Asked by Anonymous
Asked 2w ago
My mum is 49 this year and has only 7.5k in OA, 12.1k in SA. My dad and my mum are paying our hdb installment of 700 a month thru cash. She is working as a blue collared worker earning around 1.8k. What product would be recommended for her to buy and how can she adjust her Cpf contribution for retirement?
Top Contributor (Jan)
The most fundamental tool in retirement is CPF Life. Your mom is working for an income now, when retirement is here, income needs to come without her working. CPF Life is provides a life long payout which allows her to have peace of mind that money is coming in.
Thus, the best thing for her to do is to ensure that she has sufficient monies in her SA. This may be a bit of a bitter pill for some to swallow since some people don't have a favourable view of CPF. If you are working, contributing to her SA via RSTU may help to boost her SA monies, and save you some tax. Else, she will have to rely on her work contributions, and hopefully some top ups straight to SA with her spare cash will work as well.
Without confirming that she is able to reachthe full retirement sum, she really shouldn't be looking at any other products.
Also, don't do CPF OA to SA transfer. If she loses her job, her OA savings are her only method to sustain the housing repayments. She'll need that as a buffer.
-inform yourself well and broadly (attention: pros often have conflicts of interest and nobody can predict the 'real' future)
-ask your Ma about her risk tolerance (with very different probabilities ALL assets can be lost)
-when you come to investing, make sure that your whole family supports the decisions 100%! coinvolve. important.
Top Contributor (Jan)
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, 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/
At the most basic level, the first priority is always healthcare. The reason is simple - medical inflation hits 10% in 2019. Accordingly, a single medical treatment could potentially wipe out all your savings. To do this, it is always valued to have your own private integrated shield plan. Here is why: https://www.blog.pzl.sg/is-integrated-shield-plan-necessary-in-singapore/
At the same time, we shall conduct a detailed calculation on the mortgage to find out the risk that your parents are undertaking. Thereafter, we can evaluate and decide how much life insurance we should get to cover the liabilities risk.
Of course, saving up for retirement is important as we edge closer towards the golden age. With this in mind, I will advise them to create a budget that is capable of helping them 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/
Every bit helps and there are various wealth accumulation tools available in the market to help your parents grow their wealth for the future, e.g. endowment, annuity with high guaranteed payout.
All in all, it will be valued to understand their needs and concern and see how we can help your parents live with confidence.
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