Retiring in style
Don't delay working towards building a nest egg for your future any longer.
POSTED ON 16 JANUARY 2019
To retire confidently, it will take us years of planning and a disciplined approach towards saving and investing. Some key questions that we should think about when we consider our retirement plans include at what age we wish to retire, how much we need before we can retire comfortably and so on.
In simple terms, retirement is not something we can plan and execute overnight. To help you start thinking and planning for your retirement, we have put together a simple checklist that you can use to evaluate how prepared you are for your retirement.
It is important to calculate how much you will need each month when you retire. Once you retire, it is generally quite difficult to get back to the workforce so do ensure you avoid retiring too early and find that you do not have enough for retirement due to a miscalculation of the amount you need for a comfortable retirement.
By calculating the cost of the above, you will have a good gauge for how much you need for a comfortable retirement.
The main source of retirement income for majority of Singaporeans will be CPF LIFE (Lifelong Income For the Elderly). CPF LIFE is our national annuity plan that provides a lifelong monthly payout for Singaporeans, aged 65 and above. The exact amount that you receive each month will depend on the following two factors:
It is important to know how much you will be able to receive from your CPF LIFE each month, and whether the amount is sufficient for your expected monthly expenditure to support the lifestyle you prefer. As the payouts for CPF LIFE only start from age 65, you should consider other sources of income to make up for the difference if you choose to retire before 65 years old.
You may have started building a diverse investment portfolio early on in your career and your portfolio might include stocks or bonds that you have invested in, investment properties or even financial plans. After calculating the amount you need each month against your CPF LIFE payouts and identifying the shortfalls, you should have a plan on how your investments can also help fund your retirement and make the necessary adjustments if required. Keeping in mind how your investments can fund your retirement is important because not all investments are liquid or provide regular payouts and you might need to review them along the way. You can speak to a banker for advice if you need help on allocating your investments to best suit your retirement goals.
As we cannot foresee the future and aging is an inevitable course of life, it is important to ensure that we are always well-prepared for the unexpected and have sufficient health insurance coverage so that in the event the need arises, we do not have to worry about the additional costs that might be incurred. There are health insurance plans that are MediSave-approved by AIA that you can consider if you do not already have existing coverage.
Last but not least, estate planning is also an important part of financial and retirement planning, since it concerns how our assets will be distributed among our loved ones when we are no longer around. It is never too early to prepare for the future and you would want to ensure that your retirement planning matters are well taken care of so that you can be confident today knowing that you are prepared for anything life throws at you.
Source: AIA Singapore Private Limited.
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