This Songkran festival, many prepare special gifts for their parents or elders who have cared for them—ranging from desired items, new mobile phones, cash, to gold. These represent our thoughts and gratitude to loved ones. But in a world of growing uncertainty, why not shift from seasonal gifts to preparing our loved ones for lasting happiness, such as creating a 'retirement plan' for parents and grandparents?
Generally, retirement means stopping work after age 60, when income may decrease but expenses do not. Therefore, a retirement plan is needed to manage finances to ensure sufficient funds throughout one’s lifetime.
A retirement plan sets goals and monthly spending needs. This Songkran could be a good opportunity to talk openly with your parents about how they want to live after retirement, how to plan finances now, their concerns, and how you can support and help them manage money and investment portfolios for a happy retirement.
Thairath Money has summarized ways to start planning retirement for your loved ones here.
When thinking of retirement, large sums like hundreds of thousands or millions may come to mind. But if you discuss with your parents their current financial base and priorities, you can tailor a retirement plan that meets their needs more effectively and simply.
Survey assets and debts. For example, social benefits, bank deposits, and all types of debts. This is crucial because many households have land and multiple bank accounts unknown to the children or even forgotten by the parents. Also, debts must be clearly identified—whether with banks, cooperatives, informal lenders, or personal loans. If a creditor demands a large sum unexpectedly, the financial plan may need urgent revision.
, Health is also very important. Have an honest conversation about any chronic illnesses parents have, their worries, and medications or supplements they take (to avoid problems from self-medicating). Early awareness allows children to plan affordable health insurance or check current healthcare rights, such as government welfare cards, and prepare for associated expenses accordingly.
With family information ready, allocate funds to align with their wishes. Initially, divide into:
Basic needs (Need). These include food, medicine, water, electricity, and regular expenses.
Desires for happiness (Want). Including donations, travel funds, or money for celebrating grandchildren.
By detailing income and expenses clearly by category, you can see if the current financial plan suffices and where you might "fill in" gaps. For example, if parents’ savings cover basic monthly expenses up to ages 80–90, children might focus on providing special annual sums for overseas trips instead.
Many families have abundant assets but still face cash shortages. Managing cash flow and retirement portfolios well is essential. Here are two recommendations:
1) Maintain an emergency fund. At least 6-12 months of regular expenses, kept in an easily accessible savings account.
2) Diversify assets. For instance, some families own much land but must borrow money to pay land and building taxes when due.
Therefore, plan for some assets to generate liquidity. New funds could be allocated to cash-generating investments like interest-bearing deposits, government bonds, corporate bonds, or dividend-paying mutual funds. The whole family should understand potential risks and choose investments within their comfort level to minimize conflicts.
If you have a clear goal of how much money to prepare for your parents, it’s time to arrange investments accordingly. Thairath Money provides some examples to consider.
*Assuming compound returns, where all earnings are reinvested to generate more returns.
Create an emergency fund of 100,000 baht.
If the goal is to save this within 2 years using a digital savings account with 1.7% annual interest, monthly savings need to be 4,062.49 baht (interest earned must be reinvested).
Save 60,000 baht annually for 10 years to provide a lump sum for parents after retirement.
At 1.7% annual return, the total would be 648,044 baht.
At 5% annual return, the total would be 754,674 baht.
At 10% annual return, the total would be 956,245 baht.
If you have a lump sum of 500,000 baht invested, how much monthly income can parents receive?
At 1.7% annual return, approximately 708 baht per month.
At 5% annual return, approximately 2,083 baht per month.
At 10% annual return, approximately 4,166 baht per month.
More important than maximizing returns is diversifying risk and investing in understandable, comfortable assets. Higher-risk investments require more careful planning.
This article may inspire many to plan their lives. This Songkran, consider replacing special gifts with a family conversation about "future finances." Though it might be difficult initially, this could be the start of greater security and happiness for everyone at home.
References: The Stock Exchange of Thailand, Bank of Thailand, Thai Financial Planners Association.
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