Why retirement planning isn’t just for you, it’s for your kids too

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As parents, we are faced with the dilemma of choosing between retirement planning or securing our children’s future. But little do we know that these two actually work hand-in-hand.

In Asian culture, education is regarded as a critical factor for future success. In fact, putting our children’s education above everything else is viewed as a selfless sacrifice that helps secure their future. Recent research commissioned by NTUC Income (Income) and conducted with Nielsen showed that an overwhelming 90% of parents surveyed said they would give up their retirement savings for their children’s educational needs.

This sounds noble, but how practical is it?  What happens if your children are in the midst of getting their university degrees and a sudden illness strikes you? You might need some time off work to recuperate, putting your earning capability on hold.  In an extreme scenario, your illness may even render you unable to work.

Let’s leave potential illness aside for a moment. Here’s more food for thought: The same study mentioned earlier discovered that 67% of parents indicated that they expect to outlive their savings and would not have enough money to last through retirement. A mere 6% of parents were confident of maintaining their current lifestyle when they retire.

Have you ever considered the inevitability of rising inflation rates against your current savings plan? And given this possibility, would you still be able to sustain your lifestyle in the future?

While it is natural to want to provide the best for your children, neglecting planning for your retirement might cost you more than you think.

What happens when you don’t save up for retirement?

1. You may need to work in your twilight years 

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It’s easy to get caught up with the demands of everyday life, and neglect building up your retirement fund in your early years. As a result, you may need to find ways to continue bringing in income beyond your desired retirement age.

The ideal scenario at the age of 60 is to retire from your job, enjoy the fruits of your labour and spend time with the people you love the most – your family: your spouse, your children and your grandchildren. By planning your retirement early, you can support your daily expenses comfortably without looking for additional ways to bring in income, or work through your twilight years. Working towards this ideal scenario does not have to be difficult, it only requires discipline in saving up as early as possible.

2. You will be forced to compromise on your lifestyle

After working for half your life, you definitely have an ideal retirement lifestyle you want to lead – for some, it may be to finally own a condominium; while for others it may be to finally own a dream car.

By failing to save up for retirement, these dreams may not become a reality. In addition, by forgetting to weave in inflation and recessions into your financial planning, it may lead to a compromise in lifestyle during your retirement years. While these are difficult thoughts to entertain, it is not a distant reality if you don’t start planning and saving today.

3. Your children will bear the financial – and emotional – burden

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As parents, you always want what is best for your little ones. You’re always ready to make any form of sacrifice as long as it means providing a better life for them – even when they grow up.

Although you, as a parent, may not have expectations for your children to support you in your retirement years, it often becomes the only option if you fail to plan for your retirement sufficiently. Despite your good intentions, it is counterproductive to sacrifice all your resources for your children and needing them to support you in the later years.

In the same research mentioned previously, 66% of youth have already factored in supporting their retired parents. While it is heart-warming to know that our youths have factored in their parents in their future planning, only 8% of youth were confident of supporting their parents financially, and they are willing to downgrade their current lifestyles, make career-related sacrifices and indulge less in personal hobbies to do so.

As parents, you make numerous selfless sacrifices in your prime years for your children, but how can you ensure that you don’t become the reason for our children’s sacrifice as you grow older?

What is the solution?

How can you prepare for your retirement while providing your children a great start in life? Is it really possible to “have your cake and eat it too”?

The answer is simple: It would be possible with a comprehensive savings plan that balances both your needs and the needs of your children.  

Income offers a savings plan that gives you cash payouts that you can use at any point you feel it’s necessary – whether for your child’s education or your own retirement.

VivoCash Prime lets you enjoy cash payouts after five policy years until the age of 100 while providing protection against death as well as a peace of mind in the event of total and permanent disability. In your later years, you can even transfer the ownership of this plan to your child.

A little confused? This sample will give you a better picture.

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Important Notes

BUT, I can’t afford a savings plan right now…

Most of us are under the impression that in order to get a savings plan, you need deep pockets; or that you don’t have enough funds to set aside for a savings plan yet. In reality, a savings plan can be customised to your budget and lifestyle. 

The first thing you need to do is compute how much you need for your retirement fund. Use Income’s retirement calculator to get an approximate figure of how much you’ll need for retirement. With this sum in mind, speak to an Income adviser to work out the best plan for you.

Mums and dads, equip your children with the right tools to be successful adults, but don’t compromise on yourself during the process. When it comes to retirement planning, start small and start now (it’s never too late). Being prepared for your retirement might sound like a selfish act, but it isn’t. Retirement planning isn’t just for you, but for your entire family’s bright future.

Source: www.income.com.sg/NTUCIncome/media/NTUCIncome/Retiring/income_retiring_infographic_v5a.pdf