Retirement readiness checklist
Are you ready to retire? Here are some guidelines and checklist of considerations to gauge if you are ready for your golden years.
Retirement Planning helps to ensure that you can take care of yourself without the help of your loved ones. This can give you certainty and a feeling of autonomy as you inch nearer to your post-work life. The best method to accomplish these objectives is to plan thoroughly with good financial advice for your future necessities.
You should know that planning for retirement begins well before you even retire; "the sooner, the better". The sum you need to retire is dependent on your lifestyle. However, there are various general guidelines that can give you a better idea of the amount that you need to save.
Also, your expenses may increase as you get older. Your medical care costs will just keep on going up. Clinical inflation is likewise a lot higher than the core inflation rate in Singapore. So, retirement planning is a must to guarantee that you have enough resources when you need them the most.
When should you retire?
The Ministry of Manpower currently states that the official retirement age in Singapore is 62 years old*. Nonetheless, CPF LIFE payout begins from age 65 onwards. This implies that if you wish to resign prior, say at age 55, you need different sources of revenue to cover your everyday expenses.
Medical coverage, basic needs and inflation rates can affect the amount you need post-retirement.
In our research1 conducted in May 2021 amongst 304 Singapore retirees, we found that the average retiree spends S$1,450 per month (S$48/day) but would like to have 60% more to spend (S$2,300 per month) in order to be highly satisfied.
Additionally, the average retirees are telling us that the following costs are more than what they had expected prior to their retirement:
● Overseas travel
● Utilities
● Medical expenses
● Health aids and equipment
Retirement planning guide checklist
Basically, retirement isn't something we can decide in a single day. Here, we have assembled a guide to retirement planning that you can use to determine whether you are ready for your retirement.
#1. Understand your future monthly costs
Initially, you have to ascertain the amount you will require every month. When you retire, it's very hard to start working again. If you retire too early, you may need to find a new line of work in your golden years as your savings may not be sufficient.
The sum you need for your retirement can be separated into two fundamental segments.
- Mandatory: This is the amount you need to maintain a basic standard of living in Singapore. This incorporates what you spend on your convenience, essentials, utilities, food, transport, and healthcare needs.
- Non-mandatory: When you resign, you likewise need to have the option to pursue leisure activities or interests. This may incorporate overseas travelling, learning photography, or simply keeping yourself fit by enrolling in yoga, tennis, or other activities.
By computing the expense of these segments in retirement, you will have an understanding of the amount you need. You should know that Future cost = Monthly Cost + Inflation.
#2. The amount you'll get from CPF life
The essential source of retirement income for many people in Singapore will be CPF LIFE (Lifelong Income For the Elderly). CPF Life is an annuity plan that gives a monthly scheduled payout to Singaporeans and Permanent Residents, aged 65 or more. The specific sum that you get every month depends on two components.
The amount you have in your Retirement Account (RA) and the CPF LIFE plan that you pick. The more you save in RA, the more you’ll receive monthly. You can also put more money into CPF. If you need higher payouts, you can opt for the CPF LIFE Standard plan.
Regularly topping up your Ordinary Account (OA) and Special Account (SA) can also give you higher returns. You should speak to your financial advisor to understand the pros and cons and plan this based on your cash flow.
#3. Will your investments fund your retirement?
While working, you may develop an investment portfolio from your savings. This portfolio can include stocks, securities, investment properties or even insurance policies that you buy. It is important to do money management and diversify your portfolio so that you are not exposed to excessive risk in a single asset class, especially when you're approaching retirement.
We understand some of us have played too safe when approaching retirement. We have set aside a significant portion of our surplus in savings accounts. This will generate very low returns which won’t be able to keep up with inflation. We understand the feeling of having a sense of security with more accessible money when we need it in our post-work life.
If this describes you, we have a plan, which you can consider. GREAT Lifetime Payout, is a plan that provides lifetime monthly payouts of up to 3% per annum2 that starts after 4 years. Plus, 100% capital guarantee3 after 6 years. This provides you with options and flexibility, in case you need extra financial resources throughout your retirement life.
#4. Medical expenses and assistance
Even the best among us will ultimately get old and face health-related issues, chronic illness, or geriatric conditions.
In your retirement agenda, make sure that you have proper healthcare coverage. A basic medical coverage plan that you ought to consider could be Great Eastern's GREAT SupremeHealth + GREAT TotalCare, which can cover up to 95% of your total hospitalisation bill.
#5. Asset Planning
Estate planning is a significant part of retirement planning since it concerns how your assets will be managed in the event of your incapacitation or death.
When you have The Power To Make Your Own Choices, you are pretty confident that your post-retirement life will be as easy as your pre-retirement one. You are able to enjoy the finer things in life like watching the sunset with a glass of wine in your hand.
Why do you need professional financial advice?
A financial planner can not only offer great advice tailored to your retirement needs but help you cover all your blind spots.
There are a lot of financial products and it is very confusing to know when and where to invest. Doing it alone can cost you more time, money, and energy and also end up in you making losses. An advisor can furnish you with the best information related to the diversification of your funds and the pros & cons associated with every alternative. Asking “what happens if” type of questions can prepare you to handle difficult situations in the future. Here are some questions that you should ask your financial advisor:
● Will your current policies cover your post-retirement needs?
● Are you mistakenly over-insured?
● Are you entitled to any discounts applicable to your policies?
● Should you rebalance your investment portfolio?
● How much risk can you bear and mitigate on your investments?
How can Great Eastern help you?
To all the people who want to live a comfortable life post-retirement, we offer two main policies that can improve your living standard and provide peace of mind when thinking about retiring:
To make sure we don't outlive our savings, we have developed the GREAT Lifetime Payout retirement income plan. This can be the right plan to save for your mandatory and non-mandatory expenses post-retirement. Some of the benefits are:
➢ Your lifetime monthly payouts of up to 3.00% per annum2 start from the 4th policy anniversary.
➢ Your loved one will receive a lump-sum benefit of 105% of the total annual premiums paid plus any bonuses in the event of your passing or terminal illness.
➢ 100% capital assurance guaranteed3 after the completion of the sixth policy year.
➢ Short premium commitment of only 3 years, starting from S$10,000 a year and no medical assessment required.
Thinking about retirement in advance is a prerequisite in modern-day society. For this, we have launched GREAT Retire Income for a brighter future. Some of the pros are mentioned below:
➢ Cash payout plus a potential cash bonus every month.
➢ You are also protected against Death, Total & Permanent Disability4 and Terminal Illness.
➢ Flexibility in choosing premium term, retirement age as per your retirement needs and how long you want to receive payouts for.
➢ Your capital is guaranteed at your selected retirement age5.
Kick-start your retirement planning with hassle-free Great Eastern plans and make investing easy.
Sources:
* Retirement, Ministry of Manpower, April 11, 2019, https://www.mom.gov.sg/employment-practices/retirement
Footnotes:
1 Great Eastern’s survey was conducted in May 2021 with 304 respondents above age 63 in Singapore through an independent research consultancy. Online and qualitative interviews were conducted to better understand the current state of retirement in Singapore.
2 Monthly payout comprises guaranteed survival benefit and non-guaranteed cash bonus. 3.00% p.a. of total annual premiums paid is based on an Illustrated Investment Rate of Return (IIRR) of the Participating Fund at 4.25% p.a.. At an IIRR of 3.00% p.a., the monthly payout is 1.94% p.a. of the total annual premiums paid. The actual benefits payable may vary accordingly to the future experience of the Participating Fund.
3 Capital guarantee is on the condition that premiums are paid by annual mode and no policy alterations are made.
4 Protection against total and permanent disability is from the start of the policy till before the policy anniversary on which the Life Assured reaches the selected retirement age.
5 Capital guarantee is on the condition that no policy alterations are made.
Disclaimer:
This advertisement has not been reviewed by the Monetary Authority of Singapore.
As buying a life insurance policy is a long-term commitment, an early termination of the policy usually involves high costs and the surrender value, if any, that is payable to you may be zero or less than the total premiums paid.
Protected up to specified limits by SDIC.
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