retirement planning

Facts About Retirement

A study by The Wharton School, University of Pennsylvania, revealed some a startling fact about retirement in Singapore: Despite having one of the highest savings rates in the world, Singaporeans will live on only 30% of their last drawn salary instead of 75% as recommended by international retirement planners.

What Does It All Mean To You?

During retirement, you will be living on about 30% of your last drawn income. Under such circumstances, you may then have to consider working longer in your current job, investing differently or even selling your current house.

Your Desired Retirement Lifestyle

If you wish to pamper yourself and do things that you always wanted, you have to plan and work towards it. Here are some points for consideration when planning for your retirement:

 
Increasing period in retirement
~

You are likely to live longer than your parents. The current life expectancy of Singaporeans is 74 for men and 78 for women. With better medical care, life expectancy will continue to increase. Your retirement years may even equal your working years.

 
Inflation eroding purchasing power
~

In the 1970s, you can watch a movie at $1.50. Now, it costs $8.50. In retirement planning, you need to preserve and increase your purchasing power. You need to invest your savings to generate returns higher than the rate of inflation.

 
Volatility of investment markets
~

Investing your savings comes with risk. The investment markets are characterised by volatility and unpredictability. To reap the potential returns that the investment markets can give, you need to effectively manage risk.

 
Steps For Retirement Planning

Retirement planning may not be easy. You can however achieve your desired retirement lifestyle if you take a structured approach to planning.

Step 1: Determine the amount of money you will need

Step 2: Construct your investment portfolio

Step 3: Review your plan regularly

 
The Investment Strategy That Is Right For You.

The right investment strategy is one that best fits your personal retirement lifestyle goals and produces the highest returns for the level of risk that you are willing to take. You should construct an investment portfolio that consists of a mix of the four asset classes. They are cash, bonds, property and equity.

The question then is how much should you invest in each of these asset classes? The answer depends on many factors. They include:

~ Your financial and emotional ability to handle the risk of temporary declines in the market
~ Your income and its level of stability
~ Your liquidity requirements
~ Your desired retirement lifestyle
~ Your retirement age

Taking all these factors into consideration, you can construct an investment portfolio that is unique to your needs and goals.

 

Provide For Contingencies

Your retirement plan can be upset by an event such as an accident or an illness. Hence, be sure to have in place adequate health insurance coverage. Providing for contingencies is absolutely essential in ensuring the attainment of your retirement goals.

When Should You Start Planning For Retirement?

Getting started is probably the hardest part of a retirement plan However, the longer you put off taking action, the more difficult the task becomes. If you start sooner, you can take advantage of the power of compounding to create wealth.

A competent financial planner can help you make more informed investment decisions. He/she will ensure that you have the plan that is appropriate for your current circumstances and retirement goals.

Start planning early in partnership with your financial adviser, your retirement could include some of the best years of your life.

 

 

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