This article was first posted on Honeycombers on 16 March 2018.
We get it: planning for the future is no cake walk, especially when you've got financial responsibilities like debts, mortgages and student loans to think about. Couple that with everyday stresses such as work, childcare and the rising cost of living (GST hike, anyone?), and it’s all too easy to focus on the present while leaving your retirement plans on the backburner.
With strategic thinking (and plenty of deep breathing), you can actually start planning for your retirement now! Here's even better news: with a few simple moves and some help from the experts at Aviva, you could strike retirement off your worry list and still achieve your retirement dream.
#1 Envision your golden years
Cocktails on Waikiki Beach, exploring Asia on motorbike, opening a book café or taking the grandkids to Disneyland…these are all great retirement scenarios. Having a clear (and realistic) idea of the future helps reduce any uncertainty and makes planning for your golden years easier. But do you actually know how much it would take to live out those dreams?
#2 Make a plan (and modify it as you go along)
We found that Aviva's 2017 Consumer Attitudes To Saving survey revealed some interesting facts. For instance, a sizable 40% felt they needed a post-retirement income of about $2,000 to $4,000 per month, while a surprising 23% thought they required less than $2,000 per month*. To help you have a better idea of what you'll need to realise your dream, all you have to do is map out different scenarios such as the type of housing you'll be living in and where; the type of transport you'll be using and how many vacations you'll be taking in a year. This will give you a better picture on which savings and investment plans are tailored to your needs – and we've got the basics here.
#3 Prep for inflation…
As most Singaporeans will tell you, inflation is always a cause of concern when you are living in one of the most expensive cities in the world. If we were to consider a flat inflation rate of 4% per annum, $100,000 will only be worth about $45,000 in 20 years. Yikes.
#4 … And be sure that you're also debt free
Make a list of your assets, liabilities and loans. These will factor in planning your post-retirement lifestyle. One key aspect of retirement planning is being prepared for potential illness or disability costs, so having sufficient coverage is essential – to get you started, here's the one important thing you need to have for retirement planning that most people tend to overlook. You can thank us later!
#5 It never hurts to start early
With the power of compound interest, you'll be surprised by how setting a small amount aside each time can help your savings grow significantly. The earlier you start, the more your money will work for you.
#6 Small sacrifices go a long way
Something as little as cutting back on your twice-daily, venti-size artisanal coffee can mean over $100,000 surplus in your retirement account at the end of 20 years. Food for thought, indeed!
Once you've got it all scoped out, it's time to crunch some numbers! The Retirement Calculator is a handy tool that helps you map your estimated expenditure with six easy questions. Want a more in-depth consultation? Leave down your details in the form below and we'll be in touch with you.