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3 Ways To Protect Your Retirement Savings

There are plenty of traps out there that might cause you to end up with a smaller nest egg. Here’s how you guard yourself against such unfortunate incidents.

When it comes to retirement planning, simply saving money in a bank account for your retirement is not a strategy that is going to work. As mentioned in an earlier article, Singaporeans are expected to live an average of 17 years after they have retired. However, retirement savings are expected to run out after 9 years. This further emphasise the importance of protecting your retirement savings in order to make sure that you do not end up with a smaller nest egg due to poor financial choices.

Below are 3 ways that are critical to protect your retirement savings:

1. Doing Your Own Research And Making Unbiased Financial Decisions

Most financial advisors have an agenda in mind when they approach you. It is usually a sales agenda linked to the commission that they get if they close a deal. We mentioned in an article last week that more often than not, financial advisor play the role of a salesmen, on behalf of the financial institutions that they represent.

Keeping this in mind, it is of no surprise if some financial advisors recommend you a product that makes them the most money, instead of one that can really benefit you in the long run. Hence, it is always good to obtain an unbiased financial advice after a talk with your financial advisor. Always do your own research or have a quick chat with someone who has bought a similar financial policy to increase your understanding on the product before deciding if you want to buy it.

2. Reduce Transaction Cost

We cannot emphasise enough the importance of an efficient, low-cost, investment plan. The fact is that returns on investment products you choose may be uncertain. You know what is certain? Transaction cost and mangement fee.

Pick the funds with the lowest fees which suit your risk appetite and investment needs. For investments in stocks, a stock brokerage account that charges the least fees definitely helps too. We won’t tell you who that is because in line with point one above, you should do your own research.

If you prefer to diversify into various stocks, consider investing via an Exchange Traded Funds. It has a much lower management fee and has shown to be able to generate returns that are as good, if not better, than actively managed funds.

Read Also: How Does ETFs Investing Really Works?

3. Health insurance

Relying on your health with the assumption that you can work for as long as you want to is a terrible idea. Health conditions tend to hit us when we least expect it to. Unexpected medical bills will wear out your retirement savings much faster than expected, leaving you with less to spend in your old age.

Like it or not, it is always wise to have a coffee session with your insurance agent to find out how well covered you are, what kind of claims you are entitled to and what you can do to get yourself better coverage within a reasonable cost. This will ensure that you and your nest egg are well covered in the event of any unforeseen circumstances.

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