We all want the best for our parents. They have taken care of us all our lives, and now it is time to return the favour. In a few years’ time, your parents may consider retiring and will have to manage their expenses keeping in mind that they may not have active income anymore. To ensure that they live out their golden years with a peace of mind, you can help plan their retirement savings and insurance too.
So, how can you do that?
To help you get started in your parents’ retirement planning, we have listed 6 tips that can set you on the right track.
- Go for a retirement savings plan as soon as possible
All of us want to see our parents live comfortably, never having to worry about their finances. This is why your parents should take a good retirement savings plan early and leverage on compounding interest to ensure financial stability. A stable retirement plan that includes a monthly income that has the potential to increase annually could help keep up with inflation. Any good plan would also offer you Accidental Disability Benefit, where in case of an accident resulting in total and permanent disability, your future premiums would be waived off. You can also receive additional monthly income aid for support.
- Make a cash top-up to your parents’ CPF accounts
Making a cash top-up for your parents’ CPF accounts will greatly benefit them. They will receive higher monthly payouts from the national annuity CPF Life Scheme. If you were planning to make a top-up, do it sooner in order to accrue more interest. This will not just benefit your parents, but you too. How? You could be eligible for tax relief of up to $7,000 every year.
- Make sure your parents have adequate hospitalisation cover
Every Singaporean has basic coverage under MediShield Life. If you want better coverage for your parents, you should go for Integrated Shield Plans that offer your parents a wide range of private, public, and restructured hospitals to choose from. It is best to talk to a financial consultant while choosing an insurance plan suitable for your parents. Plus, some insurers also cover planned overseas treatment, which makes it possible for your parents to access top-quality healthcare services.
- Help your parents complete their CPF nominations
CPF savings, unlike what many believe, cannot be distributed through a will. You would have to go to a Public Trustee who would charge a fee for administering CPF savings that have been left unnominated. It is always better for your parents to make their CPF nominations as soon as they can so distributing them in the future would not be a problem.
- Ensure that your parents have critical illness coverage
A critical illness insurance plan can pay a lump sum amount if the policyholder is diagnosed with a specific critical illness. MediShield Life has a limit of S$3,000 per month for chemotherapy. But a single chemotherapy session can cost up to S$4,000 or even more. Also, patients go for chemotherapy sessions twice a month on average, which brings their total bill to S$8,000. This is where a critical illness insurance plan or cancer insurance plan can be very helpful since such plans could give you a lump sum payout depending on your chosen coverage amount. This can help cover your treatment bills as well as day-to-day expenses, especially if you were to stop work to focus on recovery. However, do make sure to do your research well and consider your parents’ needs for a critical illness insurance plan.
- Help them in making their will
Making a will can be quite a sensitive topic, but a very important one nonetheless. Drawing up a will looks like a black and white process; it could get quite complicated. In such cases, it is best to hire a lawyer who will be instrumental in avoiding any grey areas which could lead to fights in the future.
You can also take advice from a financial consultant for getting a suitable repayment plan for your parents. All the best!