How to help your parents navigate retirement planning in Singapore
23 Oct 2023

Painting the "gold" in your parents' golden years

Key points:

  • Create a safety net with health insurance that considers their preference for public vs private hospitals, and choice of doctors.
  • With CPF LIFE as a foundation, build layers of passive income streams with retirement income policies and investments that lessen the sting of inflation.
  • Preserve their dream with estate planning tools such as Lasting Power of Attorney, will, CPF nomination and insurance nomination.

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As you move through the milestones of getting married, starting a family, and progressing in your career, you may be worried about one thing: ensuring that your parents have a happy and meaningful retirement.

Having the foresight to plan for retirement early can reap many benefits. But your parents may be too preoccupied with work, other priorities, or health concerns to begin planning. Sometimes, the fear of the unknown can paralyse them into inaction.

This is where you can come in. Reassure your folks and help them take concrete steps towards realising their dream retirement. The earlier they start, the longer their runway of enjoying the fruits of their hard work. Here are 3 things to look out for in your quest to help your parents.

Create a safety net with health insurance

Prepare the canvas: Create a safety net with health insurance

As the saying goes, “Prevention is better than cure.” As your parents age, health issues are likely to crop up – which is why a safety net, in the form of robust health insurance, is crucial. The good news is that all Singaporeans and Permanent Residents (PRs) are automatically insured with MediShield Life. This is a basic health insurance scheme which is designed based on public hospitals Class B2/C bills.

Some choose to upgrade to an Integrated Shield Plan (IP), which offers a higher level of coverage. Premiums may be higher, but your parents can have the choice of doctors and have the option to stay in Class A/B1 of public hospitals and private hospitals as well.

“Will you be comfortable staying in a public ward?” “Will you like to have a choice of doctors?” These are some questions you may want to ask your parents when deciding on a suitable plan. Long-term care is another area to take note of. As reported by the Ministry of Health (MOH), 1 in 2 elderly Singaporeans could be severely disabled in their lifetime.

Check if your parents are covered by ElderShield or CareShield Life, which are government schemes that provide a monthly payout of S$300 to above-S$600 each month to those who are severely disabled.

To enhance their coverage, you can purchase a CareShield Life Supplement plan, which can provide up to S$5,000 of lifelong monthly payouts.

You can also help to pay their CareShield Life Supplement premiums using your MediSave. Talk to your parents to find out what they need – and do a frank assessment of your ability to care for them if required.

Secure passive income streams to sustain your parents’ lifestyles once they stop actively earning.

Paint the layers: Secure passive income streams

Passive income, generated from investments, interest and rent, are critical to sustaining your parents’ lifestyles once they stop actively earning.

Most Singaporeans and PRs will receive monthly lifelong payouts from CPF LIFE. Assuming your father sets aside the Basic Retirement Sum (BRS) of S$99,400 at age 55 in 2023, his monthly payout will be S$850 when he turns 65 and opts for the CPF LIFE Standard Plan. If he sets aside the Full Retirement Sum (FRS) of S$198,800, the monthly payout will be S$1,600.

If your parents intend to travel, restaurant-hop and more, they will likely need a higher payout to support a more luxurious retirement lifestyle. Setting aside the Enhanced Retirement Sum (ERS) instead of the BRS or FRS can help with this. By setting aside the ERS of S$298,200 in 2023, he will receive S$2,360 per month from age 65.

CPF alone may not be enough. To help them lead an even-more comfortable retirement, you may want to explore options such as a retirement income plan. This allows them to enhance the guaranteed streams of income in retirement. Manulife FlexiRetire and RetireSavvy are two such plans that can be customised to your needs.

One of the greatest risks to your parents’ retirement is inflation and not having sufficient savings. And the solution to that is to ensure that your parents’ savings continue to outpace the rise of prices. Your parents can consider setting some funds aside that can provide potentially higher returns in the longer-term by investing in structured products and unit trusts. There is a wide variety of investment tools and your parents can invest in those that serve their risk profile and needs best.

Preserve the retirement dream with estate planning

Framing it up: Preserve the dream with estate planning

Retirement planning is not only about how to live your best life in your later years. It also about preparing for the possible scenario of losing mental capacity, and what you leave behind for others when you are no longer around.

Doing up a Lasting Power of Attorney will help your parents appoint responsible donees to care for them should they become mentally incapacitated.

Other estate planning tools include a will, CPF nomination, insurance nomination and a trust. These tools help to ensure that their assets, such as properties, investments and valued possessions are distributed according to their wishes. Without them, the Intestate Succession Act, or Islamic inheritance law if they are Muslims, will kick in. In such cases, the process could be longer and costly, and the outcome may not be what they desire.

For some, death is a taboo topic, so broaching the topic gently is the best way to start the conversation.

Read more: Key aspects of successful legacy planning in Singapore

Help your parents enjoy their retirement years

Enjoying the work-of-art: Your parents’ retirement dreams

Retirement is a new and exciting phase of life for your parents and navigating it well is important to ensure that their quality of life remains even in later years. Once the funds have been built up, your parents will have more options to rock their golden years comfortably.

Your parents don’t have to do it alone, and neither do you. Simply reach out to a DBS Treasures Relationship Manager today, so that you and your parents can focus on the things that matter most.

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Disclaimers and Important Notices

This article is meant for information only and should not be relied upon as financial advice. Before making any decision to buy, sell or hold any investment or insurance product, you should seek advice from a financial adviser regarding its suitability.