Have you asked yourself this question before – Are people around you living longer or shorter?
If you do not have an answer or do not wish to answer this, my suggestion is that you flip through the Straits Time and just have a glimpse at the Obituary Page. You do not have to understand in details but just have a rough feel at the age of people passing on…
My personal opinion is that the answers to the above are both a yes! And the point that I want to bring across is – Have You Planned for both situations?
What Happened When You Live Too Long…
During the course of sharing Financial Education through Financial Planning, we, as Financial Planners, have a certain guideline to share that men and women are living longer. Men will usually live till age 72 and Women will live till age 80 and should we consider Medical Advances (should you be sick in long term and require medications to sustain your life), the average lifespan for men is at 72 + 8 = 80 years old and women to be at 88.
And is this suggestion accurate – refer to the newspaper and more less you will get the same answer as what I usually share.
So what happened when you live too long… Have you ever thought of it? Some of the implications that will usually worry people are:
- You are much on your own or with your spouse. Children may be too occupied with their own lives and family. So you will need to depend solely on your own savings to sustain your lifestyle. Children may still contribute a little (do not really expect this too much) but may not really be enough to keep you going for 15-20 years (retirement age is around 65 and lifespan of 80 years old gives you 15 years of no working)
- Because of long years of working and stress (as much many Singaporeans suffer from Diabetes, High Cholesterol and Hypertension), many people fall sick and need to be under long term medications and of which a minority may need to be under some form of hospital care & treatment. These costs will eat up your savings, and should you be well again, your earning ability has already been reduced and you may just have not enough for your retirement period.
What Happened When You Live Too Short…
Nobody wishes for this but life is really unexpected. When such a thing happened… the implications are:
- One can be the only child that a parents can ever have. With that loss, emotion hurts are there and the possibility of having someone really close in times of need is low.
- One could leave behind a huge debt – Study Loans, Credit Card Debts, Home Loan, Installment Purchases are to be taken care of by the next-of-kin. If there’s no planning for this. The next-of-kin’s life is worst off than before.
- One could leave behind children. Part of starting a family is having children and providing them with a good education. The loss would mean that they have a lesser chance to have that especially if the one that is gone is the main income contributor.
Is It Too Late To Start Planning?
As long as you feel that there’s a need to plan, it’s never too late! Setting aside a budget would only mean that you need to change your lifestyle a little. Will you really suffer… Definitely not! Okay, maybe a little at first but once you get used to it, life is still per normal.
How Can You Plan?
For sharing wise, I will not go into too much of Financial Planning details (like how much retirement income or how much commitment) so I will just share with you what are the available options available to you to plan for…
For Living Too Long…
- Annuity Plan. This Plan will give you a monthly income as long as you live. And if you do live longer, the payouts will be more than what you have initially set aside. Such plans are like your CPF Life and from Insurance companies.
- Rental Income from Property. Good hedge against Inflation. And should you get a property early soon, the Rental income will help to ease off the Loan installments and during your Retirement age, this income will be your monthly expenses (part of it will go to maintaining your property).
- Dividends or Sale of Stocks. Good stocks will give you dividends and multiple stocks can give you substantial amount every 3 months or so. Should you follow Warren Buffet and hold on to good stocks for long term, the sale of these stocks during your Retirement will be your Savings.
- Medical Insurance. A good medical insurance plans will help to take care of your hospital bills (keeping them to minimal) thus protecting your life-long savings.
- Insurance Plans. Endowment, Investment-Linked Plans, Whole Life Plan with Profits – should you plan early when the cost is lower will help you in your Retirement times.
For Living Too Short…
- Term Insurance. If you have loans and financial commitments, get a Term Insurance to protect. Plan more and your family members will have less to worry in later years.
- Medical Insurance. Should there be any hospital bills, at least a Medical Insurance Plan will help to minimize the bills for the next-of-kins.
- Waiver Of Premium Riders. Should you be planning for your Children’s Education with Insurance Plan, do get the Riders to protect future premiums.
- Have a Will. Having a Legal document will help to distribute your assets accordingly.