Now that December has arrived, you're just in for the perfect time of the year to express our love to our loved ones through valuable presents, especially to our elderly parents.
But what would be the most thoughtful present for our parents’ retirement? It’s time to do something different, beyond the typical spread of food, clothes, and lavish gifts, and give them a financial health checkup to better their financial future.
Many surveys have shown that many people have no idea how to start saving for their golden years. The fact that parents prioritize their children’s needs over their own can further damage their financial stability.
Parents should acquire the ability to manage their own finances as early as possible. They may need nudges from their kids to get them moving in the right way, though. Here are four best ideas for presents you can give your elderly parents.
1. Long-Term Health Care
Due to the country’s aging population and the high expense of new medical technologies, the healthcare expenditures are rising at double-digit rates, making it one of the primary concerns of those nearing retirement age.
Our health insurance policies have age-based premium increases for hospitalization. Keep in mind that you can minimize the use of cash in paying for premiums of the basic hospitalization and surgery insurance plan MediShield Life by using the funds in your Central Provident Fund (CPF) MediSave Account (MA). Your parents’ premiums may also be paid in part using your MA savings.
Furthermore, some of you may have hospital insurance riders that can protect against the deductible and/or co-insurance portions of the medical expenses. For elderly policyholders, the cost of these riders has skyrocketed in recent years. Take note that the riders cannot be paid for with CPF MA funds.
Make sure your parents have adequate hospitalization insurance that meets their needs and preferences, such as being able to stay in a private hospital that is suitable to their medical needs and preference and choose their desired doctors, and etc. Additionally, you should check if their premium may be reduced by downgrading their riders.
2. A comfortable nest egg
With a birth expectancy of 84.8 years, Singapore ranked as one of the countries with the highest lifespan in the world. In an era where people are living longer and prices are rising, we need to make sure that our parents aren’t in jeopardy financially in retirement due to these factors. The best method to ensure their financial security and happiness in retirement is to assist them in establishing diverse sources of income.
Cash or near-cash assets, such as higher-yielding savings accounts and fixed deposits, can house their 3-to 6-month emergency fund.
You may wish to consider investing any extra funds in assets that provide more stable and assured streams of income. For instance, the Singapore Savings Bond (SSB) is a product that can meet this need, as it is both adaptable and risk-free, and it provides cash dividends twice a year. An annuity or retirement insurance plan is another “safer” instrument that requires either a single premium payment or periodic premium payments over time. In certain cases, your parents can rest assured that they will get a set amount of money each year for the rest of their lives, while in others, the payouts will terminate after a set number of years. Research shows that retirees tend to spend more heavily on travel, hobbies, and businesses in the first 10–20 years of their retirement.
And depending on your tolerance for risk, people should invest in equities as well, as they tend to produce larger returns that can be used as a hedge against inflation.
3. A comprehensive estate plan
This is probably an emotional topic, but it needs to be discussed if we want to reduce family disputes in the future. Among these measures is revising existing wills and amending CPF nominations. A person’s wishes on the administration and distribution of his or her estate upon death might be laid forth in a will. If your parents have previously prepared a will, remind them to revise it as needed, especially if there have been any major shifts in their personal or financial situation. Keep in mind that charitable organizations can be named as beneficiaries in your will or CPF account.
The wills and lasting powers of attorney (LPA) for your parents and other relatives can be helpful too. When a person loses mental ability, but is still alive, can designate “donees” to make decisions about their care, finances, and other matters.
A trust, which can be set up to protect a family’s assets, is another instrument to think about, along with an Advance Medical Directive. The latter is a directive to your doctor that you do not want extraordinary life-sustaining therapy to be utilized to prolong your life (in the event that you become terminally sick and unconscious).
4. Wonderful memories
It is not necessary to spend a lot of money to have a wonderful time with our parents and make lasting memories. Not only can we spend quality time with them by going on walks and celebrating holidays, but we can also assist them in learning to use digital technologies to enhance their relationships with others they care about. Another option would be to tag along to their doctor visits with the hope of getting a clearer picture of their health. After all, good health is financial gold.
Let’s give our parents the care, attention, and encouragement they deserve by spending as much quality time as possible with them in their later years. May we all spend a wonderful christmas with our family and parents!