Have You Started Your Retirement Planning?

Part of a Good Financial Planning is planning well and early for your retirement and a good rule of thumb of starting your retirement planning can be well around your mid 20s as you may have started working by then and have the means to start saving.

What To Note For Your Retirement Planning

And the things to note for your retirement planning would be basically

  • The retirement monthly income you would need for your daily expenses (without really working) and lifestyle
  • How long you plan for this retirement income to last

A general guideline to know how much you would need is to note down how much are your current expenses and once you have gotten this figure, do a rough estimation whether you would like to maintain this kind of lifestyle (you can choose to have an even better or just a simpler one – it’s your life, so your choice!)

Then the portion for the how long you plan for it to last would be a gut feel. An average person would wish to have a retirement income to last for 20 years starting from the average retirement age of 65.

Once you have your figures ready, head over to the CPF Board’s Retirement Savings Interactive Calculator to get a rough feel how much you need to start saving now to hit your desired retirement income.

A sample of my Retirement Planning would be like below:

My Retirement Planning

Hmmm… and seems like I do have to start saving like $600 per month for the next 37 years in order to achieve my desired monthly retirement income of $2000.

From the above chart, I have assumed that

  • My return of investment would be an average of 5% from a combination of both my Endowment and Investment-linked plans.
  • The inflation I assumed is also at the rate of 2% p.a which, if you do not know what it means, is that prices of stuff will get more expensive by 2% each year for the same amount of money that I currently have. This also means that I have less purchasing power in the near future.

So what are your Retirement Planning Numbers?

Sources Of Funds That Will Help You With Your Retirement Planning

If you have committed to some forms of regular savings either with a Bank or Insurance Company or into Stocks, do continue to do so. And if your retirement planning numbers seem too far-fetched, do not worry on that as you do have other sources of funds that will actually or can help you with your Retirement Planning like:

  • Your CPF Minimum Sum (combination of your CPF ordinary and special account)
  • Existing Life Insurance Policies that can be converted to an annuity or due to maturity
  • Rental Income from current property or investment property
  • Part Time Income (should you decide to work at a slower pace and to keep yourself healthy)
  • Residual Income if you have your own home business or from a network marketing business

If you do have the figures to the above, you can start using them for your calculation to give you a better gauge as to what is really needed.

Have You Settled This Before Your Retirement?

  • Medical Insurance. All the good food or lack of exercise for the whole of your life may decide to turn against you and make you more prone to hospitalization. A good medical insurance will help to ensure that your medical bills are kept small without affecting your desired lifestyle.
  • Your Loans. A good savings and a worse off Loan work on the basis of compounding interest rate. Therefore if you do not settle your loans early before your retirement, your lifestyle may be affected. Unnecessary stress or worries may indirectly affect your health.
  • A Will. Anything can really happen and I am serious about it. If you have done your planning well for your retirement, you have actually set aside a substantial sum of money. Should anything unforeseen happen to you, you would not wish to have any dispute over the distribution of your funds. Do have a Will done up!
  • What To Do During Your Retirement? Many of us are too used to working for the whole of our life and to suddenly stop working for the sake of Retirement may seem unwelcoming. That’s why it will be good to plan what you will be doing on a regular basis to enjoy your retirement.

If you are serious about planning for your Retirement, here’s a handy Guide (a PDF file) as prepared by the CPF Board and you can download it from here (right-click and choose ‘Save As’)

When All Is Lost…

If you feel yourself in a loss, it’s advisable to find yourself a good Financial Adviser whereby both of you can sit down together to discuss on how to plan for your retirement. And to know if the Adviser is the right one for you, ask the person on his/her retirement planning.

In Summary

Retirement Planning is part of a good Financial Planning process and it’s advisable to start planning so as early as possible.

You can get your Retirement Planning Numbers through a Calculator as provided by the CPF Board. If figures are too far fetched, there’s external sources that you can depend on. There are also a few areas of concern that you will need to take care before your retirement.

When all is lost, find a good Financial Planner to work together with you on this planning. Good luck to your Retirement!

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Join the conversation

comment 2 comments
  • Andre

    Hey Dexter,

    2% for inflation is actually low? Is it better to over-state the inflation rate while planning for retirement?

    • Dexter Damien Chan

      Hey Andre, thanks for the comment! It is indeed low and I have given a detailed reply on my new post, so do check it out! >> Click Here

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