In Q1 this year, Manulife released the results of its retirement survey. The goal of the survey is…
Retirement has always been a topic of concern among Singaporeans. This concern is even more visible after the recent parliamentary decision to raise retirement and re-employment age in Singapore.
If you are one of those concerned Singaporeans, we have good news for you. We are writing this guide to help you kickstart your journey towards retirement by starting with 3 simple things: Insurance, savings and annuity. If you can achieve these 3 things, you should be in good shape to retire at your desired retirement age.
Singapore as a society is growing into one of the oldest in the world. Singaporeans will have the third longest lifespan globally with an average life expectancy of 85.4 years by 2040, according to a study by the University of Washington’s Institute for Health Metrics and Evaluation (IHME). This will be an improvement from Singapore’s current life expectancy of 82.8 years.
While living longer is a gift, it can become a problem if your health is not well taken care of. This can affect your quality of life in your retirement years, especially if you do not detect your health problems early. Not just that, it can also affect your financials, creating a setback in your retirement savings.
Thus, it is important to make sure that you are well protected with health insurance. Health insurance (e.g. Integrated Shield Plan) helps you manage your healthcare spending without having to fork out large sums of money from your own pocket to pay for medical treatment.
Read More – QNA on Health Insurance Plans
Another type of insurance you will need is critical illness insurance. According to the study from IHME, leading causes of death for Singaporeans will be lung cancer, heart disease, stroke and respiratory infections. Early detection and treatment of such health problems can lead to effective recovery. But it comes at a huge financial cost with all the surgeries, medication and hospitalisation. If you have the right critical illness insurance, you can focus on recuperating without worrying about the cost of treatment.
Read More – GUIDE: Choosing a Critical Illness Plan for your Needs
No retirement plan can work without adequate savings. It is the primary building block of any retirement plan. Singaporeans have the privilege of having a forced savings in the form of CPF, where 20% of your income is mandated as savings. However, is it really enough? Sadly, it isn’t. CPF forms a good foundation for you to build your retirement plans. But you will need to supplement it. You can top up to your CPF to earn additional interest rate on your savings. If you prefer more flexibility, you can supplement your savings with savings plan that can earn you higher interest rate.
‘Cash is king’. This is a very apt description for any retirement plan. One common problem that Singaporeans face for retirement is the issue of cash flow. While your home is worth hundreds of thousands, the home asset that you own isn’t liquid. This makes it difficult for you to unlock cash value in your home to create cash flow for your monthly expenses. Thus, for your retirement plan to come to fruition, you need to ensure that you take care of the potential cash flow problem.
One way to take care of the cash flow problem is to invest in an annuity. Here’s how it works. When you are in the pre-retirement stage, you contribute to your annuity by paying premiums to the insurer. When you reach your retirement age, your insurer will provide monthly pay out to you to help you meet with your monthly expenses.
Not quite sure where you are yet in your planning for retirement? It is never too late to start your retirement planning today. You can seek professional advice from Moneyline’s team to review and assess your current retirement planning.