their future. Here's an easy five-step guide to get the conversation going.

01

Have an open conversation

As adults, the process of building our own family can mean a whole new level of financial responsibilities - servicing a mortgage loan, paying for our child's education and of course, getting the right insurance protection for the entire family. As such, we forget that our parents may need our help to plan for their retirement needs as well.

Many of our parents may not have the necessary financial knowledge to know how much they need for their retirement. While we want to do our best to provide for them in their golden years, the reality is that our resources are limited. It is thus important to help them understand their needs and plan ahead.

Speaking about money can be a sensitive topic for traditional families, but it is no doubt, an essential step towards understanding our parents' financial situation and safeguarding their future. Here's an easy five-step guide to get the conversation going.

02

Understanding their current financial situation

Parents may not want to be upfront about how much money they have sitting in their savings account, but you can always ask them about a few specifics to get a sense of their situation:

  • Outstanding mortgage/personal loans
  • CPF money
  • Investments
  • Monthly expenses

With the above information, you will likely have an idea of whether your parents have more liabilities or assets. The first step is to help them minimise their debt.

03

Ensure they are adequately insured

As we grow older, it is inevitable that we become more susceptible to ill-health and diseases. Having adequate health insurance is important to ensure our family members are not unnecessarily burdened.

It may be worthwhile to engage a Financial Representative to find out the insurance coverage gaps your parents may have. Some elderly may be resistant to taking on insurance at their age because of the higher premiums. As you might understand your parent's financial circumstances best, it will be a good idea for you to sit through the discussion with your parents and the Financial Representative to show your support in helping them plan for their retirement.

If they are taking up any insurance retirement plans like the Manulife RetireReady to enhance their retirement income, remember to ask them how they prefer their payout method to be as well.

04

Right-size their living accommodation if needed

If your parents are still paying for their home, ask them if they are able to fully finance their home before they retire. If not, right-sizing their home could be a good solution.

To "right-size" means to sell an existing flat and buying a smaller, cheaper flat such that the net proceeds can be used to supplement our retirement income.

05

Help them review/draw up a will

Beyond their CPF money, your parents may have other assets which they want to distribute after they pass on. The best way to do this is to help them draw up a will with a lawyer.

While technically you do not need a lawyer to help write a will, it is highly recommended as a lawyer can give the best advice on how to prevent future complications or contest of the will.

Some people have the misconception that it is expensive to engage a lawyer to write up a simple will. In fact, for a simple will writing cost around $200-$400 - a small amount to pay for a peace of mind. Getting together the documents for a will can be a little daunting, so volunteer to help your parents with it.

The above pointers provide a simple way to help your parents kick start their retirement planning process. Depending on your parent's current financial situation, retirement planning can be a long process. Needless to say, Mum and Dad will definitely appreciate your thoughtfulness and help in making their retirement dreams come true!

Date: 11/04/2018

The information in this article does not necessarily reflect the views of Manulife (Singapore) Pte. Ltd. These are general information and does not constitute or form any recommendation of insurance plan.

Disclaimer:

These insurance products are underwritten by Manulife (Singapore) Pte. Ltd. (Reg. No. 198002116D). This advertisement has not been reviewed by the Monetary Authority of Singapore. Buying a life insurance policy is a long-term commitment. There may be high costs involved if you terminate the policy early, and your policy's surrender value (if any) may be zero or less than the total premiums paid. Buying health insurance products that are unsuitable for you may affect your ability to finance your future healthcare needs. This advertisement is for your information only and does not consider your specific investment objectives, financial situation or needs. It is not a contract of insurance and is not intended as an offer or recommendation to purchase the plan. You can find the full terms and conditions, details, and exclusions for the mentioned insurance product(s) in the policy contract.

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