What do you envision yourself to be doing in retirement? Would you want to travel more, reconnect with old acquaintances, pick up a new hobby, volunteer or simply spend time with your family? While these may be ideal retirement activities, it is important to consider the costs involved. With the official retirement age in Singapore being 62 years old, many often wish to enjoy an earlier retirement.1 However, this may not be feasible as most expect themselves to still be working even at the age of 65.2 Moreover, even if you have managed to save a tidy sum for your nest egg, will this be enough for the rest of your life?
(See "Want To Retire By 55? Here's How Annuities Can Help")
#1 Lifestyle changes
While retiring is a highly anticipated affair, many fail to realise that lifestyle changes have to be made. This could mean switching from restaurant to hawker meals and changing your spending habits to avoid purchasing luxury goods and the latest tech gadgets. Moreover, with your retirement likely to span over 20 to 40 years, a modest lifestyle should be adopted to ensure that your retirement lifestyle is sustainable. For example, switching from restaurant meals to hawker meals for a week could give you approximately S$550 in savings with public transport being almost one-seventh of the price of using taxis as your mode of transport.
(See "How Much Does It Cost To Live In Singapore 30 Years From Now?")
#2 You may spend more in retirement
"Retiring is cheap" said no one ever. While your loans and other financial commitments may have been paid off, the activities that you choose to indulge in could end up costing more. This is because upon retiring you now have 7 days a week free with your holidays not restricted by your availability of annual leave. However, while you may see your retirement as a chance to visit exotic destinations and embark on new travel adventures, it is essential that you factor these costs in when planning your retirement. This is because while your retirement budget may allow for short trips to nearby destinations, it may not be enough if you were to go on a month long Alaskan cruise. As such, prudent spending as well as a comprehensive retirement plan is important in allowing you to enjoy a comfortable retirement.
(See "5 Amazing Countries You Can (Almost...) Retire With Your CPF")
#3 Setting a budget
As the Chinese proverb goes, "The best time to plant a tree was 20 years ago. The second best time is now" thus indicating that it is never too late to start planning for your retirement. For starters, begin by estimating your retirement expenses and the number of years that you will be in retirement for. For example, the average life expectancy for Singaporeans is currently 83.1 years.3 Therefore, you would require retirement funds and/or income for approximately 28 years should you wish to retire at the age of 55. Failure to plan for your retirement may then result in you being unable to enjoy a comfortable retirement.
Additionally, to ensure that your retirement funds are adequate, consider alternatives that can supplement your CPF Life pay-outs. For example, annuities allow you a guaranteed lifelong income thus ensuring that you would have enough for your retirement. By providing regular recurring pay-outs, annuities also eliminate the possibility of outliving your savings. As a large nest egg does not guarantee that your retirement funds will be sufficient, it is therefore important that proper planning and budgeting is done for your retirement.
(See "3 Surprising Facts About CPF Life You Probably Didn't Know")
How FSMOne can help you get on track
Our team of friendly advisers are able to help you review your financial objectives, long term commitments, and offer you investment and insurance advice specific to your needs. If you would like assistance in reviewing your financial and protection portfolio, or simply to get a quote for an insurance plan,
Available Products on FSMOne Insurance |
Term Life, Whole Life, Critical Illness, Annuity, Health, Endowment from Manulife, NTUC Income and Tokio Marine Life Insurance *Please check with our advisory team if the product you want is available on FSMOne Insurance |
1Source: http://www.mom.gov.sg/employment-practices/retirement
2Source: http://www.earlysgretirement.com/how-frugal-do-you-have-to-be-to-retire-early-in-singapore
3Source: http://www.todayonline.com/singapore/singapore-3rd-world-life-expectancy-who-report
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