OCBC Silver Years

Deciding between legacy and retirement

Raising a child is never easy, but it can be one of the most rewarding responsibilities.

Quite simply, most parents just want their children to have a better life than they did. This may entail leaving their offspring with a substantial legacy upon the parents' untimely demise. However, providing for one's own retirement needs may often conflict with one's desire to leave behind a sizeable bequest, given that most of us only have a scarce amount of resources at our disposal. Hence, as with all matters of life, there is a trade-off to be made – happy retirement or happy children?

Prioritise your retirement needs first. Leaving behind a legacy can wait.

If you ever had to make such a choice, it's good to be slightly selfish by putting yourself first and choosing a happy retirement. Think about it. What good could you be to your children if you were unable to adequately and independently provide for yourself financially in your twilight years? After all, you are best able to give back to others when your life is secure. So, settle your retirement planning first before you consider legacy planning.

To do this, you should first decide how you want to live out your golden years. Time is finally a luxury you can afford when you retire, and so whether you would like to travel, live with your children, support a charity or engage in a number of other activities, these should be reflected in your financial plans. Plan for your retirement as early as you can and review these plans as regularly as possible to ensure you are on track to meet your target standard of living at retirement.

Once you are satisfied with your retirement provisions, legacy planning would naturally fall into place. This is when you may start thinking about the assets you want to leave behind as bequests to your family and the manner of distribution.

What about doing both together? The wonders of financial innovation

Depending on the level of planning that you've done as well as your financial capacity, you may also take advantage of financial innovation that has been developed to address both retirement and legacy needs simultaneously.

In OCBC, this is possible through the PremierLife Generation insurance product. This is a Singapore-dollar denominated single premium, whole life participating insurance plan that enables customers to address both their retirement and wealth transfer needs.

It allows policy holders to enjoy a guaranteed monthly income to supplement or maintain your current lifestyle, transfer wealth for up to 3 generations, guaranteed insurance coverage for life and a hassle-free application with no medical questionnaire.

Seek advisory, not just product solutions

While it may be attractive to jump on such product opportunities, it's important to note that a financial product is not the be-all end-all solution to your wealth transfer needs. Legacy planning goes beyond just leaving behind a sum of cash to your family.

The table below provides a snapshot of factors one should generally consider when broaching the idea of wealth transfer.

  1. What you need to leave behind

    • Begin by understanding how much you would like to leave behind to ensure that your family is financially stable upon your passing.
    • Derive broad figures for (1) your current living expenses, (2) the financial needs of your dependents (whether they are still in school etc), (3) your existing liabilities (do you have outstanding loans on their properties or other types of investments) and (4) the ideal length of time the family should be supported with this source of income.
    • Minimally, this should be the amount you leave behind to tide your family over upon your demise.

  2. How much more you can afford to leave behind

    With these figures in mind, you can then address the "wants". This encompasses the additional amount of money you would like to pass on to your successors as a head start to their lives.

  3. How should the wealth be distributed?

    Finally, you should settle on (1) whom the beneficiaries should be in your wealth transfer plan and (2) how these beneficiaries should receive pay out, whether as a lump sum or monthly income.

Ultimately, wealth transfer should be an on-going conversation with your financial advisors as circumstances and financial situations may change, and these plans have to change along with it.

At the same time, wealth transfer plans cannot standalone. Rather, you must complement these plans with your own will-planning as well as financial plans to fulfil your other life goals like retirement and children's education.

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Wealth Product Disclaimers

Terms and Conditions apply. This is for general information and does not take into account your particular investment and protection aims, financial situation or needs. You should seek advice from a financial adviser before committing to a purchase. Otherwise, you should consider the suitability of the product. Insurance plans are provided by The Great Eastern Life Assurance Company Limited. This is not a contract of insurance. The precise terms and conditions of the insurance plans are specified in the policy contract. Buying a life insurance policy is a long-term commitment. An early termination of the policy usually involves high costs and the surrender value payable, if any, may be less than the total premiums paid.

A copy of the prospectus of the fund is available and may be obtained from the fund manager or its approved distributors. Potential investors should read the prospectus for details before deciding whether to subscribe for, or purchase units in the fund. The value of the units in the funds and the income accruing to the units, if any, may fall or rise. Payouts are not guaranteed and may be changed at the fund manager's discretion without prior notice. Please refer to the prospectus for the name of the fund manager and the investment objectives. OCBC Bank, its related companies, their respective directors and/or employees (collectively "Related Persons") may or might have in the future interests in the investment products or the issuers mentioned herein. Such interests include effecting transactions in such investment products, and providing broking, investment banking and other financial services to such issuers. OCBC Bank and its Related Persons may also be related to, and receive fees from, providers of such investment products.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Policy Owners' Protection Scheme

Policy Owners’ Protection Scheme The insurance plans are protected under the Policy Owners' Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact us or visit the Life Insurance Association (LIA) or SDIC websites (www.lia.org.sg or www.sdic.org.sg ).