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How overseas education can drain up to 30% of Singaporean parents' retirement savings

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  • Overseas education can deplete up to 30% of Singaporean parents' retirement savings if not planned properly.
  • Only 51% of affluent parents in Singapore have an education savings plan, leading to potential financial stress.
  • Comprehensive financial planning, including maintaining an emergency fund and managing daily expenses, is essential to mitigate the impact on retirement savings.

Sending children abroad for higher education is a dream for many Singaporean parents. However, this dream comes with a hefty price tag that can severely impact their retirement savings. According to a recent report by HSBC, failing to plan adequately for overseas education can deplete up to 30% of Singaporean parents' retirement funds.

The Financial Burden of Overseas Education

The HSBC Global Quality of Life Report 2024 sheds light on the financial strain that overseas education imposes on families. The report reveals that a three- or four-year degree program in popular destinations such as the US, UK, Australia, and Canada can cost between USD 192,000 to USD 256,000 per child. This significant expenditure can consume a substantial portion of parents' retirement savings if not managed properly.

Alice Fok, Head of Customer Propositions and Marketing at HSBC Singapore, emphasizes the importance of comprehensive financial planning. "International education is not just about academic excellence; it’s also about gaining diverse perspectives and developing essential life skills such as independence and resilience," she notes. "Parents and students seek more than basic banking services—they are also looking for comprehensive support for overseas education financial planning".

Lack of Financial Planning Among Singaporean Parents

Despite the high costs, only 51% of affluent parents in Singapore have an education savings plan in place. This lack of planning can lead to significant financial stress and the depletion of retirement funds. Nearly a third (32%) of Singaporean parents expect their child to take on student loans, while 36% are hopeful for scholarships. Alarmingly, 26% would even consider selling assets to fund their child's education.

The Importance of Financial Planning

Financial experts stress the importance of early and comprehensive financial planning to mitigate the impact on retirement savings. Maintaining an emergency fund for unexpected costs, keeping safe from financial scams, and managing daily expenses are top financial concerns for parents.

The Broader Impact on Families

The financial burden of overseas education extends beyond immediate costs. Parents must also juggle multiple tasks, such as helping their child select the right course and university, ensuring they meet admission criteria, and managing the logistics of relocation. These responsibilities contribute to the overall stress levels of Asian parents.

The dream of providing an international education for their children is a significant investment for Singaporean parents. However, without proper financial planning, this dream can come at the cost of their retirement savings. As HSBC's report highlights, early and strategic financial planning is crucial to ensure that parents can support their children's educational aspirations without jeopardizing their financial future.

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