How to plan for your parents’ retirement

Planning your own retirement is one thing, but planning for your parents’ retirement is another. Here’s how you can make arrangements ahead of time for your parents’ happy and comfortable golden years.

You have probably already thought about your retirement plan. Planning early for retirement is essential as Singaporeans have one of the longest average life expectancies globally, with studies suggesting this trend will continue to increase.

According to Prudential’s CEO Dennis Tan, many Singaporeans, despite being earnest savers, will struggle to retire at 62 with sufficient savings in the next 30 to 40 years. For the 'sandwich generation’, planning for retirement is extra tricky as it also includes making provision for parents. In a survey conducted by Prudential, 89 percent of millennials polled said they foresee the need to take care of their elderly parents.

While some are confident of their financial future, it may be challenging with the added responsibility to financially support their ageing parents and children. Even if you are not in a tight financial situation, it can still be taxing to provide for yourself, your children, and your parents – especially with the ongoing pandemic and economic fluctuations.

If you need a little advice in planning for your parents’ retirement so that they can live comfortably during their golden years, here are some practical steps you can take.

Have an open discussion with your parents

For the older generation, conversations involving income and expenses can be seen as taboo. Your parents may feel like such information or issues should be kept private so they don’t worry you unnecessarily.

Although this perspective has changed among the younger generation, it is important to encourage your parents to open up about their finances so that you can budget to help them.

If you tell your parents that you intend to help them optimise their retirement plan instead of taking full control, they will be more open to discussing it. It is important they feel assured that you are there to assist them in growing their finances and are not needlessly interfering with their financial planning.

Regularly review personal finances

In case of an emergency, you are often told to attend to yourself first before helping others. In many ways, the same applies to retirement planning. Otherwise, how can you help your parents with their retirement planning goals if your own retirement has not been accounted for?

Regardless of your current financial status, it’s beneficial to evaluate your finances to see where your money goes, especially when you are taking financial care of multiple people. Even if you don’t have to cut back on spending, you may find more useful ways to save or invest your money.

Some simple ways to achieve this are:

  • Review your financial plan regularly to ensure you are on track with your goals and see if there are any gaps that you will need to address.
  • Take stock of your expenditure and see whether you are keeping to your set budget and what may need to change.
  • Review your investment and insurance plans to ensure you are getting the best returns that allow you to take care of yourself and your parents.

Wealth planning is key

If you are actively responsible for your parents' expenses, the first thing you can do is cover their basic needs such as food, housing, and utilities. If they are able to manage these already, you can consider setting up an emergency fund for them instead.

Next, you might want to create a sinking fund for unforeseen circumstances. As the sole provider for your family, you need to ensure you have enough in your emergency fund for a rainy day.

Sinking funds will set you up for success should you face a situation that you’re unprepared for. This includes home maintenance, car maintenance, medical bills, dental bills, and pet-care or childcare.

Leverage our insurance solutions – from protection to savings – to ensure you are well-covered.

This article is for your information only and does not consider your specific investment objectives, financial situation or needs. We recommend that you seek advice from a Prudential Financial Consultant before making a commitment to purchase a policy.