Insurance Money

4 Easy Steps to Plan for Retirement

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Want to start planning for retirement? Don’t be intimated by how little or how much you can only save for your retirement. At least you have started. You will be surprised by the number of adults who have yet to plan for retirement until they have reached their 40s. Yes, by 40s, one should have some fair share of money to do single premium but do you also realize that you have lost years of compounding interest?

Start with a small monthly amount that you could spare out from your expenses. Be it $200 – $300 per month or less. An early start goes a long way.

1. Start with a baseline.

Do you know that every Singaporean will be automatically enrolled into CPF Life at age 55. Depending on how much you have in your CPF at age 55, you will be getting a monthly payout for your life starting from age 60. Be thankfully that the government have such plans in place for you.

Knowing there is a CPF life in place, it creates a baseline for all Singaporeans. If you wish to retire early before age 65 and wishes to get some monthly payout before age 65, you can start to decide at which age should you first retirement plan starts to pay out.

If your job doesn’t provide CPF, you will have to create your own baseline. Always buy at least 1 retirement that pays for life (eg CPF Life, NTUC Guaranteed Life Annuity), because you do not know how long you will life and you dont want to be caught in surprised that you are left without a penny at age 90.

2. Build your empire.

There are a few options you can look at, Retirement Plan (Annuity payout), Savings/Endowment Plan (Lump Sum payout) and Singapore Savings Bonds (Lump sum payout). Ultimately, they are all doing some form of savings goes into 1 purpose – Retirement. Always start off your retirement planning with low risk savings before moving on to high risk investment. You certainly don’t want to lose you retirement funds in a high risk investment and get nothing for retirement.

At this point of writing, there are a few retirement plans that provide you guaranteed capital returns with projected returns. I did my research and my personal choice of retirement plan at this moment is, Aviva – My Retirement Choice, because it has the highest guaranteed returns. I met a few agents from AXA (RetireHappy) and Great Eastern (Prime Retirement), all trying to convince me how their company’s offered retirement plan has a much higher non-guaranteed maturity at a high premiums. Sorry folk, it’s for retirement, guaranteed is the key for me.

You can refer to my 5 Websites to Compare Insurance for a comparison for the best retirement / endowment plan to date.

3. Review your Retirement plan every few years.

Review your retirement every few years to see if you have extra cash to invest in another retirement /endowment plans. There will new and better plans coming along the way where you can buy in.

Planning till age 99 because you don’t know how long you can survive is call over-budget. I personally don’t agree with such planning and it is just a tactic that insurance agent like to use. I personally choose to follow the average life expectancy where male and female live to the age of 80 and 85 respectively (Statistics Singapore – Life Expectancy at Birth).

Draw out your lifespan chart from the age you plan to retire. Verify that you have a decent payout at every stage from the day you have retired from your job. Ensure that there are no lapsed in between.

Age / Retirement Plan 50-54 55-59 60-64 65-69 70-74 75-79 80-85
CPF Life $900/mth $900/mth $900/mth $700/mth
Aviva My Retirement Choice $1k/mth $1k/mth $1k/mth $1k/mth
Aviva My Retirement Choice $1k/mth $1k/mth $1k/mth
Aviva My Wealth Plan $100k Lump sum payout (spread across 10 years = $833/mth)
Total $1.8k/mth $1.8k/mth $1k/mth $1.9k/mth $1.9k/mth $1.9k/mth $1.9k/mth

Sample of a retirement plan for female til age 85

Above is just a sample of how you should draft your retirement plan depicting the payout monthly at every stage of your life from the day you retire. The monthly payout of $1.8K/mth or $1.9K/mth may not be sufficient for you. You may need to buy in more retirement if you want a higher payout.

4. Moving into other investment.

After you feel comfortable with the retirement payout at every stage of your life after retirement, you can start to look at bigger investment like property, etc.

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