Talking To Your Parents About Retirement

Mr-Wong-Sui-JauMr Wong Sui Jau, Retirement Planning Ambassador,
iFast Corporation

Preparing for retirement may be a difficult topic to discuss with your parents, but planning ahead will help them enjoy their golden years.

Mr Wong Sui Jau, Retirement Planning Ambassador of iFast Corporation, sheds some light on how you can broach the topic and set things in motion for your parents’ fulfilling retirement.

Step 1: Understand your parents’ retirement dreams

Sounding out your parents about their hopes for life after work can help kick-start their retirement planning and help you better understand how much they need to set aside for retirement.

If your parents are not comfortable talking about money, sharing your personal retirement goals might get your parents to open up. Do keep in mind that mutual honesty, respect and trust are important when having these conversations.

Step 2: Meet with a financial planner

Start off by asking your parents how much they expect their monthly expenses to be during retirement and how much CPF savings, personal savings and investments they have.

Their CPF savings will provide them with a monthly income to meet their basic living expenses in old age. It is good to supplement their retirement savings with their personal savings, so that they can enjoy their retirement to the fullest. Meet with a financial planner together to draw up a financial plan towards their desired retirement would be useful.

A financial planner can advise your parents on the merits of investing and if they should invest in annuities or financial instruments like stock and bonds.

Step 3: Broach the subject of estate planning

Estate planning can be a delicate subject, but making your parents aware that you are simply looking out for their best interests can definitely help ease the tension! Reassuring your parents that you are managing your own finances helps too.

Tactfully highlight that starting estate planning whilst they are mentally competent can help prevent any future misunderstandings in the family. Also, remind your parents that they should make a CPF Nomination if they want their funds to be distributed as per their wishes.

Step 4: Ensure your parents have adequate healthcare cover

MediShield Life is a basic health insurance plan which helps all Singaporeans and Permanent Residents pay for large hospital bills and selected costly outpatient treatments. It is sized to help with subsidised treatment in Class B2/C wards at public hospitals.

If your parents would like additional coverage and are still young enough to buy medical insurance, check with their financial planner on Integrated Shield Plan options offered by private insurers.

If they are older however, medical insurance may not be as feasible as it will likely be too expensive. If this is the case, it is critical to set aside a sum of money for healthcare expenses during old age.

Prevention remains the best course to avoid large medical bills in future. Encourage your parents to follow medical advice, eat well and remain active.

Step 5: Balance your family obligations

It is important to build a relationship of trust and mutual understanding from early on.
Have an honest discussion with your parents about whether they expect you to support them financially in their old age or if they have the means to support themselves.

Sharing your financial situation and family obligations with your parents will help both parties manage lifestyle expectations, determine financial obligations and assess how resources can be best pooled and shared.