The struggles of being in the sandwiched class are that you will need to manage children’s education and your parent’s finances. This article describes some of the issues that I dealt with before. It is by no means exhaustive, and my family’s specific situation may often influence my solution.
I highlight some key issues that need to be resolved and how to think about a customised solution to your personal needs.
i) Facing End of Life Issues
I lost my dad in 2019. But my dad was well prepared for his passing and has written a will. While he was still alive, he was transparent about where he kept the document, and it was a simple will. He has just one wife and just one kid.
The execution of the will was fast because I had legal training. But even that had minor complications. My mother had to renounce the trustee role to me to speed up the paperwork. One interesting administrative work I did was explain to the Family courts why some non-renounceable rights had no market value when reflected in the CDP statements. For this piece of work, I worked closely with paralegals, very much like my time doing practice training as a pupil in a small law firm – my response was real-time and assured the paralegal working with me that I can be treated like a co-worker. The final process was a short three months. I suspect I may have even earned a job offer from the process.
From this experience, I felt that my own will was too complicated as I drafted it from the ground up using my notes I picked up from my practice training.
Two weeks ago, when my mum had a health scare, she pushed me to bring her to a well-known community family law firm to update her will to expedite the process should anything happen to her over the short term. So I had to swallow my professional pride and let another professional do the work that I thought I could do quite competently.
To my relief, the entire process was cheap relative to the liability the law firm was taking. The will and Lasting Power of Attorney (LPA) were less than $500, and we even lodged the document in the Wills Registry. Good firms have a simple and elegant template. I told my mum that I would not do it myself for this fee, and I’m probably just an Associate if a law firm were to take me in.
Takeaway
I hope that folks in the sandwiched class can learn a bit from my experience and take steps to engage your parents on end-of-life issues. It goes beyond just a Will but also include a grant of the LPA. If a parent can no longer act on their finances, a child must step up to the plate and family politics will complicate matters. Your solution will likely be different from mine, but initiating communication is the hard part.
In any case, I am aware of many services provider who can provide will writing for free. But why not just take one simple step to create a Will, put it in the registry, and do an LPA at the same time. Given the number of assets at stake, it may be better to engage a professional law firm to get it done.
ii) Navigating Medical Issues
My personal experience
It was tough losing my dad in 2019. I still spend my evenings thinking about whether the medical moves I made with my dad was right. We opted for B2 wards and employed my father’s Medisave to treat him. My father resisted all attempts to upgrade when he was still alive. The last 48 hours of my father’s struggle was hard, and we’ll be wondering whether a private hospital would have prolonged his life.
A lot of Singaporeans have the same problem as my family. We don’t have good genes, and both my parents could not get an Integrated Shield Plan because of existing illnesses. My dad’s solution was to accept the B2 ward stoically, and I had no complaints about his treatment during his final days. In fact, my mum’s entire breast cancer remission was achieved via government hospitals under the B2 ward.
Learning from experience
So with my mum, we’re drastically changing our approach to elderly healthcare.
We are still not insured, and we will still rely on government hospitals if she falls seriously ill. But I recently had a conversation with mum and told her that we’d saved so much money NOT PAYING for these Integrated Shield Plans (ISPs) all these years and even compounded them to generate income every month. We have a five-digit dividend payout every month even though we live like any family in the heartlands.
So why not spend part of this extra savings not paid on ISPs on superior preventive medical care?
Please don’t take this as a complaint, but the truth is that we’re pretty tired of the default service we get from GPs and Government polyclinics. One GPs hand-waved my mother’s blood pressure when it hit over 200 and tried to have her hospitalised rather than troubleshoot the issue properly. My mother even told me that a polyclinic doctor scolded her five years ago for visiting him because “medicine was very expensive leh“.
This time I am playing a different game.
I pulled strings to get a referral to an excellent cardiologist to look into my mother’s high BP, and from last week, we’ve been visiting a high-end hospital at Novena area to have her BP treated. I told my mum that it’s better to negotiate from a stronger position and do as many tests while still healthy. The specialist added a new BP drug, and my mum’s BP dropped about 20 points over the past few days. Waits are now shorter, and we can get same-day consultation after a blood test.
My cost is 10x more expensive than a visit to the GP, but it’s worth having someone look at the issue over a longer time. For the first time in my mother’s life, there was some hope in controlling her blood pressure and breaking the curse that plagues her entire bloodline.
I do not mean to dissuade you from Integrated Shield Plans. But understanding my story allows you to realise that alternatives exist, and resources we save from one option can be farmed into different tiers of medical care.
iii) Managing General Finances
Of course, management of a senior’s finances has to be taken care of properly.
My personal experience
My mum is no different from many elderly parents of Gen X. She needs her occasional fix from 4D and Toto booths. Pre-COVID 19, her sisters would come down to Singapore during Chinese New Year to invite her to visit the casinos. They would spend on average $1,000 per person per night at the casino tables. I try to bring my mother out for a meal and some shopping on weekdays every week as well.
The method I employ to assist my mother is a high dividend portfolio consisting of three different types of assets: Singapore blue-chips, Singapore REITs and Singapore business trusts. Singapore securities were chosen because there is no dividends taxation and does not estate taxes like US stock counters.
The portfolio we’ve built over the past decade is extensive and generates a higher sum than most average households every month. At the time of writing, the portfolio yields about 6.6% but sacrifices higher capital gains favouring regular payouts.
The arrangement between my mother and myself is simple: she is free to spend any income that falls into her bank account, but expending capital will result in a smaller payout in the future.
The current arrangement allows my mother to spend only half the dividend payouts in the extreme case. Reinvesting half of 6.6% means having a portfolio growth of 50% x 6.6% or 3.3% even in the absence of zero business growth. 3.3% growth allows the portfolio to maintain its value as inflation is approximately 1-2% over the long term.
In this sense, I am fortunate. A dividend portfolio like this can take decades to build. Readers should caution that handling money across dividends requires consensus across generations. I also have complete discretion over the entire portfolio, something which, if I had another sibling, he/she might be uncomfortable for me to have so much power.
How to build start a dividend portfolio
To experience the joy of dividend payouts, interested readers can build a small portfolio of stocks consisting of 7 REITs from the STI as large capitalisation REITs tend to outperform a portfolio of S-REITs in equal shares for the past 10 years:
- Ascendas REITs (A17U)
- Capital Integrated Commercial Trust (C38U)
- Mapletree Commercial Trust (N2IU)
- Mapletree Industrial Trust (ME8U)
- Mapletree Logistics Trust (M44U)
- Keppel DC REIT (AJBU)
- Frasers L&C Trust (BUOU)
(also, read this)
How should you adequately support aging parents in 21st Century Singapore?
Readers should not employ the solutions I operate for my family as a template for their own lives. I have admitted many times on this blog that my life has been more privileged than the average Singaporean. My parents had an engineer, financial analyst and a lawyer to advise on all issues 24×7.
I don’t have a single sibling to veto my ideas which often goes against conventional wisdom.
Instead, Gen X and Boomer readers should be open-minded to consider these issues :
- Have you had a frank conversation about end of life issues with your parents? This should include the steps to take when one of them passes away. A Will and an LPA is the minimum your parents will need to have.
- How will your parents pay for medical help? Which services would you employ when they fall sick, which fund would you draw to pay for illnesses?
- Your parents will have interests and hobbies and expect a lifestyle in their winter years. How can you create a sustainable system to pay for that lifestyle?
Naturally, this can also be a series of questions you can ask yourself as you get older.
