Retirement Planning (Part 1)

Retirement.

A phase of life that every working adult aims for at the end of their careers. Some may reach that goal earlier, others reach later, maybe never (that last part is sad, but real.)

There is one question that we all, as working adults, will ask ourselves: Do I have enough financially to retire?

In order to answer that question, you really have to break that down into two further questions:

1. What age do I want to retire?
2. How much will my desired monthly expenses be when I retire?

In Singapore, the current statutory retirement age as of this post is 65. The retirement lifespan is about 20 years. As for the monthly expenses, for simplistic calculation purposes, I'll put it at $3,000 a month. You can feel free to approach your agent and share with him/her your desired monthly expenses upon retirement. Oh, and inflation rate is about 3% a year.

Based on the above data, I would do the financial calculation for my clients (All agents do the same); and the results are really shocking. To be financially prepared for retirement from age 65, you essentially have to be a millionaire. In fact, my clients will realize that they have to have at least $1.1m ready when they reach 65, assuming that is their desired retirement age of course. If my clients set an earlier retirement age, then the amount to prepare for retirement increases. 

It's easy for prospects and clients like yourself to think that this is a scare tactic; but feel free to spend some time and ask your agent to sit with you and do the calculations together. You will realize that the numbers don't lie. 

For most of us in the working world, to be a millionaire before retirement is very hard, dare I say, impossible. Well, that may be true if you only have one source of income. If this current pandemic-plagued economy has made anything painfully clear, it's that one source of income is no longer enough.

So what can we do to plan financially for retirement? 

As a preview for part 2, just remember these two words in relation to income sources: Fixed and Variable.

So as always, stay tuned for part 2!!!

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