SINGAPORE – Singaporeans, especially parents of young children, have to take stock of their financial situation and do their retirement planning early, said a panel on Tuesday (Aug 17).

The panel on retirement planning, organised by insurer AIA and The Straits Times, discussed issues related to parents in preparing for old age and retirement.

It was moderated by ST Invest editor Tan Ooi Boon, who brought up an AIA survey which found that 60 per cent of Singaporeans face uncertainty in the future by not making retirement planning a priority.

Panellist Melita Teo, AIA Singapore’s chief customer and digital officer, also noted that parents spend almost 20 per cent of their income on their children, but less than 7 per cent on their own retirement planning. And 70 per cent of them plan to maintain or increase the amount allocated to their children’s expenses.

Ms Teo said: “Retirement planning is a very strong foundation of our society in terms of financial security, so there are real concerns when families are deprioritising this. The longer they wait out, the tougher it will be for them to be able to live out their later years well and healthily.”

She noted that such parents face immense pressure to care for their children and for their own elderly parents.

Panellist Tommy Lim, who works in sales in the oil and gas industry, said he is part of this sandwich generation.

Married with two children aged 15 and 12, Mr Lim, 42, admitted: “There are many competing expenses for funds.”

He said: “From my current age to the age I was planning for retirement, there are less than 20 years, so the runway is rapidly shortening, and I need to accumulate (enough) for at least 24 years of reduced income from 60 to 84 years old.”

Ms Teo said a study showed that more than half of Singaporeans have only enough to last till 70 years old, for instance, assuming they retire at 60 and live till 84 or 85 years old, she said. This is 14 years short in terms of retirement planning.

“The irony is there is a knock-on effect for those who don’t plan well for retirement. It means that eventually they may have to rely on their own children in their later years.”

Even as parents prepare children for their future, they should also consider proper retirement planning for themselves, “so they can avoid unintentionally burdening their children”, she added.

Credit Counselling Singapore general manager Tan Huey Min said people must make the effort to take stock of their financial situation.

Even someone who earns, say, $10,000 monthly can run into trouble if he wants only the best lifestyle options, such as a premium pre-school for his children, a continental car, weekly restaurant trips and holidays overseas.

“People need to sit down, see where they stand, and ask what are their earnings, obligations and financial goals,” she said, adding that it is not just about what they want, but what they can afford.

Savings are also important, so when extra money comes in like the 13th month bonus, a big chunk should be set aside for savings.

But making your money work for you and overcoming inflation are also vital, said Mr Lim.

This is where the power of compounding comes in, and planning and investing with professional advice is important.

Mr Lim contributes to his Central Provident Fund account and uses robo-advisory services where algorithms help to balance his portfolio.

“You have to know where you stand on a monthly basis, you must minimally be cash-flow positive, meaning your income covers your expenses,” he said.

“Whatever is in excess can be planned, but planning is a holistic process and it cannot be by yourself, but with your family.”

• You can read and watch the video on the panel’s discussion in The Sunday Times on Aug 29.