27 Dec Retirement Planning – Act NOW to keep The Shine In Your Golden Years
“RETIREMENT” – it is a stage in our lives that we both look forward to, but at the same time, worry about as we will no longer be earning an active income. For some younger people, retirement is not even a blip on their radar. This is a mistake. Retirement planning is in fact something that should be started as early as possible.
Retirement in Singapore is helped by the fact that we have a world class social security system in the Central Provident Fund (CPF). The 2017 Melbourne Mercer Global Pension Index* evaluates and scores pension systems globally based on their adequacy, sustainability, and integrity. The 2017 Index ranked Singapore top in Asia in providing adequate income for retirement in a sustainable manner.
However, just because CPF is ranked the best pension system in Asia by pension expert Mercer does not mean that you should spend like there is no tomorrow. Here are some of the factors you need to take into account if you plan to retire wise and retire well.
Don’t Spend More Than What You Earn and Have Already Saved
Proper retirement planning in a nutshell, requires that your cash outflows (i.e. expenses) do not exceed the sum of your savings and cash inflows after you retire. Indeed, outflows should be substantially less if you wish to set aside a legacy for your family. Simple, right? But there’s more…
How Long Will I Live?
One key consideration is life-expectancy. Obviously, the longer we live, the more money we will need post-retirement. According to the World Health Organisation, women in Singapore have a life expectancy of 86.1 years, while men have an expectancy of 80.1 years*. For retirement planning purposes, it would be wise to plan for a lifespan longer than just the average. Besides, who doesn’t wish to live longer?
*World Health Statistics 2017
What Kind of Lifestyle Do I Wish To Lead in Retirement?
Half of the equation for retirement planning is “cash outflows”. Cash outflows partly depend on your individual expectations and circumstances. Would you want to live in style or would you prefer to live simply during your retirement years? Do you still have property mortgages or car loans to pay off, or children’s university fees to foot? However, you should also be prepared for unexpected expenses, particularly medical costs. These can come suddenly as you age, and can be painfully heavy.
What Are My Options for Post-Retirement Cash Inflows?
While there may be little you can do to control your expenses in advance (except for getting plenty of exercise and maintaining a healthy lifestyle), you can start acting today to optimise your post-retirement cash inflows.
For smart retirement planning, passive income that results in cash inflow is essential. CPF provides a good starting point here. It is an annuity scheme that provides a steady stream of income throughout a member’s entire lifetime. For instance, if you set aside the Full Retirement Sum of $166,000, CPF estimates that you can receive around $1,300 a month when you retire**.
However, CPF payouts may not be sufficient to support your expenses and you would want to supplement these with additional streams of cash inflows. Your bank savings account may not the best savings account for retirement planning purposes as the interest you can expect to earn may be too low. Some people may want to invest in the stock market. Yet, while stocks have the advantage of higher potential returns and are relatively liquid, they are riskier by nature and hence may not be suitable for everyone.
Endowment, Savings or Legacy Planning Solutions May Be Your Ideal Choice For Retirement in Singapore
A good option for many of us will be to convert a portion of our cash savings or current income into future income through instruments such as endowment insurance plans or insurance savings plans. These offer a good balance of risks and returns to people who prefer returns higher than bank interest rates, but do not want the risk exposure from investing in the stock market. In addition, unlike bank savings or stock investments, with Etiqa’s endowment insurance plans or insurance savings plans, you get insurance protection (such as death protection and accidental death benefit) that shields your dependents against unforeseen circumstances. The payouts could, for instance, be used to pay off outstanding loans, or left as an additional legacy for your dependents.
If leaving behind a legacy for your family is an important part of your retirement goals, you can also consider Etiqa’s Premier series of legacy planning solutions, which are designed to help you grow and distribute your wealth to your loved ones efficiently, while allowing you to prepare for a comfortable retirement.
Chances are, Etiqa has the Right Plan for You
Etiqa’s range of endowment insurance, insurance savings plans, and legacy planning solutions cater to a variety of personal needs and risk profiles. You can choose between plans with different policy terms, between higher potential returns or higher guaranteed returns, or whether to reinvest part of the regular payouts. Some of these plans are available for purchase online, so you can take your retirement planning into your own hands and from the convenience of your own home!
Etiqa is a Singapore insurance company owned by Maybank Ageas Holdings. Maybank Ageas is a joint venture between Maybank Group – the fourth largest banking group in Southeast Asia with more than 22 million customers across 20 countries worldwide, and Ageas – one of Europe’s largest insurance companies with 33 million customers across 16 countries and a history of over 180 years.
Protecting Singapore since 1961, Etiqa offers comprehensive insurance coverage and solutions with affordable and transparent insurance premiums. These include general insurance, life insurance, and retirement planning insurance plans for personal and business needs. Etiqa is also one of the first insurance companies in Singapore to empower its customers with the option of online insurance. Etiqa is dynamic, progressive, and at the core of it all, committed to humanising insurance – placing people over policies.
Discover the full range of Etiqa online insurance plans here.