How to guide your parents on managing insurance and financial grants

 

If you’re part of the sandwich generation, here’s how you can help your parents plan financially for their golden years while staying on top of your family’s finances.

Although it’s good news that Singaporeans are among the longest-living globally¹, it comes at a cost. During the pandemic, people were able to reflect on what’s important ‐ and our latest study shows that more Singaporeans are financially prepared for living to 100. Our latest Ready for 100 paper shows² that 44 per cent of the surveyed 1,219 residents are not confident that they have saved enough to support themselves to 100.

In addition, it’s not surprising if your parents want help with their finances as well. In fact, it makes sense for everyone, young and old, to want to be as financially secure as possible. While you may need to take on more financial responsibility if your parents are already elderly and retired, there is still time to add to your parents’ pension pot if they are still middle-aged and working.

No matter their situation, you can still guide them on managing insurance and financial grants to help them in their retirement and eldercare journey.

Questions to ask

Whether your parents are looking forward to a simple relaxing retirement, turning a hobby into a career, or planning to see the world ‐ these will govern the retirement income they need. As a gauge, according to a 2021 survey, a single older person in a household needs a retirement income of S$1,421 a month to cover the basics.³ Here are some topics you will probably need to discuss:

• What are their plans are for retirement?
• Are they confident about funding the retirement that they want?
• Do they have enough savings/investments to fund their dream retirement?
• Do they have other healthcare/protection on top of Medisave?
• What life insurance do they have?
• Have they made provision for any care they may need in later life?

Life and health insurance

There are numerous types of life insurance providing a range of benefits. Generally, a simple Term Policy pays out a set sum to the policyholder’s spouse if the policyholder passes away within the policy’s term. Premiums for whole life insurance are higher, but this can work as an insurance savings plan for retirement; some also allow you to withdraw some of the funds in case of unavoidable emergencies.

Health insurance comes in many different plan types, some of them geared specifically towards the elderly, which may allow an entry age up to 70.

Financial grants

A range of financial grants exists for the elderly. Your local Social Service office can help explain what you may be eligible for. Furthermore, different stages of eldercare may require different expenses, and grants can help.

Estate planning

Your parents may feel that their assets are modest, but after combining them, they can be considerable. Property, savings and insurance policies can mount up and how they are distributed is best decided in advance. There may be exceptional circumstances and it’s best if these are discussed beforehand to avoid any conflict.

If your parents own a business, especially a family business, inheritance plans should be put in place for a smooth succession. Professional advice can ensure that everybody is informed and aware of the new set-up.

Power of Attorney

Nobody wants to think about losing their ability to look after themselves. Still, ill health, especially dementia, does rob some people of their capacity to make decisions about their health and finances. By becoming the Lasting Power of Attorney for your loved ones, you can make those decisions on their behalf. This may be easier to do when there is enough time to help them work out their long-term wishes and to act for them should it become necessary.⁴

What is next?

There’s a lot to think about ‐ and possibly change ‐ if there are gaps in your parents’ financial planning. But taken methodically, any problems can be identified and addressed. And you don’t have to do it all yourself.

To ensure your family is covered and ready for retirement, schedule regular check-ins with your financial consultant to review your family’s coverage and gaps.

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