Tips For A Stress-Free Retirement
Back in the day, our parents or grandparents thought they ought to work till they were 65 and then retire to have the life they always dreamed of while working hard for all those years that lead to the age of 65. Most of them did not get the “exact dream package” they had in mind as they only relied on pension funds and social services. So, the yacht of their dreams was not purchased, the numerous white sandy beach holidays had to be limited to maybe one a year and having one’s own home to live in became the biggest appreciation.
Times are changing, the stress in work life has increased when compared to that of our parents’ and we all probably want to retire before we are 65. All in all, we all want to be financially free and mentally at ease about this at some point in the not so distant future.
Along with the change in mindset, there have also been changes in employer attitudes and companies are no longer offering the best pension plans as an employee benefit option. Especially when you are an expat in Singapore, your employer is probably not contributing to a pension fund at all.
So, you have to rely on your savings - the big question is: how much is enough? The answer to this question varies from person to person and in order to determine how much will be enough you will need to answer some more questions. Here are a few to start with:
How much will you need?
What do you envision yourself doing when you retire?
Where do you intend to live?
What would your travel plans be like?
Would you consider working part time or having a source of income other than your savings?
How will you be spending your time?
If these questions are too hard to answer for the time being, think of your current lifestyle and what may change during retirement. For instance you may be paying school fees for your children and this may have come to an end by the time you retire or you may currently be travelling for sea side holidays, but you may be considering moving to a sea side town for retirement. Thinking of these will give you an idea on how much more or less you will be spending during retirement.
There is another big question: how long will you need your money to last? This is probably the hardest question to answer as we may not want to think of our own life expectancy, but it is in fact one of the most important aspects for retirement planning. To help reach an estimate, you can either consider average life expectancy research for your county or have a look at your family background. Thereafter you can decide on the age you would like to retire at and there you have your average answer on how long your savings should last.
You will then need to make a financial plan depending on how many years you have until your desired retirement age. Depending on your goals and timeline you will need to adjust your contribution to your retirement savings account. We always stress that it is most important to start saving early to make the most of compounding interest. However, there is also the fact that when you are at an older age your income levels are higher so you can save more than you would have been able to in your twenties. Whatever the case, having a plan and awareness is much better than avoiding the subject and ignoring it.
Many of us struggle when it comes to start saving for our retirement – whether it’s making investment decisions or just getting started with saving in the first place, we are here to help. We will help you review your existing savings, loans, income and saving capabilities and work on a solution that will enable you to reach your goals for a financially stable and stress-free retirement.