
Retirement - would it be the complete halt to your working life or the financial independence of not needing to rely on your job for an income? With it defined differently by various individuals, how would you describe your idea of retirement? While many may think about retirement, most are actually unaware of how they can retire at their desired age. Moreover, with the ever-changing statutory age of retirement, will retirement in Singapore really be possible? In this article, we show you the steps required at each life stage to allow you your retirement in your 50s.
(See "Insurance, Is It Always The More The Merrier?")
In your 20s...
Repaying student loans, buying a house and starting a family, these are key stages likely to take place when you are in your 20s. With numerous financial obligations, it could result in a lower priority being placed on retirement as less savings may be available for you to set aside for retirement.
While a retirement may seem like a long time later, planning for your retirement at an earlier age would actually be advantageous. Start small by setting aside a couple of hundreds each month. This serves as a stepping stone for retirement planning while contributing to your retirement nest egg. Alternatively, if you can afford doing so, consider using cash instead of your CPF for your housing loans and/or housing down payment. This allows your CPF to earn compound interest that ultimately goes to your retirement account.
(See "How Much Should You Have In Your Emergency Stash?")
In your 30s...
Statistics have shown that most usually start to consider retirement planning at the age of 38.1 With Singapore ranked third in the world for life expectancy, the fear of outliving one’s savings is a common problem that many face.2
To start planning for your retirement at this stage, consider the impact of inflation on your future retirement income. With past inflation averaged at 2.61 percent, your expenses could amount to a greater sum in the future.3 Therefore when preparing for your retirement; consider the number of years left and the time you will spend retired. Annuities with escalating pay-outs also provide assurance as it ensures that your pay-outs will be able to beat future inflation.
(See "Term or Whole Life - Which Should You Choose?")
In your 40s...
Your 40s is a critical time to build your retirement nest egg with your earning power potentially at its peak. Hence, it is time to seriously consider your retirement objectives and look towards building up your wealth to your best efforts at this stage in life.
Consider factors such as your desired retirement lifestyle and monthly income necessary to determine when you can retire if you were to maintain status quo. This then allows you to check on your progress to see if you are on track to retiring at your ideal age. Additionally, consider topping up your CPF SA account or put your money into an annuity plan that allows you to receive monthly income for life. This ensures that you regularly receive a sum of money for life that could supplement CPF Life pay-outs and your other savings in retirement.
(See "3 Reasons To Use Your SRS For Annuities")
In your 50s...
In your 50s, aim to have all loans fully paid off with no remaining mortgage debts. With your children likely to be grown up and financially independent, you should be free of financial obligations. This can be achieved by an early start to your retirement planning. With adequate planning and precautions undertaken, you should be on track to retire at your desired age.
(See "Want To Retire By 55? Here's How Annuities Can Help")
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2Source: https://www.todayonline.com/singapore/singapore-3rd-world-life-expectancy-who-report
3Source: https://tradingeconomics.com/singapore/inflation-cpi
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