Planning for your own retirement can be challenging. Most of us already struggle with that.
But planning it for the generation before you? That’s rough. And also a daunting task that lies ahead for many Singaporeans.
For better or worse, many baby boomers raised us – Gen Y and Zers – at the expense of their own retirement.
As our parents approach their 60s and 70s, this is a problem that needs to be tackled at some point. Well, our take is always that early detection and prevention (for anything, really) saves lives.
The earlier you start preparing, the earlier you can avoid painful, prolonged periods of hardship.
With that mind, we’ve researched and come up with a list of things you can do to alleviate your sandwich generation woes.
Not all of these will be suitable for everyone, but the more of these you can do, the higher your chances of success.
Good luck!
Downsize, rent or sell the house
Rightsizing the family home. If you and your siblings have all moved out, your parents might want to consider downsizing their HDB flat. Not only will this help with empty nest syndrome, downgrading from a five-room HDB to a three-room HDB should free up some cash for them.
Househacking and renting. Being a live-in landlord means you give up privacy, but they can expect to fetch at least an extra $500 a month in rent if they rent out of their common room, or $900 for the Master Bedroom, or $1,700 if they rent out the entire apartment (and move in with one of their children).
Lease buyback scheme. If no one is inheriting your parents’ home, they might also want to consider HDB’s lease buyback scheme. They basically sell the remaining lease of their home back to HDB, and get some income for it. TBH, this is not our preferred option and should be viewed as a last resort.
For asset-rich, cash poor elderly parents who live in private property but refuse to sell their home despite financial trouble, they might want to explore a home equity loan.
We hate to say this, but there will be a day your parents are unable to look after themselves. When that day comes, you’d either have to:
1) make arrangements to look after them
2) look after them yourself
Both of these can be fairly expensive options. Hiring a qualified helper or placing them in nursing homes isn’t exactly cheap. On the other hand, being a caregiver is a full-time job – there will be significant opportunity cost.
Therefore, the longer your parents stay healthy, the longer you get to avoid these medical costs.
PS: Swimming, indoor cycling and even walking are great, low-impact options for the not-so-young!
Buy insurance for them
Many boomers are quite skeptical of insurance due to a lack of education during their era, and as a result, do not possess any. The result is that they’re one medical emergency away from financial ruin.
If they are still eligible for health insurance, we’d strongly recommend buying at least an integrated shield plan for them.
Also check if they’ve got their Eldershield plans and supplements sorted. Supplements are sold by private insurers and complement these plans by offering higher monthly payouts.
Delay retirement for as long as possible
I know you’re balking at this option already, but hear me out.
People are living longer, and retirements are also becoming longer. Your grandparents most likely retired at 60, then passed away in their 70s and 80s – around 20 years of retirement.
However, if your parents only pass away at 90, that’s 30 years of retirement you have to deal with. Encouraging them to work till their 70s can really help reduce financial difficulty later on (and keep their minds active).
Top up their CPF
The more money your parents have in their CPF RA at 55, the more CPF LIFE payouts they get in their old age.
These payouts will last as long as they live, so topping up their CPF accounts can help secure a stream of income.
This is especially important if they did not make regular CPF contributions in their working years, or if they have been homemakers their whole lives.
However, if your parents don’t qualify for CPF LIFE, or if they wish to maintain their lifestyle even in retirement, your next best bet will be buying a private annuity.
The costs of these annuities are dependent on various factors, including premium tenor, payout period and rate of financial returns and payout. Some of these annuities also include a higher payout due to disability or when the policyholder is unable to perform 2 or 3 ADLs.
PS: Personally, I don’t think that a private annuity is better than CPF LIFE, and vice versa, rather, CPF LIFE should form the base of your retirement by helping to pay for basic retirement needs, and anything more is a bonus.
Be prepared to say no
We understand that it can sometimes be painful to deny your parents stuff because it might seem unfilial.
However, if these are expensive or unhealthy habits that affect their quality of life down the road, then is it tho?
For example, we think it’s completely fair to deny allowance to a parent who’s addicted to gambling, alcohol, or some other destructive habit.
Similarly, if your parents are very concerned about ‘face’ and keeping up appearances, then you also might have to be the one who takes them back to reality.
Look at it this way – there might be a point of time where you become the parent to your parents. Therefore, your responsibility isn’t just their happiness, but instead their long-term well-being – which takes into consideration many other factors.
In the same way you would not spoil a child, you should not indulge your parents if they’re making bad decisions.
Important: Ending the sandwich generation is a combined effort
Society often puts the onus of ending the sandwich generation on the sandwiched class.
This is a narrative we don’t quite subscribe to.
Why? If someone decides to have kids, it is their responsibility to make sure that they can afford both the costs of raising a child, and their own retirement.
Which means to say, the burden of your parent’s retirement should not fall entirely on you; your parents have some responsibility as well.
Your role as a child? It’s to assist them to the best of your ability, not be their plan for retirement and sacrifice everything – including the next generation’s future.
These are two different things.
At the end of the day, coming out of the sandwich generation requires a multi-generational effort.
If everyone does their part, perhaps someday, there will a generation that’s free to live on their own terms.
Stay Woke, Salaryman
Further reading: Here’s some boomer advice you need to stop following
PPS: You can’t have a sandwich generation if you don’t complete the sandwich. i.e don’t have kids.
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