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What Is Best To Do For Parents Retirement

Discussion in 'Parents & Siblings' started by Mylifeatusa, Oct 23, 2018.

  1. Mylifeatusa

    Mylifeatusa Silver IL'ite

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    Hello Everyone,

    I'm here again with another question.

    Both my parents are in their 50's now. My dad is a farmer. Both worked very hard to give me and my brother good education and life. My Dad recently diagnosed with Diabetics. Even though he is healthy right now. I don't think he can do any more farming after 2 to 4 yrs.

    They don't really have any Savings, they have a own house and they will get Rent on farm lands when my dad decide to rent them. But I don't think that's enough for them to lead a decent life.

    1. I want to start saving for them from now, monthly 7-10K INR for next 5 -10 yrs so that it will generate some monthly income when they retire.

    2. Or I want do an FD of 5Lakhs and have them take the interest earned every month for their Maintenance.

    They are not dependent on me right now, as my brother is very good and he takes very good care of them and they are covered under his insurance as far as the Medical needs goes and I'm ready to help if any Major unexpected expense comes up. but I don't want to burden my brother with 100% of my parents responsibility and want to do something from my end.

    Please advise what is Best option ? If you guys know nay other options please shed some light.


    Thanks.
     
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  2. Ouroboros

    Ouroboros Silver IL'ite

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    If you are keen, there’s homework for this task. You have to compare NRE (tax free) , NRO, gift principal to parent with local interest TDS, senior citizen rebate (if they qualify) and figure out the best net fixed deposit return with tax.

    It’s simple:
    • Interest rate.
    • Tax.
    • Type of FD (Non-resident/resident)
    On each type of FD investment (NRE, NRO, transfer as gift to parent for domestic senior citizen rebate), calculate the net return.

    It’s net return that you maximise on! Good luck.

    Help: 7.4%, 7.2%, 7.6%, 7.8% so forth based on the selection of interest rate, tax, type of FD status.
     
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  3. Mylifeatusa

    Mylifeatusa Silver IL'ite

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    Thank you Ourobors. Ladies please advise if you have any other suggestions.

    Thanks.
     
  4. SGBV

    SGBV IL Hall of Fame

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    Definitely you should help your parents.
    It is not nice, rather rude to expect brother to bear complete responsibilities of old parents.

    FD is a good idea, but think wisely and make the right choice.
    Or you can alternatively send them some allowance every month. Just like monthly salary on a said date.
    This way, they can depend on your allowance for their monthly needs, as well as they could save or even make small investments within that amount.
     
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  5. Brevity

    Brevity Gold IL'ite

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    Check the extent of insurance provided by your brother's policy. Buy top up or a critical illness plan if the amount is not sufficient for major illnesses.
    Once health and home is taken care of, you can look at buying annuity plan for your parents. It will provide them a steady source of income as long as needed. Check out various annuity plans by SBI, lic etc. If you do not have the bulk amount to buy a plan now, you can save for the next 5-10 years and get one at that point.
    I think it would be better to invest in their names since they will get higher interest rates and better tax exemption once they cross 60 years.
     
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  6. Mylifeatusa

    Mylifeatusa Silver IL'ite

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    Thank you @SGBV and @Brevity for your response. I don't have lump sum to invest right now. But I want put 6000 rupees away per month for next 10 yrs so they will get lumpsum at that point. Both my parents are in their 50's now.

    Any safe plans to invest in their names in India ?
     
  7. hino

    hino Silver IL'ite

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    OP. Very nice initiative.

    1. Diversify your investments. Dont put entire amount into single FD.
    2. Senior Citizen Savings Scheme(SCSS) give 9.25% as now and will increase.
    3. Buy 2gms of gold for them every month and see the compound value after 10 yrs. Its best scheme. Dont go with jewelry shops schemes until you can claim them against Gold coins.

    first calculate , how much is the retirement money required. I assume , min expense required to live is 25K-30K. Calculate how you can calculate and start investing into corupus fund to them.

    will get back if i come across good investment plans.
     
  8. Mylifeatusa

    Mylifeatusa Silver IL'ite

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    Hi,

    Thank you for you response.

    My goal for them is to have 15k per month. for that I'm willing to invest 6k for month for next yrs.

    Really struggling on which is the best option to choose.

    I would appreciate any help.

    Thanks.
     
  9. YoGirl

    YoGirl Gold IL'ite

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    OP,
    Whatever you plan to do.. dont delay.
    My suggestion would be to start off by putting 6k away every month and as soon as it reaches 30k or 50k, FD that amount. Once you are in this flow, analyse other options that you may have like RD or other investements..cuz these kinds of savings are good for your future too.
     
  10. Laks09

    Laks09 Moderator Staff Member IL Hall of Fame

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    Since you are in the US and don’t see the need to start this annuity for the next ten years, save some money monthly in a separate bank a/c in the US. Once a year you could send it to an Indian bank and create an NRO FD.

    What’s your immigration status? With GC and citizenship you need to think about the implications of having funds outside the US(filing fbar is mandatory). I’d still have money in India especially in good quality MFs or FDs and file fbar. Once you have accrued a good capital find a proper investment consultant or do your groundwork to find good investment avenues. If you haven’t visited the r2iclub forums do look at their investments forum to get an idea of India investments - ulips, insurance, mutual funds, fbar filing etc all seem
    To be covered there. I’ve not visited in ages so can’t vouch for the advice but you could make it a starting point.
     

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