The best way to enjoy your retirement in Singapore is to be secure with your finances. This may be a challenging task for some Singaporeans. Fortunately, there are certified financial planners who can help you properly prepare your retirement plan.
To achieve your ideal lifestyle during your retirement years, it is important to properly understand and prepare for your finances. Here are five important questions that you can ask your financial planners about your retirement.
Retirement Question #1: How much do you need to save?
One of the most immediate concerns to address when planning for your retirement is how much you need to save. Tell your financial planner about the kind of retirement lifestyle you envision. Do you plan to acquire your own home or to continue renting? Do you plan to travel or to stay close to your children? Your financial planner can factor in these considerations when computing how much you need to put into your retirement plan each month.
There are already many tools available to help you make your own computations. However, the financial planner can do a better job in explaining how far your money can go. They can also help you determine whether or not you are on the right track.
Retirement Question #2: How much CPF savings should you transfer to your Retirement Account?
There are two CPF LIFE Plans for you to choose from – the LIFE Standard Plan and the LIFE Basic Plan. The plans differ on the monthly payout you would receive; and the amount you would bequest to your beneficiaries.
Depending on your desired CPF LIFE monthly payout and your CPF balances, you can choose from a range of payout options that best suit your needs in retirement.
For those who already own a property, the *basic retirement sum of SGD 80,500 may be enough. However, for those who still have to rent, the *full retirement sum of SGD 161,000 might be a better goal. Ask your planner whether or not the *enhanced retirement sum of SGD 241,500 is advisable and attainable.
Retirement Question #3: What are the other investment options aside from CPF?
Discuss whether or not CPF is enough for you to rely on. If not, ask your financial planner to look for other investment options aside from CPF. Some examples may include stocks, mutual funds, bonds and insurance schemes among many others. Of course, you may also set up your own business, which can also be a great, albeit risky, investment.
Retirement Question #4: How aggressive or conservative should your investments be?
Discuss with your financial planner the right balance between aggressive and conservative investments based on your age, assets, earning capacity, and goals. If you have a high salary and can easily bounce back from any loss, then you may try more aggressive investment options. On the other hand, if you have just enough salary to handle your current financial obligations and can only spare a small amount of excess cash, then you may want to try more conservative investments.
Retirement Question #5: What other concerns should you address?
Death is inevitable for everyone. You can help lessen the burden and heartache for your loved ones by addressing issues such as estate planning early on. Gather all important documents such as including life insurance, disability insurance, long-term care insurance, retirement accounts, past wills, investment accounts and any other asset documentation. Keep your financial documents handy just in case the financial planner needs to go over them.
This way, you can ensure financial clarity for yourself during your retirement years, but also for your family in the future.
Find out how much you need to retire with our Retirement Calculator!
*The figures above are based on CPF LIFE Standard Plan payouts computed as of 2016.
She was nominated and selected for FORTUNE Most Powerful Women conference in 2016 (Asia) and 2015 (San Francisco, Next Gen).
Anna has 10 years of experience in the financial sector and is currently a Director in Tera Capital. Her previous work experience includes positions at Citigroup, United Overseas Bank, a regional role in Business Monitor and a boutique private equity firm based in Shanghai. She graduated from Singapore Management University (Finance and Quantitative Finance).