SG Budget Babe
Asked by Anonymous
Asked on 22 Oct 2019
My hawker parents are in their early 50s, they have less than 5k cash savings. We live in an executive apartment (left 10 years of installment) and they have a car. While they have enough for daily expenses, they do not have a retirement plan (I believe that they think that I am their retirement plan). Am I responsible for their poor financial health? Am I doomed to be another sandwiched generation? What can I do to help myself?
To be honest, yes you would be.. And I get it, it's a tough decision. At the very least, I would suggest to get a basic hospitaliztion plan for them. That will prevent some "surprises" from happening. On your end, I guess it would be to save as much as possible. If you can get a second hustle (such as tuition), that would be great. Portion out your income to savings and do not touch it. If worst come to worst, I guess an option would be to downgrade the apartment as well, but that would be the final resort if it was up to me.
Top Contributor (Jan)
You don't owe them everything but you should be keeping aside 5% aside of your income for them in case something really bad happens to them.
They are your responsibility as much as you were their responsibility when you were young.
Speak to them about saving at least 20% of whatever they earn for themselves, but you need to make that small sacrifice of 5% for them as well. Put it into an annuity that will start paying when they turn 65.
This is a tough one, especially with the recent talk around the sandwich generation.
Personally (this might not apply to everyone) - I feel that I want to be able to take care of them. My parents (in their 60s) don't have a retirement plan (mum has been a homemaker for the last few decades and dad earns a humble salary doing metal works), and in addition, they did not have insurance coverage until I got it for them in the last few years. My parents are not financially savvy, and in fact, I was scolded by my mum for buying insurance for her.
Despite all the arguments, If I am not able to have that financial buffer for them, there is no way I would feel at ease.
That said, I will always see how we can cut down at home. For example, I purchase family consumables such as toilet paper, washing powder etc, and in general, will look to be more frugal in terms of spending.
Simple answer - yes, you are responsible for your parents' financial health. I am going to be cynical here, which may disgust or horrify people here. Children are a loss making entity in Singapore unless they give you $1200-$1500 monthly allowance.
I did a financial projection of a child going through 3 tuition subjects in Primary, 3 in Secondary, 1 in JC and Zero in Universtiy. Adding the cost of medical and everything, I recalled the future value was about 1.1 million and the breakeven level in the form of cash inflow of future monthly allowance was around $1,300 per month.
It really horrified me that having a child was a very financially draining matter. In business, we have a cashflow projection method and I had applied this concept into perceiving a child as a business entity. That said your parents raising you up in Singapore meant that they had sacrificed a lot of holidays and probably even the opportunity to travel in first class seats multiple times (Aaron Wong is going to be horrified at this statement). So if they have little cash now having raised you up, I will say your growing up expense contrbuted to where they are financially now.
Not going to give you a direct answer for this
No matter how, they're the one that raised us up. There's no amount that is enough to replace that i believe.
What can you do, make sure they have adequate coverage. At least hospitalization plan. If possible, help them to open up an investment account where you can ask them to fund it montly irregardless the amount. Can me few hundreds dollar also. At least, they can have some savings.
I think you should speak to a financial adviser.
Now that they are in their early 50s, they can still get started now.
The more they plan, the lesser your worry in the future.
it's important for them to realise how much they actually need to retire in the future. Many don't start planning because they don't know how to.
You should talk to your parents and be upfront with them. It is important that you are all on the same page about their retirement. "Dad, mom, you guys are getting older, have you thought about your plans when you stop working?", this could be a good conversation starter.
If they expect you to support them, then you'll have to decide how much support you're able to give and let them know the boundary. "Dad, mom, I've calculated my finances and I think I can only afford to help you with $X a month." Its not so much about the amount, its about being on the same page with your family members.
This way, you can continue to support them, but you should not have to be responsible for their poor financial decisions.
Try to see if you can convince them to let go of the car? It is one of the greatest expenses.
It would be good if you could help to ensure that they have enough cpf for their retirement or convince them to start planning for their retirement. In the meantime you can try to cut down the household expenses.
Tbh I don't think you have a choice. I'm in the same boat as you, and tbh I am really quite worried cos my parents financial situation isn't quite solid yet they spend a fair bit.
I've resigned to the fact I'm responsible and I will have to take care of them to the best of my ability. On the other side, we'll probably have to take care of my MIL as well who might not have any savings so I guess we're in charge of 3 parents finances.
I won't say you are responsible, but you should do take good care of your parents.
I am a new parent myself and I suddenly realised how much my own parents have sacrifice to take care of me. Your parents have gone through a lot of trouble to take care of you.
You won't know how much it takes until the day you have your own first born.
Beside, for your parent case, its not that bad, they have a house that left 10 years of installment that they can monetarise later. The older generation knows nothing much about investment and savings.
They probably didn't have enough to invest because they spent what they have made on their children.
I would say for us born in the 80s, the sandwiched generation, ultimately yes it falls on our shoulders to help them cope with their financial health. This comes in the form of monthly allowances etc.
I think what you can do to help them, one avenue is to top up to their retirement account (if they have hit 55 yr old and have less than 30k in their RA). Reason for doing so is that the first 30k in their CPF earn 6% interest, and that's quite a decent amount of interest which would ultimately be beneficial when they reach their 60s and possibly fully retired.
Top Contributor (Jan)
Simple answer - yes, you are responsible for your parents' financial health.
When you have nothing (young and not working), they did everything within their means to provide for you such that you can reach whatever status that you are today. Without them, it is impossible for you to have the knowledge and skills that you have right now.
Now, use what you know and help them make long-term plans for thier retirement. Through this process, it benefits both your parents and you. With a common goal, work together as a family and achieve it!
Here is everything about me and what I do best.
Yes, given that they've also raised you up with their own finances, I believe it's only right to return the favour once you've gained some financial freedom yourself. As a start, perhaps you can look towards helping them manage their budget and set aside a sum of their savings each month? And check whether they have insurance coverage too, otherwise bulk of the financial burden from health expenses might potentially fall on you.
Sounds to me like you dote on your parents' welfare yet run the fear of not being able to help yourself too. I do agree with some commentators on their suggestions on doing some future planning for yourself and them, consider your family's overall assets and liabilities, make plans for any shortfall, etc.
For an Asian society like ours, I reckon you provide some form of monthly allowance to your parents too whenever possible. You may want to consider having your parents do their LPA (Lasting Power of Attorney). Should any require your help to manage their assets such as the house and funds like bank accounts, you will need this important document to have access to their personal welfare coupled with property and affairs, the bank or CPF will not grant you access easily without the LPA, you will have to go to court to apply for a deputyship order.
If your parent treated you well and brought you up, why not? Maybe don’t have to go to the extent of a few thousand a month but maybe 500$ a month as an allowance to the family?
From a legal standpoint, the answer is "YES" - The Maintenance of Parents Act does put some responsibilities for children to be supporting their parents when elderly/in-need.
The details of the obligations below
On a social/filial standpoint, really up to you and your relationship with parents.
Best of luck with it.
Run. Run as far as you can. Just kidding!
Was in, still am in a similar situation. My parents have since retired albeit, with less cash savings than I would like, the house is paid up, etc. Etc.
If you have siblings, this is a good time to split the load and commit to a joint account for family expenses like groceries, medical bills. Insure them for the shield, hospital plans. Etc. Chances are they don't have much in CPF so there's little point to contribute to it.
The thing about my parents is they handle money separately, figure out what their habits are like. Good or bad you should know but always be gentle when talking to them. My parents don't have a concept of investment so they never thought of it.
I feel like this makes for money to be a sensitive topic to my family and myself but that's life. Plan your own finances to include your parents, understand the payment schedules (insurance) and show them the amounts. Get them to take up part-time job/volunteering and stay active!!!
It's tough because you feel like you're perpetually at a negative net worth and you never chose your family background. But like any person with a growth mindset, which you should adapt and be - make this environment a lesson for yourself to learn and discipline yourself. Find a good job that pays well, spend only what is truly discretionary etc. Etc.
ALL THE BEST.
Logically you should not be responsible for your parent's financial problems and they should have taken care of their own finances but I also know that this is a common mindset among the older generation to rely on their kids for retirement.
I suggest you have a sit down with your parents and have a serious talk about finances. There is still time for them to implement solutions to help with their retirement. They can also choose to sell their car and/or downgrade their housing for starters.
Meanwhile, for yourself, you should definitely first set up a budget for yourself and strictly follow it
Build up your savings and emergency funds. You can look at cutting out expenses that are not absolutely necessary.
Secondly, you can look for secondary streams of income to complement your main income and also start to invest your money to leverage it as much as possible.
Your parents are still young and there is still time to educate them on their finances. Don't give up hope it's still not too late
If you find it awkward to talk to your parents about this, feel free to drop me a message on my Facebook at facebook.com/jianhuicheung or my email at [email protected]
They were responsible for every action of yours, good or bad for the number of years you have been living. If you need to put a monetary value to how much you owe them. You can never pay them back.