Worried about your parents’ retirement and how it will affect their lifestyle (and yours)? Here are some things you should consider to help everyone enjoy peace of mind.
If you’ve started thinking about your retirement for yourself, you would have probably also started thinking about your parents’ retirement too. Will they have enough money, or has it all gone on supporting you?
In our family-centric society, you have probably watched your parents spend significant amounts of money supporting you throughout your childhood, paying for your education and ensuring you become a well-rounded adult. All this was probably at the expense of their own retirement planning, placing your needs before those of their own. Once you start earning an income, it is worth considering if you should help ensure an enjoyable retirement for them and that they will have enough money for their golden years.
If this is something that is on your mind, you are not alone. Recent survey findings reported in local media have shown that only a small percentage of youths and young adults believe their parents have planned sufficiently for retirement and would therefore not require additional financial support from them.
The numbers corresponded with the responses from their parents too, who reportedly only saved about a third of what they believed they would need for retirement, and with 67% of respondents expecting to outlive their savings in their retirement years.
Singapore has one of the longest life expectancies in the world, this means that our parent’s funds will have to stretch even longer. How can we, as children, provide adequate support and advice to them?
There are a number of things we can do, and it is not necessarily just financial support.
1. Start the conversation about their retirement early
Many traditional Asian parents feel uncomfortable talking to their children about their financial situation, whether they are well-to-do, or otherwise. This likely stems from a habit to shield their children from the unpleasantries of any financial troubles, or just out of privacy.
However, it’s essential to get the ball rolling. We need to explain that their well-being is an essential component of our financial plan, and that we don’t want them to struggle in their retirement years.
It may take several conversations to get our parents to open up and get the full picture of their financial situation, so make it a point to have frequent talks with them, and talk often.
What should the focus of these conversations be?
The main focus should be about understanding their situation, and how your parents would like you to help them manage their finances when they may no longer be physically able to do it themselves.
2. Consult an advisor together
If you feel unable to speak with or advise your parents, you can seek help from a trusted professional advisor who can, together with you, talk your parents through their retirement needs and options.
3. Always plan your retirement first
Ironically, it is better to ensure your own retirement is secure before you worry about your parents’ retirement needs. And no, it does not mean you are being selfish.
If you are still struggling to set aside money for your own retirement, you would also be hard pressed to save any money for your parents. Having a well-funded retirement plan in place for yourself will ensure you also have enough finances to help your parents with their retirement needs.
4. Consider insurance solutions to help preserve their wealth and cater enough for their health and legacy needs.
While many people struggle to save enough for retirement, your parents may be among those financially aware enough to have already set aside enough money for a comfortable retirement. In this case, your main considerations would be ensuring their funds last long enough, and is also sufficient to ensure they are able to enjoy the same or an even higher standard of living as they get older.
Can a Universal Life plan help?
It’s well known that life insurance is a vital component of every individual’s financial plan. It can serve as a long-term insurance savings vehicle and provide you or your loved ones with a lump sum of cash when you need it most.
With so many different types of life insurance available, making a decision can be difficult. It’s worth spending a little time to understand how Universal Life plans work and the benefits they provide.
A key feature of Universal Life plans is that it provides both life insurance coverage and cash value accumulation. Upon the death of the insured person, a substantial payment will be paid to the insured’s loved ones, ensuring that you can distribute it according to your wishes.
Read on to find out how a Universal Life plan can improve the lifestyle of your parents:
⇨Asset diversification–helps to diversify their investment portfolio and lower the level of risk for optimal outcomes.
⇨Wealth accumulation–increases the value of their assets for both wealth distribution and a more comfortable retirement.
⇨Legacy protection–provides a sizeable lump sum for their heirs.
⇨Wealth distribution–the cash payout is distributed according to their wishes upon their passing.
⇨Business continuity – If your parents are business owners, taking up a Universal Life plan for key management members can help ensure the company continues to thrive in the event of an unforeseen incident. If a key management member passes on, the business operations could potentially suffer significant financial losses. It may also take a long time to find a suitable replacement to join the business. The payout from the policy will help to ensure the company has enough cash flow in the interim and business is not significantly interrupted.
ePREMIER lifetime by Etiqa
Etiqa’s new Universal Life plan Guaranteed Crediting Rate is a generous 4.39% p.a. This will help to build the cash value of the policy. In subsequent years, the crediting rate is guaranteed to be no lower than 2.00% p.a. This gives customers an element of comfort that a minimum level of growth will be achieved.
The policy provides minimum death benefit of at least US$500,000 with a single premium payment. Customers can choose to have higher coverage if they wish.
Another key benefit of flexibility. There is the option of topping up the policy or even making a withdrawal if they need cash.
Another useful feature is the flexibility to change the person whose life is insured. If the policy owner is a company, this change can be made an unlimited number of times. This flexibility can prove invaluable for ensuring business continuity (as key managers can be added or removed from the policy as required). If the insured is an individual, a change is permitted twice for each policy. The option to change life insured is subjected to the insurability of the insured and applicable terms and conditions.
The bottom line
Singaporeans are increasingly becoming aware of the benefits of buying life insurance. A half-yearly review for the first six months of 2018 carried out by the Life Insurance Association of Singapore, found that new business premiums jumped by 20% in comparison to the similar period last year.
In the January-June 2018 period, Singapore’s residents paid S$2.02 billion in life insurance premiums. The total sum assured for new business climbed to S$66.28 billion, a rise of 19%.
If you’ve decided to secure your financial position with a Universal Life plan, consider the advantage you will gain by speaking to Etiqa, Singapore’s premier insurance company. Etiqa is owned by Maybank Ageas Holdings Berhad, a joint venture between Maybank, one of Asia’s leading banking groups, and Ageas, an international insurance company with more than 190 years of heritage and a presence in 15 countries.