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How to successfully plan a retirement…..way beforehand


An insight into certain routes to take and options available to us to successfully plan a retirement.

Continuing in the vein of our last article, we take a look at how we can plan for a retirement successfully. There exists many options and considerations we have to be knowledgeable about, and starting young never hurt anyone.

 

1) Insurance policies

If you take a look at insurance companies nowadays, you will notice that they have many policies now even giving guaranteed monthly income for 20 years from the age of 65.

Insurance policies are simple and fast ways to get started and what you have to do is only save the pre-determined amount monthly/annually and you are good to go. The extra benefit is that you can add on riders to certain policies to enjoy the medical and health insurance coverage together with saving for retirement.

As there are many types of policies for you to choose from, it is often prudent to look for a genuine financial adviser who is really helping you and one who can explain the terms and conditions in a layman term to you.

In fact, at dollarsandsense.sg, we have a A.S.K. platform which you can direct your questions to if you are unsure of anything and we will be there to offer our assistance.

 

2) Investment

If you are new to investing, do read up our section on investing. It is important that you understand your personal circumstances such as how much you can afford to invest and your risk appetite – how much money you can afford to lose, before you begin to examine the wide range of products available out there.

Take time to choose the right products that you understand and are most suitable for you. A well-diversified portfolio will help to spread the risk and balance the fluctuations in the value of your investments.

If you take a long term view at the stock markets, you can see that while there are major fluctuations along the way, they usually rise in the long run. One research study according to MSNBC has shown that the U.S. stock market has produced returns of 7% annually over a period of 10 years, virtually outperforming any other U.S. investment.

 

3) Govt. Scheme

We are lucky that in Singapore, the government has also come out with a retirement plan called the Supplementary Retirement Scheme (SRS). There are 3 main benefits shown below:

  • Tax relief for contributions made to SRS. Every dollar you contribute into your SRS account will reduce your taxable income by a dollar.
  • Investment gains accumulate tax-free in the SRS.
  • Upon retirement, only 50% of the amount withdrawn will be taxable. What’s more, you may spread your withdrawals over 10 years. With lower or minimal income at retirement, you may be paying little or no tax at all on the amount withdrawn.

If you are interested, you can learn more at the Inland Revenue Authority of Singapore website.

 

In Conclusion

To conclude, we all have to take an active approach to planning for our own retirements, no one will do it for us. There are viable options, and different solutions that will suit different people, and all of us should be aware of our options to make the best decisions.

 

We would hate to become a burden on our family, and god knows the government here is not going to take care of you. So unless you get actual pleasure of continuing to work into your 70s, we suggest you start soon. Do drop us a note at our A.S.K platform if you have any queries or need a nudge in the right direction!