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5 steps to help your parents plan their retirement

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-steps guide to get the conversation started and help your parents manage their retirement.

Step 1: Have an open conversation about retirement and how it would be

A great way to start a discussion on retirement planning would be asking your parents how they envision their retirement to be. Do they want to travel the world, or perhaps, continue working to keep themselves active?

You may also want to ask if they have a preference for where they will stay - some parents prefer to continue living in their own homes, while others envision staying with their children so that they get to spend more time with them and their grandchildren.

Find out more about their retirement plans if any, their liabilities, fears and aspirations for retirement.

Try to keep the conversation light, even if what they expect is different from yours. This can help to foster better understanding between each other.

Step 2: 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 and insurance plans
  • 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.

Speak to a financial consultant today!

Step 3: Ensure your parents 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 Consultant 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 Consultant to show your support in helping them plan for their retirement.

If they had previously taken up retirement insurance plans like RetireReady Plus (III)  to enhance their retirement income, this is likely the time when they'll start to receive their retirement payouts to supplement their lifestyle needs.

RetireReady Plus (III)

A retirement plan that offers you the option to receive Guaranteed Monthly Income for life. 

Step 4: 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.

Step 5: 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. This is because as a lawyer can give the best advice on how to prevent future financial 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 S$200-S$4001 - a small amount to pay for 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 and goals, retirement planning can be a long process. Make sure to seek advice if needed to avoid mistakes when planning.

Needless to say, Mum and Dad will definitely appreciate your thoughtfulness and help in making their retirement dreams come true!

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.


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