With so many options available, it can be hard to find the right retirement plan. That's why we've made it…
Retirement planning for couples may seem like a long way off, but the reality is that most people don’t start saving enough until they’re retired. This can be due to a variety of reasons — financial pressures, poor assumptions about their own spending needs, and just plain bad advice.
The good news is that retirement planning is something couples can do together. The bad news is that it’s not always easy to agree on what you want to do and how much you need to save. The good news is that there are ways of working out these issues together.
A few things you should know:
You can’t rely on your spouse for all your retirement needs.
If one person has a higher income than the other, that person will need a bigger retirement nest egg than the other. That’s why it’s important for both spouses to have an independent assessment of their own situation and make sure they have enough saved in case the other person dies or gets sick soon after reaching retirement age.
You can’t rely fully on CPF.
If you are employed, you and your employers are required to contribute to your CPF accounts every month, but CPF won’t necessarily take steps to ensure this happens if you’re unable or unwilling to save yourself.
The process of planning for retirement is a bit like the process of playing a board game, where at the beginning there are a lot of choices to make.
But you play the same game, over and over. You can’t delay the process until you know exactly how much money you’ll need in the future.
And you can’t stop playing once you’ve made all your choices.
The first step in planning for retirement is to be ready. You don’t need to invest everything you own today, but you do need to be ready to pay for expenses later on. If you’re not saving enough in your pension or if you’re not paying down your mortgage, those expenses will need to come out of your CPF instead — meaning less money will be available when it’s time to retire.
Most people have pretty strong opinions about retirement.
But still, as many as 1 in 3 Singaporeans are worried about retirement inadequacy and 45% have yet to start planning: Endowus Singapore Retirement Report 2021
It can be tempting to put off planning for retirement entirely -– or just to focus on the present. But retirement readiness takes time and effort; if you don’t start sooner rather than later, you’ll likely run out of money before you retire.
So how do you get started? Start saving now. If you’re young, set aside 10 percent of your income each month. That may sound like a lot, but it’s much easier to save when you’re younger and earning more money.
If you’re in your 30s or 40s, you can afford to save 15 percent of your income each month. If you have kids or other family members who rely on your income, aim higher: 25 percent of your income per month if possible.
A good retirement plan is a little like a good wedding — it shouldn’t be rushed. For instance, one of the first decisions you need to make is how long you want to work before taking off. If you’re ready 30 years from now, you’ll have plenty of time to save. But if you plan to retire in five years, that means you’ll need to set aside much more money at once.
The fact that there are no shortcuts to retirement planning doesn’t mean you have to go through the same old retirement planning process every time. It just means your plan can’t be watered down to fit any situation.
Make sure your retirement plan is as long-term as possible by setting it up with a balance between risk and safety. If you’re planning to leave your money to your grandchildren, for example, you want to take steps to make sure you’ll have enough in the end.
Think about how much income will come in at various points over the decades, and whether it will cover all of those expenses. In other words, whether your money has a high probability of being there when you need it.
Remember, there’s no retirement age. Most people think of their 60s or 70s when they picture their retirement years, but that’s not realistic.
You can retire late, and you can retire early. Planning for those possibilities is the best way to ensure you’ll have enough money to live comfortably in your golden years.
Retirement planning isn’t easy. Even those of us who have thought about our retirement often have no idea what we’ll do when we’re older and time is running out.
There are a few things you can do to get on the right track. First, don’t be afraid to ask for help. Make an appointment with a financial adviser and let them walk you through your options.
Second, keep this in mind: nobody’s retirement plan is perfect and you can always adjust your plans as necessary. You might decide to retire earlier than expected or later than planned, or take a part-time job instead of retiring altogether.
It doesn’t matter how much money you’ve saved if you die young from a heart attack or stroke. Just make sure that your retirement plan provides for your family’s security in the event of your death before age 65, especially if you’re fairly certain that it will take longer than that to collect enough money to live comfortably after paying bills.
At its most basic level, a retirement income insurance policy is an annuity that combines the features of a traditional life insurance and a traditional retirement plan. It pays out a stream of income in case of death. This is a common benefit of many retirement plans, but it’s not always well understood.
The most popular option for couples includes those plans with Secondary Life insured option, which ensures that your retirement income can continue to pay for the surviving spouse in the event you die.
The Secondary Life Insured option allows the Policyowner to name a Secondary Life Insured person to receive payments upon the death of the Primary Life Insured. The Primary Life Insured is the original life insured person indicated at the policy start date.
You will need to provide proof the secondary life insured’s relationship with the original policy owner. The Policyowner must have an insurable interest in the Secondary Life insured and therefore they must be either
You, your spouse, or your child can be the secondary insured on your policy provided he or she is under 18 and you are under 65 years of age.
You can’t appoint a Secondary Life Insured for these types of policies:
Normally, the Policyowner can appoint, change or remove the Secondary Life Insured during the Policy Term.
You can pay a single premium or smaller premiums that are spread out over several years. Once the plan reaches the payout age you select, you receive monthly income payments from the insurance company for a set period of time. A good insurer will offer flexibility in the premium term and guarantee that your monthly income will never decrease once the payout period begins. In fact, your payouts can increase over time.
If you don’t need the money right away when you reach the payout age, you can choose to leave it with the insurer to allow it to grow.
Because the decision to retire is such a big decision for couples, it is crucial that you put in enough time and effort to plan for this momentous occasion. Make sure you take the time over the coming months to talk your finances with your partner.
Most retirement plans are well known and researched, which is why this article will not go into detail about various programs or which one will work best. Rather, use this guide to give you ideas that you can research together and make a plan that works best for both of you.
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