Many Singaporeans are delaying retirement and putting off investing for their later years. They think it’s too early to start planning ahead when retirement seems far away. However, with the high cost of living and possibility of long-term inflation, one can’t afford to put off planning for the golden years. Having a plan in advance can save both time and money, but ignoring it can be a costly mistake.
Before you begin retirement planning, make sure you have considered your retirement goals and determined how much time you have to achieve them. If you are saving for retirement, think about the various types of accounts that might provide you with the money you will need in your post-working years. Most importantly, savings should grow through wise investments in order to provide a nest egg for your future.
Whether you like it or not, you need to start planning now to get ahead of your retirement years. Here are five steps you can take to get into action:
1. Set Realistic Goals
Setting financial goals at different stages of your life will make your retirement goals seem more realistic and attainable. While you may not be as ambitious as others, you can still set your financial goals for yourself—and fulfill them. For example, you might want to save $100,000 by the time you’re 30 and have a diverse investment portfolio in several markets. Some targets may seem bold but it also ensures that you’ll have adequate finances if you fail to meet these goals.
2. Contribute Regularly to CPF Savings
CPF LIFE payments are the primary source of retirement income for the majority of Singaporeans and permanent residents (PRs). In order to determine how much CPF LIFE you will receive, your CPF Retirement Account (RA) balance must be taken into consideration, as well as the plan you choose to enroll in – Basic, Standard, or Escalating.
You can start saving without having to deal with any hassles by setting up a special account in the Central Provident Fund (CPF) and making regular contributions to it. The CPF Special Account offers a 4% interest rate. This is a far better investment than putting money into a savings account with a bank, where the current interest rate is less than 2%.
3. Invest Your Savings
A recent survey found that the CPF basic retirement fund will only be able to cover about S$1,400 in your monthly spending demands. Individuals who want a better quality of life in their golden years will have to increase their retirement savings by investing in growth assets.
As long as the inflation rate continues to rise, an individual’s purchasing power will decrease. In order to keep your spending power constant in the future, you should invest your money in investments that keep pace with inflation. Perhaps having more liquid assets like the government-backed Singapore Savings Bonds may be a great option for you to consider.
Government-backed Singapore Savings Bonds are a relatively safe investment because they are liquid and in the event of an emergency, such investments can be withdrawn immediately.
4. Get Enough Insurance Coverage
When you’re young, you don’t have a lot of responsibilities. So you can afford to take risks, and if you fail, you can start all over again. But when you reach the retirement age, it gets harder to bounce back from failure.
So that’s why, as we get older, we need to focus on making sure we don’t fail. And the most important thing we can do is make sure we have enough money saved up for retirement, so we don’t run out of money before we run out of life. And that means getting adequate insurance coverage for all our needs.
Retirement is a phase of vulnerability when a person is no longer employed and no longer has income. This is a time when you will likely need insurance to secure your health, protect yourself from the unexpected, provide for your long-term needs, and help ensure that your loved ones are provided for in case something happens to you. Anything can happen and you have to be prepared at times like these, so make sure you have enough coverage of life insurance, health insurance, and even long-term insurance.
5. Choose a Suitable Plan For You
When you’re young, you don’t have a lot of responsibilities. So you can afford to take risks, and if you fail, you can start all over again. But when you reach the retirement age, it gets harder to bounce back from failure.
So that’s why, as we get older, we need to focus on making sure we don’t fail. And the most important thing we can do is make sure we have enough money saved up for retirement, so we don’t run out of money before we run out of life. And that means getting adequate insurance coverage for all our needs.
Retirement is a phase of vulnerability when a person is no longer employed and no longer has income. This is a time when you will likely need insurance to secure your health, protect yourself from the unexpected, provide for your long-term needs, and help ensure that your loved ones are provided for in case something happens to you. Anything can happen and you have to be prepared at times like these, so make sure you have enough coverage of life insurance, health insurance, and even long-term insurance.
Plan Ahead of Time
Planning well in advance for the stage of your life in which you’re no longer earning an income and have to rely on your savings and investments to meet your financial needs can be daunting. However, it doesn’t have to be if you take the time to learn more about your options and thoroughly plan out your future financial security.
Turn your plans into an action by choosing a viable plan that’s suitable to your needs. Talk to one of our financial advisors and learn the best option we have for you!