Saturday, 1 September 2018

Would you give up on your own retirement plan to fund your child's education? I wouldn't!



Would you give up on your own retirement plan to fund your child's education? Apparently, 90% of Singaporean parents would.



I belong to the 10% who will NOT, but before you slam me for being selfish or a bad parent, hear me out first.

If I fail to plan for my own retirement - which includes living expenses and healthcare costs - this burden will eventually fall onto my child. And that's not being fair to him.

Being in a situation today where my husband and I are limited by the choices we can make precisely because our parents did not plan and take care of their own retirement, I'm well familiar with the stress and emotional burden that comes when we're stuck between our parents and our future. It is not something I would wish upon my child. 

You see, my parents (and my in-laws) didn't adequately plan for their retirement, and as a result,
  • They didn't buy private hospitalisation or critical illness insurance 
  • They did not save up cash for their retirement expenses (or at least buy an annuity plan)
  • They do not have sufficient CPF to rely upon for their retirement monies (my in-laws were mostly self-employed)
And due to old age and pre-existing conditions, it is far too late to get insurance coverage now. 

We're very cognizant of the fact that we have 5 dependents relying on us for their retirement. And as a result of our parents' decisions, we've had to make some sacrifices in return - this year, we had to give up on our plan to buy our own house because there's no way we can afford to have two big-ticket items in a single year.

It was a choice between paying for mortgage, or paying to support a baby (our pregnancy expenses aren't cheap either).

Obviously, we went with the latter upon finding out I was pregnant.

And apparently, I'm not the only one. According to a recent news article here, 92% of Singaporean youths do not feel confident about supporting their parents financially as well. The infographic provides a few key points which I wanted to discuss as well:




It was surprising for me to learn that 90% of parents said they would give up their retirement savings for their children's needs. As loving as this gesture may seem, there is a hidden cost down the road that I feel many parents may not take into consideration when they're this self-sacrificial : they end up putting the burden of funding their retirement onto their children.

I say this because this is the situation my husband and I face today. He's an only child and his parents have no retirement cash savings, as they lovingly gave him the best and today, they live paycheck-to-paycheck. I'm the eldest child of two and my parents are in a similar situation, because they failed to plan for their retirement. Today, I face the stress of being my parents' retirement fund. 



Are YOU your parents' retirement plan?

Are your kids YOUR future retirement plan?

It is time we changed that. 

As parents, it is understandable that we would want to give our child the best, often at the expense of our own.

But as the saying goes, blood runs thicker than water.

If parents do not plan for their own retirement, the burden of retirement expenses will eventually fall back onto their children, thus limiting the choices they can make for their own life (due to limited monetary resources). Will CPF Life payouts be enough? I highly doubt so, for it is only meant as a basic safety net. With cost of living and healthcare going up, you'll be fine if you're healthy even in old age, but damned if you're not and have no spare cash to pay the bills.

Guess who will have to pay the hospital / healthcare bills and living expenses for retirement then?

That's right, your children.

This is the plight that our sandwiched generation face : having to split our resources between caring for our parents and our own children. And at the rate our wages are increasing (I'm being sarcastic), how can we keep up?

With love,
Budget Babe

4 comments:

  1. Thanks for the insights. I nvr thought from that vicious cycle perspective before. In my 50s, not rich but guess I am in a better position than many. The younger gen is having a harder time whule govt keep saying cost of living affordable. Of course that is true with their big pay check.

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    1. I think this is a growing issue among the sandwiched generation where we have fewer siblings (to split the cost and responsibility of taking care of our ageing parents with), kids of our own to take care of, and our own retirement so we won't be a burden to our kids in the future. all these, amidst a backdrop of rising cost of living and stagnating wages =/

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  2. Hi,

    This is so much one has to handle in the prevailing circumstance based in Singapore. I think that it's better to keep it simple.

    Ben

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    Replies
    1. agreed, simple and minimalistic while having a well thought-out plan would be the best!

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