4 steps to help your parents plan their retirement
26 September 2022 | 1-min read
Our parents have done their best to provide what they can for us until we are adults. As they grow older, it is our turn to make sure that we do our best to provide for them in their golden years. However, your resources are limited as you have your own financial commitments. Hence, it is important to understand your parents’ retirement needs so you can help them to plan ahead as much as possible.
Follow these 4 easy steps to help your parents plan for their retirement
Step 1: Have an open conversation about retirement
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 on 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.
Step 2: Understand 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:
- monthly expenses
- CPF account balances
- outstanding mortgage/personal loans
- investments
Also, find out if they have any savings plan for retirement which may be giving them payouts to enhance their retirement income. For example, if they had taken up retirement savings insurance plans like RetireReady Plus (III), they will receive a Guaranteed Monthly Income1 for life over their choice of 5², 10, 15, or 20 years after the selected retirement age of 50, 55, 60, 65 or 70.
Once you have an idea of their current financial situation, you can estimate the retirement fund they need. You can then work together with them to fill the missing gap between their desired retirement fund and their current savings with sources of retirement income (e.g.: CPF savings and insurance payouts).
Step 3: Ensure your parents are adequately insured
As your parents grow older, it is inevitable that they become more susceptible to ill-health and diseases. Making sure that they have adequate health insurance coverage is as important as it can help you to avoid being unnecessarily burdened by their medical bills. For example, RetireReady Plus (III) has a loss of independence income benefit3,4 which allow them to receive up to an additional 100%3 of their Guaranteed Monthly Income1, depending on the severity. It may be worthwhile to engage a Financial Consultant to find out the insurance coverage gaps your parents may have.
Step 4: Talk to them about their will
There’s no love greater than the love a parent has for their children. Even though your parents would not be around forever, they might still want to take care of their children for as long as they can. Having an open conversation to understand how much they would like to leave as their legacy is an important step in figuring out their desired retirement fund as well.
We hope you have a better understanding on how to help your parents plan their retirement. Learn 5 tips on how to plan for your own retirement here.
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Footnotes:
- The Guaranteed Monthly Income (GMI), less any policy debt, will start one month after the policy anniversary immediately after the life insured reaches the selected retirement age and payable to the end of his/her selected income payout period.
- Not applicable to policies with single premium and 5 years premium payment term.
- If the life insured is not able to perform any 2 out of 6 Activities of Daily Living, the Loss of Independence Income Benefit payable is equivalent to 50% of the GMI, capped at a maximum of S$2,000 per month per policy. If the life insured is not able to perform at least 3 out of 6 Activities of Daily Living or diagnosed with Irreversible Loss of Speech, Deafness (Irreversible Loss of Hearing) or Major Head Trauma, the Loss of Independence Income Benefit payable is equivalent to 100% of the GMI, capped at a maximum of S$4,000 per month per policy.
- Please refer to Product Summary for more details on the Loss of Independence conditions.
Important Notes
RetireReady Plus (III) and its supplementary benefits 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. This article 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.
This policy is protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact us or visit the LIA or SDIC websites (www.lia.org.sg or www.sdic.org.sg).
We recommend that you seek advice from a Manulife Financial Consultant or our Appointed Distributors, or visit any DBS/POSB Branch before making a commitment to purchase a policy.
Information is correct as at 26 September 2022.
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