Planning for retirement

Save now and enjoy life later.

Many Singaporeans aspire to live comfortably after retiring, but to achieve that dream, one should consider the four factors below.

1) Savings plan

In Singapore, part of the contributions that go into a person’s Central Provident Fund (CPF) are meant for retirement savings. However, it is not advisable to entirely depend on it. For example, financial experts advise people to set aside at least 10 percent of their take-home pay. The younger you start saving, the more you’ll have in the future.

2) Other income

After retiring, you will no longer receive an income. Given that your savings could run out while you’re still alive, experts recommend investing in other income streams, such as businesses, bonds, equities, unit trusts and even newly founded companies. But a word of caution: research first before investing your hard-earned cash as each has different yields and risks.

3) Lifestyle needs

Our daily expenses are ultimately based on our lifestyle. It’s nice to go on week-long vacations to other countries and stay in five-star hotels. But splurge on these frequently and you’ll go broke in no time. No one wants to end up becoming a bankrupt and homeless retiree. So instead of satisfying your wants, focus first on your basic needs such as food, clothing, shelter, utilities and medical bills.

4) Healthcare costs

Under the Retirement and Re-employment Act (RRA), you need to be at least 62-years-old in order to retire. At this age, people are more susceptible to illnesses and serious health issues, hence, it’s imperative that would-be retirees factor in higher healthcare costs when planning their retirement budget. This is important considering that 32 percent of Singaporeans are unsure how much money they need to save for healthcare post-retirement, while 38 percent are worried about their medical expenses after leaving the workforce.