How To Create An Effective Retirement Plan! (5 Powerful Questions To Help You)

Last updated on May 21st, 2019 at 11:28 pm

A staggering 85% of Singaporeans don’t have enough money for retirement!

This was discovered in a 2017 survey by health insurance company Cigna. It also disclosed that this score of Singaporeans is one of the lowest across different countries

So how can you effectively plan out your retirement?

Is it about thinking when you want to retire and imagining how many years in retirement you need the money for? These are useful numbers to think of.

But for an effective retirement plan, you need  to think deeper and I’ve this 5 powerful questions for you!

Question 1) How confident are you in replacing your income if you lose your job?

This is a very important question to ask yourself as it exposes deep down on how confident you are in your long term job prospects.

When you have that financial security in your job, it is easier to make plans for retirement. These could be jobs in the government or healthcare sector.

If you plan out your budgets correctly, you could explore long term investment opportunities such as in properties quite easily. Such an investment requires servicing a mortgage loan for 10 – 20 years.

 

On the other hand, if you are in F&B or in a service industry, you may feel much less financially secure for the long term.

It is not that long term investing cannot be done.

But rather, you may need to be more prudent in your investment approach.

Taking on mortgage loans need to be evaluated more rigorously. Buying insurance plans for retirement with a 20y premium may need to be considered more carefully.

Question 2) What is stopping you from saving more right now?

This question is enable you to understand expenses in your current lifestyle situation better.

Saving for retirement means squirrelling money away and it is not fun. It needs to be balanced against having a great lifestyle now.

In addition, you may have ambitions and short term goals that need your money!

 

 

According to this study by businessinsider, the majority of millennials here prioritise spending on short-term goals over saving for retirement.

It is also stated that saving for insta-worthy first home takes priority over saving for retirement.

The figure quoted was a staggering S$177,000 on furnishing their first houses and over S$209,000 on buying their first cars.

What about you? Have you fulfilled some ambitions of yours such that you can start saving more?

Question 3) Do you need to provide for anyone else?

Do you have children? If you are a parent, you have a financial burden for your child until he/she reaches adulthood.

I love this video from NTUC Income “A retirement plan isn’t just for you”.

It speaks volumes on the tough trade off that all parents face. Save for own retirement or spend on child.

How much is it to raise a child in Singapore?

A snapshot of the summary from Smartparent.sg is as shown below and the estimates come in $670,000!

 

 

On the other hand, you may have an aged parent that you need to look after. They could be age80 or 90 or 100 and still be a dependent of yours.

If you want to retire, this amount is needed be factored into your own your retirement planning.

The moment you stop working, you still need to fund expenses not only to yourself but for parents as well.

Question 4) What is your ideal retirement lifestyle?

Do you want to retire in a condominium and do you still need a car?

Do you want to still go on yearly vacations? (My recent japan trip below =))

If your answer is yes to the above ideal lifestyle, you may need to make financial sacrifices now in order to set aside funds to accomplish that future.

It is quite likely that your habits now and expectations in life carry on to retirement years.

Don’t let circumstance decide your expectation of your retirement lifestyle. Rather, consider carefully what you truly want and make it happen!

Question 5) Where do you expect to live in your retirement?

The number of Singaporeans who choose to work or live abroad has increased over the years.

According to this report, a total of 213,400 Singaporeans have chosen to do so as of 2016, compared to 157,800 in 2004. Hence, it is increasingly common to consider retiring abroad.

I’ve a private client who resides in Australia now.

According to International Living, Thailand has one of the lowest costs of living in the world!

I’ve a friend who runs a channel on Bangkok property investment and I’ll do a shout-out for them if you are looking to retire there!

Click here to watch their youtube channel “Invest Bangkok Property”

If not, you could rentals for as little as $400/m for a modern studio apartment!

 

I recently enquired about properties in Melaka just in case I wanted to invest or for retirement stay.

Melaka city is one of the more developed parts of Malaysia and has a strong Chinese and Peranakan influence over its culture and food. There is a growing medical tourism industry there also.

I visit there frequently and even have a blog holidaymelaka.com on it.

Below is an example. Bali Residences (expected TOP 2022) is a new 800 unit development in Kota Laksamana which is near the new Impression City of Melaka

First option for vacation stay or for investment would be Type B-Room ( 62.8m square/ 676sf) RM310k+-.

Second option is for permanent stay which would be Type D-Room 2( 104.65m square/ 1,126sf) RM480k +-. At this price of about SGD$160k, it’s less than half of what a 4rm HDB will be in Singapore.

The condo maintenance cost is estimated to be around SG$50/m which is also considerably cheaper than a Singapore condo. Hence housing wise, it’s certainly affordable.

 

Quick conclusions

If you want to remain retired in Singapore, there are a few things to consider

1) Medical insurance (Medishield life & integrated shield plan) and healthcare inflation

2) Mortgage and general housing inflation

3) Food and transport inflation

Of the above, almost 60% of people surveyed believe healthcare expenses is going to be their single largest expense in retirement!

The mean range of expected retirement sum worked out to be between S$2,900 to S$3,500.

That needs some serious savings right now!

The Astute Parent

A parent who has a sharp acumen on sieving through 'alien' financial jargon to dish out bite size financial tips from a parent's perspective.

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