How much do you need to retire comfortably?
Do you want to retire early and enjoy a relaxing life? Here’s how to financially plan for a new way of living that will give you the chance to do what you want and be free.
Most people tend to fear retirement in Singapore because they are scared of an unknown future. But with proper financial planning and preparation you can put those fears to rest by keeping the following factors in mind.
Retirement in Singapore: Tips
Figure out how much money you need
Do not think about retiring if you cannot comfortably answer the question, “How much money do I need to live for the next ten years?” Most people avoid this question and are hit by sudden expenses and hidden costs later on. If you have any questions talk to a financial advisor.
Work out your main expenditures
You will have three different types of expenditure after you retire. These are known as:
1. Survival expenses –- such as utility bills, house payments, groceries, debt payments (hopefully you won’t have any by then) and so on.
2. Desired spending –- an amount in addition to survival. Maybe some money left over for traveling, spoiling your grandchildren and special occasions.
3. Maintenance costs -- think about the maintenance expenses of your properties -- such as your home or car and take into consideration the condition they may be in. For example, will you need to buy new household appliances or renovate your home?
Also, don’t forget to take into account the likelihood of emergency expenses and how much you would need for these unexpected events.
Estimate life expectancy
Estimating how long you will live after retirement is important especially if you will be depending more on your savings rather than pensions. By estimating life expectancy, you can roughly work out how much money you should put away in savings. The easiest way to estimate life expectancy is to use figures that apply to your demographic profile (such as sex and income group).
However, you should also consider your personal health situation when making such estimates. Do you have any health conditions that make it likely for you to exceed or fall short of life expectancy for people that fit a similar demographic?
Note again, though, that pension funds are not as secure as they were in previous times. You should give a little leeway when calculating these benefits into your retirement income. Benefits, for example, might not keep up with the inflation rate to the same extent that they did in the past.
Preparing for a shortfall
When you have made your calculations and estimates, you can then either use a retirement calculator or go through the maths on your own. Will your estimated retirement income meet your projected retirement expenses?
If you discover a shortfall, you can take one or more of the following steps:
• Reduce your retirement budget by cutting back on unnecessary expenses.
• Delay your retirement age.
• Increase the amount you will save prior to retirement.
• Plan for some form of post-retirement supplemental income.
If you are healthy and able to work, you can continue to work part-time. There are many possibilities from online freelance work to backyard farming. Remember though, that you should be reasonable in considering what you will be able to handle at your retirement age.
A final word
Planning for retirement requires a careful overview of your budget and income, including factors like inflation and possible changes in the economy. Err on the side of caution and you will have a wonderful retirement!
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Everyone has hopes for their retirement. But don’t be unprepared for what the future may bring. MyRetirement is here to ensure that you have enough to enjoy a better life ahead. With monthly payouts and competitive yields, you can look forward to a retirement where you can live life on your own terms.
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