SINGAPORE - If you have children, give yourself a big pat on the back: A recent survey has found that most parents here are caring and nurturing folks who care more about their kids than themselves.
And they show it not just by expressing love and concern but in monetary terms too; many spend 20 per cent or more of their monthly household income on their children alone - 2.5 times more than the amount they would set aside for their own retirement.
As if that's not enough, 70 per cent of the parents also said they intend to either maintain or increase the amount of income they allocate to their children.
This holds true for most of the 1,000 households polled by AIA Singapore recently, whether the families earned between $2,000 and $8,000 a month or more than $14,000. What this means is that if you earn more, you are likely to spend even more on your children.
While there is nothing wrong with that, it is time for parents to pause and start to do the sums for themselves as well. Otherwise, you may end up having a rather difficult retirement.
When the question of retirement preparedness was posed to those polled, about half said they might have to downgrade from their current lifestyle owing to insufficient savings for their post-work years.
But the situation does not have to be so bleak if you start to do something about it now.
As Ms Melita Teo, AIA Singapore's chief customer and digital officer, puts it, when you look at making plans for the long-term financial security of your family, you should plan not just for the children but for yourself and your spouse too.
"We recognise this is not an easy balancing act, especially amid growing financial insecurity as a result of Covid-19. Many also fear becoming a burden to their children later on in life," she says.
Parents unsure of cost of retirement
A common trend among young parents here is that many of them have not given serious thought to how they are going to get by in their old age.
For instance, at least one in five of those in their 30s and early 40s don't even know how much they would need after they stop working. This probably explains why many of them choose to set aside only $250 to $500 in cash from their monthly salaries now for the retirement kitty.
Even if you take the higher amount, a simple calculation shows that this kind of plan is not going to tide you over for long. At $500 a month, it means that you will save $6,000 a year or just $60,000 in 10 years.
Those who save $250 will even have less to spend - $3,000 a year or $30,000 a decade.
Compare this with the average sum of $1,500 that the same parents say they would each need every month for their retirement - this means that they would need to have $18,000 annually or $180,000 over 10 years.
There is an obvious disconnect here - these parents know how much they will need when they stop working, but are not saving enough now to meet this target, not by a long stretch.
What you should do
The obvious answer is that you must set aside a lot more for your own retirement, and you need to do so urgently, especially if you are already in your 40s.
You cannot increase your salary overnight as such things are not within your control, even if you are a talented employee. But there is one thing that you can achieve immediately, and that is to have a household budget to identify essential and non-essential expenses.
You need to have a clear picture of how money is flowing out every month, because the biggest obstacle to retirement planning is actually overspending.
For instance, there is no need to always upgrade everyone's phones or other gadgets in the family to the latest models, as these items can last more than a few years.
You should also cut down on snacks and food deliveries that are costly - have more home-cooked meals, which is the new normal these days.
Watching your expenses need not be a boring affair where the children are concerned. You can allocate a reduced entertainment budget for the family and seek everyone's views on how to spend it. You may be surprised that some past outings that were more costly, such as hotel staycations, were what you wanted, whereas the kids were perhaps more keen on just going to the zoo.
Planning for education
The item that will punch the biggest hole in any parents' pockets is their children's tertiary education. More than one-third of parents polled in the survey said they were banking on their children making it to local universities so that they wouldn't have to end up spending hundreds of thousand dollars for overseas education.
Only 3 per cent of parents were confident enough to say that they have the means to send their children overseas.
The rest said they would take a wait-and-see approach - see how the kids fare in their exams and whether they can qualify for scholarships, or have what it takes to make it to university. They also said they would make a decision based on the fees when the time comes.
In other words, they are leaving it to fate, because this is akin to having no plans at all.
This is almost similar to you saying, "Oh, I will start to plan for my retirement when I know how much I need when I am 70". By then, it may be already too late to do anything.
If you are serious about planning for your children's future, start drawing up a savings plan.
An endowment policy is a good option for many parents, but before you buy one, ensure that the guaranteed returns can at least cover what you put in so that you don't end up short when the children are ready to go to university.
Ask for the best- and worst-case scenarios for the policies so that you know what you are buying.
If you are looking at local universities only, you can also consider making a voluntary contribution to your children's Central Provident Fund (CPF) accounts. A $500 monthly contribution - or $6,000 a year - from a young age until your child is 20 will enable him to have more than $100,000 in his Ordinary Account, which can be used to pay for university fees here.
A big plus for making plans early is that if your children are scholarship material, they will welcome the extra savings - cash or in CPF - as the money can eventually help pay for their first property.
Indeed, if you truly love your children, do this: For every dollar that you set aside for their education, set aside another dollar for your own retirement too.
In wanting to give them a head start in life, you should also ensure that you can get a head start when you finally retire.
About 60 per cent of parents polled said that they worry about not having enough in old age. So start working on being more financially independent so your children don't have to shoulder the burden of taking care of you in old age.