There also isn't a one-size-fits-all approach when it comes to retirement planning. There are a number of factors to consider, regardless of age.
Here are 4 factors of consideration when it comes to building a nest egg for your golden years:
1. Time horizon
The accumulation period or time horizon – that is, how much time you have to save – should be one of the first things you consider. The younger you start saving, the better. A longer accumulation period means there are more options available.
If you're starting late and the time horizon is short, you can look at plans with short premium term options, or consider lump sum investment plans. With a short time horizon, capital preservation should be top of your agenda as there's less time to rebound from large losses. Consider participating endowment plans from insurers that offer a capital guarantee, such as Aviva's MyRetirement which offers capital guarantees and guaranteed returns.¹
2. Risk appetite
If you prefer to take on a higher risk in exchange for a potentially higher return, you can consider investing with Aviva's unit trust platform, Navigator. Unit trusts typically don't provide a capital guarantee but can offer higher returns in accordance to market performance, and has the benefit of liquidity.
Alternatively, you can consider investment-linked plans, such as Aviva's MyLifeInvest, which allows you to choose your policy duration, and provides the flexibility to increase or reduce contributions, do lump sum top-ups, or even take temporary breaks from your regular contributions².
3. Payout mode
There are also various options available in the market to meet different preferences with regards to the mode of payout. There are some who prefer a lump sum payout at their chosen retirement age, while others may prefer a savings tool that provides a monthly or annual payout over a set period of time.
Different savings and investment tools typically have different minimum commitment amounts.
For example, insurance endowment plans can start as low as S$100/month. There are also lump sum tools available such as Aviva's MyIncomePlus that start with a minimum contribution of about S$23,000³, or fixed deposits which typically start from a minimum of S$5,000.
Whether you opt for a single premium payment or commit to a regular premium over the course of a few years largely depends on your financial commitments and cashflow needs.
¹ For Aviva's MyRetirement, capital is guaranteed at the selected Retirement Age, and returns are guaranteed only upon policy maturity.
² Please refer to the MyLifeInvest product brochures, available on www.aviva.com.sg for more information.
³ Aviva's MyIncomePlus' minimum single premium contribution is S$23,825, which is calculated based on 10 years accumulation period and 10 years payout period with a Guaranteed Monthly Income of S$250
Updated in : June 2017