5 Essential Retirement “MUST-HAVES” In Order To Enjoy Your Golden Years
The 5 “Must Have” for Retirement planning
If you’re reading this, I would like to congratulate you.
You’ve come a long way. Worked tirelessly over the past few decades, and built a career for yourself. You’ve made your due contributions to your company, your family, and yourself.
And now, it’s time for you to finally lay it all down, take a step back, and enjoy the fruits of your labour.
As you’re preparing to move on to the next phase in life in your golden years, there are certain things you must prepare. Measures you have to take, so you can enjoy your golden years comfortably and without worry.
But I’m sure some of you may be confused as to what that is. Specifically, the measures you should take in preparation for a financially comfortable and independent retirement.
So here, I’d like to share what I believe are the 5 financial “must-haves” for anyone preparing to retire:
- CPF LIFE
If you don’t already know what that is, CPF Life is a financial scheme that provides Singaporeans and PRs with a monthly payout for as long as they live. You can read more from the CPF website.
Simply put, this is the most basic, most essential financial must-have because it guarantees you a certain amount of money every month.
However, the important thing here is to know exactly how much your monthly CPF Life payout will be.
For starters, there are three available plans, all with different payouts that cater to different needs. That is why it is important for you to know which one is the most suitable for you, according to your specific requirements, objectives and preferences.
Now, that being said, it is most likely that your CPF Life payout alone will not be sufficient for you to enjoy the retirement lifestyle according to your level of comfort. While it forms a strong foundation for your monthly income, you should be looking at other sources of income as well.
Here are 3 reasons why CPF LIFE should not be your only retirement plan but forming part of your retirement planning.
- HEALTHCARE EXPENSES
It is inevitable that as one gets older, there are certain increases in healthcare costs to take note of. There are some expenses you can plan for right now, but there will always be a certain percentage that will remain unforeseen.
Many of my clients do not plan accurately for their healthcare expenses before meeting with me. There are a variety of reasons, such as a sudden onset of a physical condition they did not (and could not have) predicted. But most of the time, the most common issue they experience is:
Inflation.
Many of you will already have a hospital plan as part of your medical coverage. However, inflation is not factored in. This means that when the time comes for you to tap into your coverage, you may find that it is not sufficient.
Hence, it is important that when you set up a hospital plan, medical inflation is accounted for as well to the best of your ability.
- OVERALL INFLATION
Medical inflation is just one of many ways the overall inflation rate of our currency will affect our retirement financially. So naturally, this should always be at the top of your mind when it comes to your retirement planning.
The tricky part about this is HOW you should plan for inflation. After all, inflation rates are never set in stone. As a result, many individuals end up underestimating the scale and effect this has on their retirement savings.
So here’s what you need to ask yourself:
How can you best prepare for inflation when setting up a retirement plan? Do you have the financial knowledge to accurately do so? If not, what should you do?
- EMERGENCY FUNDS
If I have to pinpoint the most common flaw I’ve personally witnessed in my clients’ retirement plans before meeting with me, it is either an insufficient (or complete lack of an) emergency fund.
As we all know, unforeseen circumstances can happen anytime and anywhere. That’s why planning for it can feel like trying to navigate a maze while blindfolded.
But at the same time, it is also the main cause of concern for many individuals who find themselves stuck in a corner: when they encounter an emergency and realise (too late) that they did not set aside enough funds for it.
So my rule of thumb for this is: Always set aside more than you think you need. Because truly, one can never know what tomorrow may bring.
- RETIREMENT BLUEPRINT
My final point here is also what I consider to be the most crucial thing to prepare:
A retirement blueprint that will map out your finances through your golden years. Read this article on how the retirement blueprint allows one of my clients to retire 5 years earlier than expected
You see, in my time as a financial specialist, I’ve come across countless clients who plan for their retirement by doing one thing:
Buying into as many financial instruments as possible.
But the problem is most of the time, they don’t know the exact benefits and potential drawbacks of their assets.
However, a proper retirement blueprint will include a drawdown plan from your retirement “pot”, making sure to cover your potential income gaps when you stop working. It will also give you a more accurate timeline of when you can stop working and fully retire.
To put it simply: A retirement blueprint will give you a clearer idea on your finances, as well as how to go about retiring in a safe and assured way!
Whenever someone asks me about how to plan for retirement in Singapore, I always tell them that first and foremost, it is their retirement blueprint.
It is essentially your map to retirement. Without it, it does not matter how many financial plans you invest in. Or how much money you put aside for savings.
Because without this blueprint, you will lose eventually control of finances!
So ask yourself: “Do I have a proper retirement blueprint set in place?”
If you don’t, I’d like to help. Include your details in the form below, and I’ll contact you shortly to discuss how you can put together your blueprint now:
