For those whose parents are relying on them for financial support in their retirement years, how should you speak to them about managing their expenses and helping them be more financially independent?
Editor's note: Opinions expressed reflect the views of the writer.
As the breadwinner of a family, I noticed that when I planned for retirement, my biggest challenge was to determine how much buffer I needed to factor in to fulfil my dependents' (ageing parents) daily and special needs.
Money has always been a sensitive topic within my family. Thus, I needed a way to broach this topic in the least destructive way so that I could get the information I needed to build my buffer. Otherwise, I would never dare to retire.
Here are the steps I took to get started which actually worked out quite well. Thought I should share it with you. Note that I haven’t completed all the steps – I am still finding the right moment to carry out steps 6 to 9.
Step 1: Start A Conversation
Use an article to start a conversation with your parents on retirement. I found that this was useful as it makes the discussion less personal.
Check out articles like Here’s how much money you need to save to retire on a beach and play golf all day by age 40 by Business Insider or Singapore seniors each need at least S$1,379 monthly to meet basic needs by Today.
Step 2: Create Awareness of Retirement Planning
Use these articles to ask them how much they think they need to retire as compared to the average retired household.
Step 3: Create Mindfulness in Spending Habits
Get them to list down their current expenses and ask them how do they foresee their expenses will look like when they retire using the article’s average retired household expenditure as reference.
If they have no clue how much they spend per month, share with them how you have been keeping track of your own expenses. Demonstrate to them how you have been actively weeding out the WANTS from the NEEDS and of course the savings and benefits.
Do it in a light-hearted manner. Here are some tools you can use based on my own retirement planning project.
Ask them to join you in this exercise or maybe even start a competition where the family can review this on a monthly basis for the next 3-6 months. You may want to make this a yearly or quarterly affair after that. The purpose of this exercise is for you and your parents to be more mindful of their spending habits.
Set goals to improve spending habits and compliment one another when a goal is met. You can even consider having a short celebration when a goal is met.
Step 4: Generate Awareness of CPF Life
Share with them about CPF Life. Highlight to them that everyone should at least achieve the minimum sum before they should even consider retirement. Get them to share with you their views.
Step 5: Generate Awareness of Medishield Life
Share with them the details of Medishield Life and discuss with them whether they think it is of sufficient coverage. Get them to share with you their views.
Step 6: Review Their Assets
(WARNING: this is a sensitive topic so do it gently)
Run through the assets they have. Ask them gently whether there are any assets that they believe are no longer relevant (e.g. should they downgrade their property, are their stock portfolio still relevant, etc.)
Step 7: Explore Avenues for Generating Retirement Income
For example, rental, investment, doing part-time jobs that they love to do like teaching, volunteering, and more. Discuss intently whether their income could fulfil their retirement expenditure.
Review their assets again to explore whether these assets could actually help increase their retirement income. Now, ask them whether, based on the numbers presented, they believe they have a realistic timeline for retirement.
Sometimes, it may be helpful to show them your own retirement planning numbers so that they will appreciate the challenges you may have, especially if you have a family or plan to have a family. Hopefully, this will help them start taking more responsibility in their own retirement planning.
Step 8: Set a Retirement Goal and Timeline Together
Now that your parents and yourself have a very clear view of the income and expenditure needed for retirement and timeline, share with them your bucket list and ask them whether they too have a bucket list that they would like to fulfil in their lifetime. Here is my own bucket list for reference.
I believe that active ageing is extremely important for the mental and healthy well-being of a retiree. So the best way for you to help your parents is to set retirement goals with them and work out the steps needed to reach these retirement goals.
Review these steps quarterly or yearly with them. Celebrate when short milestones have been reached.
Step 9: Seek Their Blessings for Them to Take Responsibility for Their Own Retirement
What do you think? Are there any suggestions on fine-tuning these steps? I would like to hear from all the fellow breadwinners out there.
Check out my previous article on how I wish I could turn back the clock…
A version of this article was originally published on Lady, You Can Be Free.
Read these next:
How Much Do You Need To Retire In Singapore?
CPF Has No Equal as Investment Vehicle: Singapore’s Mr. CPF
How Much Savings Should I Have at 35 in Singapore?
3 Myths About Retirement Planning in Singapore (And Why They’re Wrong)
‘Asian Women Need To Start Investing and Stop Thinking Of All Debt as Bad’
By Lady, You Can Be Free
A lady who hopes to achieve financial freedom (SGD 10K per month passive income) by 47 and spend her time striking off items on her bucket list.