There are many excuses for spending your money on things you might need now rather than saving it for retirement. But that day will come, sooner than you think, when you'll be retired – and you'll need the money.
Here are 5 common excuses you shouldn't use to put off building your retirement fund.
1. "I don't earn much money."
When it comes to saving, no amount is too small. Any little amount will add up over a period of time. Furthermore, your income is also unlikely to stay the same as you progress in your career. By at least starting, you won't lose out on the benefits of compound interest which is essentially the interest that your principal amount earns. And what makes this magical is when you add in the time factor.
Here's an illustration of the how compound interest works:
2. "All my money goes to paying off my bills and expenses."
So you've got your monthly HDB loans, car instalments and your day-to-day expenses to consider. But that’s not an excuse to put off saving for retirement. Bite the bullet and draw up a budget. Then stick to it. Start by reviewing all your monthly expenses and identifying areas that can be cut back. Any extra amount of cash that remains from your budget plan should go to your retirement sum.
3. "I want to start investing but I don't know anything about it."
Investing might seem daunting when you don't know anything about it. But with time and effort, you can educate yourself on the basics of investment. You might have come across the terms “Unit Trusts” and wonder why they seem to be the buzzwords for investment. Here are some good reasons for investing in Unit Trusts.
If you don't have the time to learn it on your own, speak to a financial adviser representative who can recommend suitable products that match your risk appetite. Each of these investments may then help you build your retirement nest egg.
4. "I need to save for my kids' education."
Education, just like retirement, costs money. While it is true that your child deserves the best education for their future, that needn't be an excuse to put off saving for retirement either.
Consider savings plans for your children's tertiary education such as Aviva's MyEduPlan. Depending on the gender of your child (and whether they will be serving National Service), you can choose to start receiving payouts when your child is age 19 or 21 at Age Next Birthday (ANB). This takes care of your children's education and frees up your money for your own retirement.
5. "When I retire, I won't need much to sustain my lifestyle."
But have you thought of the desired lifestyle you’d like when you retire? Will you keep a part-time job to while away your time? Will you be a frequent traveller? Will you continue to dine at your favourite fancy restaurant? According to Aviva's 2017 Consumer Attitudes Survey, slightly more than half of Singaporeans worry that once they retire, they can't afford an adequate standard of living.
Instead of just guesstimating, you can make use of calculators available online such as Aviva's Retirement Planner to help you gauge how much you may actually need.
The bottom line: Start today
We don't have a choice when it comes to growing old. But we do have a choice about the quality of life we can have when we're old. The earlier you start saving, the more time there is for your savings and investments to accumulate.
So banish all your excuses and start saving for your retirement today.
Updated on: October 2017