SG Budget Babe
Asked on 20 Feb 2020
Both my parents are turning 60 within the next 3 years. They have close to no CPF (< $5000 excluding MA) and no savings. I intend to deposit $600 to their CPF per parent per year from 2021- 2025. Let's say I have an additional $50 budget per month for them. How should I help them be self-sufficient in their retirement days?
Oh wow. I missed this thread.
For CPF (if RA is very little), when they apply for withdrawal from RA at 65, the minimum amount (currently in May 2020) is $250 per person. You have an option for them to remain in RSS scheme, or CPF LIFE Scheme. (if cashflow is an issue, you can just top up $3,000 every year into their RA account).
In order to go onto CPF LIFE Scheme, you will require to look at this https://www.cpf.gov.sg/members/FAQ/schemes/retirement/cpf-life/FAQDetails?category=retirement&group=CPF+LIFE&ajfaqid=2303737&folderid=11656 and also
For further details and analysis, it will be difficult because there is a breakeven point where each 30k will give additional monthly payouts etc. So best to check with CPF in this case.
Last year, upon reading that ICBC gives 1.1% per annum for fixed deposits as Low as $500, I immediately did so and opened up a 3-month fixed deposit account for $500.
then when the fixed deposit matured this year, I topped up more money and extended it for the next 3 months.
i suggest you do this with your parents. $500 for 3 months isn’t a lot of commitment, provides an easy win and make even them feel shiok enough into saving more. start small, lock in the habit of savings, move on to more ambitious saving goals
btw if your parents feel comfortable with venturing out of the conventional banks, they can open up a Singlife account (2.5% per annum for the first $10k). Check out the Singlife reviews at Seedly
Have you checked their other resources? Existing cash value policies, any investments, property, etc.
If they have less than 60k in their Retirement Account before the age of 65, they will not be put on CPF Life, so payouts won't be for life.
Do consider downgrading their home, or rent it out and rent another place for arbitrage and extra cashflow.
If they're dependent on you, please make sure you're insured as well.
I suggest sitting with a financial advisor to help plan how best to utilise all their available resources.
20 Feb 2020
20 Feb 2020
Firstly, we need to have a complete understanding on our cashflow. Through this process, we will understand our earning ability and spending habit. Here is a guide to help you: https://www.blog.pzl.sg/understanding-your-personal-cash-flow/
Next, create a budget that is capable of helping you to plan for the future. The best way to do this is via automation and this is how I do mine: https://www.blog.pzl.sg/how-to-create-a-monthly-budget/
Through the process of understanding our cashflow and to create a budget, we are able to save more money for yourself and your parents. Thereafter, you may decide the best way to allocate this budget to them.
Before that, have a discussion with them and understand their needs. For instance, it could be to have sufficient money for day-to-day expenses and month-to-month bill. Accordingly, do a calculation and understand the shortfall to the goal.
Thereafter, work backwards to find out how much we need to start saving today to reach the goal. Then check it against your budget to make adjustments to it accordingly.
Finally, do not overlook the importance of proper insurance planning. To do this, one of the most important things to do is to have a complete understanding of your existing insurance portfolio. Through this process, it allows us to understand the coverage that we have, any financial gap, as well as to find out whether we are overpaying for our insurance policies. I have highlighted the rest of the reasons here: https://www.blog.pzl.sg/why-every-client-needs-an-insurance-policy-summary/
For the most part, one key insurance policy will be the healthcare insurance policy. Here is why: https://www.blog.pzl.sg/is-integrated-shield-plan-necessary-in-singapore/
Hence, do not overlook their health while planning their wealth.
Here is everything about me and what I do best.
20 Feb 2020
21 Feb 2020