It’s Never too Early to Start
According to NTUC Income Senior Financial Consultant Carlos Lee, it’s never too early to start planning for retirement. “Saving and investing early enables compounding to work to your advantage and help you build a larger nest egg while mitigating the effects of inflation,” he said.
Retirement Planning is a Journey
While it can be a scary proposition, retirement does not necessarily mean having to give up some of life’s pleasures just because you’ve stopped working and are no longer drawing a salary. Rather, it is a journey that starts with planning your finances and financial goals well because, as you would know, savings take time to grow.
“Besides thinking about the desired lifestyle you want to attain, also think about what you envisage yourself doing during retirement. Setting aside a budget for one’s ideal retirement lifestyle is one way to start journeying towards retirement,” said Carlos.
Start Small
“What is important is to start cultivating the habit of saving as soon as you get your first pay cheque. You can start by setting aside a small amount every month that goes towards your savings plan and gradually increase the amount in the future as your earning power increases,” he added.
Consider Your Needs
Here are some factors to consider when choosing policies that can help meet your needs.
Financial goals
Looking for medical coverage, protection against death, disability and critical illness or planning for retirement? Financial planners can help you with a needs analysis to ensure your goals are met holistically.
Monthly expenditure and cash flow
Look into your expenditure and review your needs and wants. From there, drill down your spending habits and discipline yourself to set aside a fixed fund for financial planning.
Time horizon
Your age will affect the duration of the insurance policy and underscore when you want your financial goals to be met.
Current life stage
Being single, married, or having a family to care for means different degrees of financial commitment. Your needs change as your life stages progress. This influences your financial needs and should be taken into consideration.
Health condition
Pre-existing or generic medical conditions may affect your application for insurance policies as there may be loading or exclusions. Therefore, do make sure to get adequate health insurance coverage before it is too late.
How Much to Save?
“A general rule of thumb is for retirees to have a monthly post retirement income of two-thirds their last-drawn salary in order to sustain their desired lifestyle. However, the amount required for retirement will vary between different people as they would differ in their definition of what is comfortable,” said Carlos.
Review Your Finances Regularly
Consider reviewing your finances every two years with a financial planner as your lifestyle choices may change through time. This will allow you to tweak or adapt your financial plans to suit your lifestyle and choices.
Find out more about the various policies available for you to start planning your retirement, or get in touch with a financial planner here.