For junior’s sake, plan your retirement
One of the best things you can do for your children is to secure your own financial future
These days, more and more Singaporeans seem ready to spend on their children to give them a head start in life, be it in the form of enrichment classes or travel.
According to a report by HSBC, the average Singaporean parent spent S$96,196 a year on their children’s local education in 2017 – almost double what others around the world spent.
It’s clear that Singaporean parents are willing to go to great lengths to give their children a solid foundation for the future. At the same time, one of the best things parents can do for their children is to save for their own retirement. Doing so ensures that children have a future free from the pressure of supporting Mum and Dad in their old age.
AN AFFORDABLE RETIREMENT
In a survey commissioned by Income and conducted by Nielsen last year, 66 per cent of youths believed they need to finance their parents’ retirement and have factored the cost of supporting their elderly parents into their own future planning. However, only 8 per cent were very confident about their ability to do so, so much so that 44 per cent felt they would have to make career-related sacrifices in order to help fund their parents’ retirement.
In the same survey, 90 per cent of parents would give up their retirement savings for their kids’ educational and developmental needs, yet 59 per cent were worried about becoming a burden to their children. In fact, 94 per cent were not confident of their ability to retire comfortably and 67 per cent expected to see their savings run out at some point during their retirement years.
The parents surveyed set aside an average amount of S$1,146 per month for retirement, but that was only about 35 per cent of the amount of S$3,314 they perceived to require monthly when they retire.
Contrary to what some believe, boosting one’s retirement savings does not mean sacrificing life’s pleasures or earning a fat pay cheque.
Income’s retirement plan, RevoRetire, starts from an affordable monthly premium of S$200. The plan gives you a stream of monthly cash payouts from your selected retirement age and provides you with protection against unexpected setbacks. Here is an example:
However, if Mr Faiz had set aside the average amount of S$1,146 per month as stated by the parents surveyed, he would have received a total illustrated sum of S$$4,4912 each month (guaranteed monthly cash benefit1 of S$2,550 + non-guaranteed monthly cash bonus of S$1,9422 ) from the age of 65 for 20 years.
· Figures used are for illustrative purposes only and are rounded to the nearest dollar.
· The illustrated yield at maturity for this example is based on annualised premiums of S$13,223 paid for 20 years. This is obtained by taking S$1,146 (monthly premium) x 11.538 (prevailing conversion factor).
· The non-guaranteed figures above are based on the assumption that the Life Participating Fund earns a long-term average return of 4.75 per cent per annum.
· Should the long-term average return be 3.25 per cent per annum, the total illustrated sum for each month would be S$3,132.063. The total illustrated payout upon maturity of his policy would be S$751,6943, and the corresponding illustrated yield at maturity would be 2.95 per cent per annum3.
Click here for important notes on RevoRetire.
THE BONUS THAT KEEPS ON GIVING
What if the parents wanted to give their child a helping hand with education fees, while also saving for their own retirement?
VivoCash Prime from Income allows parents to do just that with cash payouts after five policy years till age 100. Parents can then choose to accumulate these cash payouts and withdraw them when needed. Here is an example: