3 reasons why saving for retirement is an act of love

3 reasons why saving for retirement is an act of love

Remember the day you first laid your eyes on your little one? Whether in an ultrascan, or when you first held them… there’s that one moment your heart went to mush. That moment, you vowed to do everything you could to protect them and provide for their every need.

You researched on the best methods to bring up a well-adjusted child, the best enrichment classes to send them for… what about the best ways to save for your own retirement?

Saving for your own retirement is another act of love for your children – here are 3 reasons why:

Rank your retirement goals in order of priority

Reason 1: It frees your children to pursue their dreams

A decade or two ago, families were larger, and things were simpler. Kopi was less than S$0.70, and driving to Johor was a breeze. Growing old? That was always the responsibility of grown-up kids.

Today, families in Singapore are much smaller, and having more than two children isn't the norm. That means everything will be focused on the 1-2 kids who would be setting up their own families and homes by then.

It may sound counter-intuitive, but by saving for your own retirement, you will be freeing your children to chase their dreams. They’ll get to live more, and worry less about whether there’s enough for medical emergencies or your retirement dreams. By planning for your silver years, you promise your child that you’ll grow old with grace and dignity.

retirement plans

Reason 2: It provides you with a comfortable retirement

Most Singaporeans underestimate their retirement needs on two fronts:

  1. How much they need per month
  2. The impact of medical advances on how long we’re living

A recent study showed that a single, senior citizen (above the age of 65) in Singapore would need about S$1,379 a month to achieve a basic standard of retirement. That’s S$16,548 a year – in today’s dollars.

If you’re 27 years old today, inflation means that you’ll need S$42,045 a year by the time you reach 62 years old (calculated using Singapore’s long-term historical inflation rate). And assuming you reach the average life expectancy of 85, you could need more than S$1.3 million for a basic retirement.

The actual amount depends on your desired retirement lifestyle, cost of medicines, choice of hospitalisation care, and the number of aches your creaky bones feel.

When you get down to planning, pure savings alone will not be enough. But there are some ways of tackling these issues:

Why pure savings alone won’t be enough What you can do
Deposit interest rates are nearly zero
  • Earn higher deposit interest by signing up for accounts with higher interest rates
  • For example, Multiplier account, cashback bonus accounts
The best laid savings and investment plans can be derailed by unexpected illnesses and accidents
  • Get a health insurance plan that helps cover your hospitalization bills and/or treatment costs
  • Another type to consider is critical illness insurance, which pays out in the event of critical illnesses such as cancer
  • Consider insurance for your liabilities. For instance, protecting your mortgage loan ensures your family will always have a roof over their heads.
Inflation eats things up
  • Grow your wealth with investments and insurance

Consider how your savings can beat inflation

Reason 3: It allows you to make better money choices today

In making money choices for your family, we’ve found this principle super helpful: at the end of the day, your kids are more interested in spending time with you, than the cost of the activities you do together. Whether it’s learning to fly a kite, daddy-daughter tennis game dates, or an expensive ski-holiday, your kids will treasure these memories.

Life's little choices will be magnified in the years to come. So, if you’ve to choose between giving your kids all the latest gadgets and saving for your retirement… we’d say that insurance and investment comes first. The latest smartphone or gaming console can be deferred, but the emergency surgery may not be.

Conclusion: Planning for your own retirement = love

While most of us are underprepared at present, it's never too late to start planning. Even if the burden isn’t lifted 100%, a percentage of that can make a world of difference.

Which means that planning for your own retirement may be the biggest gift you can give yourself….and your children.

If you’d like someone to work through a plan with you today, let us know. After all, what are neighbours for?

Ready to start?

Speak to the Wealth Planning Manager today for a financial health check and how you can better plan your finances.

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Start planning for retirement by viewing your cashflow projection on DBS Plan & Invest tab in digibank. See your finances 10, 20 and even 40 years ahead to see what gaps and opportunities you need to work on.

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Disclaimers and Important Notice
This article is meant for information only and should not be relied upon as financial advice. Before making any decision to buy, sell or hold any investment or insurance product, you should seek advice from a financial adviser regarding its suitability.

Disclaimer for Investment and Life Insurance Products

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