Insurance

3 Reasons To Avoid An Early Retirement

Is an early retirement really that daunting?

  • iFAST Insurance Team
  • |
  • Published on 12 Oct 2018

With no obligations and an abundance of time, an early retirement sounds like the answer to all misery. However, is it really wise to do so and at what cost would it take to retire early? With many only realising the reality of retirement in their 50s1, is an early retirement really possible? In this article, we highlight the three potential problems of an early retirement and the solution to these problems.

(See "Is Insurance Really A Waste Of Money?")

#1 Costs

Do you intend to work until the official retirement age in Singapore? Currently set at age 62, you may wish to retire earlier.2 However, would this be an achievable dream? With Singaporeans experiencing a life expectancy of 83.1 years, an early retirement would then result in having to finance a longer retirement.3

Ideal retirement age
Life expectancy
Years spent in retirement
Yearly retirement expenses
Amount needed to retire, with inflation taken into account
40
83.1
43.1
$14,400
$1,159,610
45
83.1
38.1
$14,400
$953,233
50
83.1
33.1
$14,400
$771,713
55
83.1
28.1
$14,400
$612,057
62
83.1
21.1
$14,400
$420,315

*Figures are an estimate and may differ between individuals. For a more accurate calculation, refer to our insurance discovery tool.

Take for example a retirement age of 40, with a life expectancy of 83.1 years you would then enjoy 43.1 years in retirement. With an estimated monthly expense of $1,2004 and average inflation rate of 2.6 per cent in Singapore5, you would then need to have $1,159,610 to finance your early retirement. With such seemingly daunting numbers, is an early retirement really possible?

(See "Be Your Own Advisor with FSMOne's Insurance Discovery and Review Tool")

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#2 Fear of outliving your savings

Without a stable monthly income, you may experience financial insecurity, living in constant fear of outliving your savings. With depleting savings, how would you then be able to finance your retirement? This may invoke thoughts such as the fear of living for too long or having unforeseen medical expenses wipe out the remainder of your retirement savings. Scrimping and saving during your golden years, is this really the retirement that you have dreamed of?

Additionally, while CPF Life provides monthly pay-outs, these pay-outs would only commence at age 65.6 Moreover, your CPF monies are untouchable until age 55,7 where you would be able to withdraw the excess, or age 65 when pay-outs commences. Therefore, if you wished to retire early, you would then be unable to rely on your CPF monies for your retirement.

(See "Can You Really Afford To Not Have Critical Illness Coverage?")

#3 Changes to your lifestyle

Lastly, what do you envision your retirement to be like? Would you be jet setting off on adventures or would a lack of funds result in you struggling to get by on a minimal budget? If you had to constantly worry about running out of money, you may find yourself hesitant to splurge on activities in your retirement. This could result in the reality of your retirement being vastly different from what you had envisioned. In such a scenario, would you still wish to retire early?

(See "8 Countries Singaporeans Can't Travel To Without A Visa")

How Annuities can help

The root of most retirement problems seems to stem from the fear of not having enough money for your retirement. However, while the problems of an early retirement may sound daunting, they can easily be resolved with proper retirement planning. By planning in advance for your retirement, this ensures that you will retire worry-free, knowing that you are financially secure. To get a guaranteed income for life, consider using annuities.

Annuities provide income security by offering the policyholder a regular stream of income until death. With knowledge that you would never run out of money, this offers financial stability thus eliminating all financial concerns. Pay-outs from annuities could also supplement your retirement savings which then ensures that you would be able to enjoy your desired retirement lifestyle.

(See "Want To Retire By 55? Here's How Annuities Can Help")

To find out you can receive a lifetime of income, click on the "Get Started" button below.



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Term Life, Whole Life, Critical Illness, Annuity, Health, Endowment


from Etiqa Insurance, 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: https://www.channelnewsasia.com/news/singapore/commentary-more-retiring-later-work-longer-unhealthy-9826644


2Source: https://www.mom.gov.sg/employment-practices/retirement


3Source: https://www.singstat.gov.sg/find-data/search-by-theme/population/death-and-life-expectancy/latest-data


4Source: https://www.channelnewsasia.com/news/singapore/retirement-planning-how-much-is-enough-8123970


5Source: https://tradingeconomics.com/singapore/inflation-cpi


6Source: https://www.cpf.gov.sg/members/schemes/schemes/retirement/cpf-life#


7Source: https://www.cpf.gov.sg/Members/Schemes/schemes/retirement/withdrawals-of-cpf-savings-from-55


Interested to learn more? Check out these articles:

The True Cost Of Raising A Child In Singapore

Term or Whole Life - Which Should You Choose?

The Secret To Retirement Happiness

How To Get Coverage With High Blood Pressure

Which Is Better: Critical Illness or Cancer Plans?

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