Rock your golden years
Everyone wants to enjoy their retirement. And with good financial planning, you can find fulfilment by pursuing all that you want. Here are some ideas to help you come up tops during retirement.
With the desired age of retirement hovering at 61 years old and only 19% of Singaporeans being aware of how much it costs to stop working at that age, it is more pressing than ever to learn how to build up a steady flow of funds1.
At present, Singaporeans live to an average of 80.6 years for men and 85.1 years for women2. While this means you have more time to make the most of your retirement, it also means that your funds need to last longer.
Having the foresight to understand how your financial needs will vary across your retirement years helps you make wiser decisions in building your funds.
Here’s a ‘playlist’ reflecting the pace across the 3 stages of retirement:
You’re in your mid-60s and just beginning to embrace retirement. The kids are doing well, your mortgage is paid up, and your alarm clock is set permanently to ‘off’. This is your time to do what you’ve always wanted – see the world, learn a new skill, indulge in a hobby.
Since you’re not drawing a regular salary any more, you’ll be relying on other sources of income. So it’s essential to make sure you have enough to continue living it up. If you’d like to estimate the income you’ll need in retirement, tap on DBS FutureMe to determine your retirement lifestyle and start planning today.
- Maintain a steady stream of income and keep your investments growing
Dividends and CPF retirement payouts give you a regular income stream. By relying on these, you can keep your equities portfolio growing, to build greater security for the years ahead. Meanwhile, your time deposits, bonds and other insurance plans that would have matured can supplement your income.
- Consider tapping on your Supplementary Retirement Scheme (SRS) funds
This could give you another steady stream of income to help cover your living and medical expenses which your insurance plans or Medisave don’t. Withdraw smaller amounts annually, and you may not be even be taxed.
- Look into a Multi-Currency Term Loan on your investments
If you need to release funds from your fixed assets, a Multi-Currency Term Loan on your investment holdings with us could unlock some spare cash. You could then use this to cover living expenses, or reinvest it to receive another stream of income.
- Plan your legacy
A Universal Life policy is one way to build, preserve and share your wealth while giving you more flexibility to spend throughout your retirement.
Here’s an illustration of how Universal Life can help you:
As these policies are highly customised, a financial planner can best advise you on setting up one that meets your needs.
It’s about a decade into your retirement and you are comfortably enjoying your 70s. You’re happy to take your foot off the pedal, and cruise a little... travel less, play less golf... but now you have more quality time with family and friends. Your needs are a little simpler, although no less comfortable. Some concerns, like healthcare, might come up. Fortunately, you have a little more flexibility with your assets.
- Review your portfolio, examine its weightage
It’s good to do this periodically. Maintain a portfolio of dividend-yielding investments like bonds, unit trusts and stocks because you want to generate a stable cash flow. Also, if longer-term investments are not so important to you now, perhaps it’s time to rebalance your portfolio. The capital you free up could be reinvested for the shorter term to bring steady returns.
- Consider a home that’s easier to upkeep
With a smaller home, there’s less to keep clean. You may also want to move closer to your children. The cash you unlock can be used to cover your expenses or for further investment.
In your 80s, you are learning to treasure what truly matters in life. The grandkids are growing up fast, and by now it’s mostly about spending time with family and friends. Your ultimate contentment now comes from having your family around you.
They support you by ensuring you get help with the things you used to do around the house, including laundry and general cleaning. And it’s good to know there’s someone to accompany you to doctor’s appointments and remind you about your medication, help that you’ve graciously come to accept.
Inflation, however, is not your friend. But planning well has given you enough for what you want to do.
- Tap on maturing assets, consider fixed deposits
At this stage, you don’t want to take on any more market risks. Investing in fixed deposits could help you beat inflation and get more stable returns. Your maturing life insurance, endowment or other insurance plans could now give you a steady source of income.
You’ve heard this often, and it’s true: The earlier you start planning and investing, the better. Starting at 35 or even 25 gives you 30 to 40 years to grow your investments and take advantage of the value of compounding interest. At the same time, you’re more likely to ride out market volatility.
But don’t fret if you haven’t started – it is never too late. There are always solutions to allocate your finances across different investment streams so that you can get closer to the amount you desire to retire with.
1. DBS-Manulife Retirement Wellness Study Nov 2015 of 1,008 Singaporeans
2. Department of Statistics Singapore
Singapore dollar deposits of non-bank depositors and monies and deposits denominated in Singapore dollars under the Supplementary Retirement Scheme are insured by the Singapore Deposit Insurance Corporation, for up to S$75,000 in aggregate per depositor per Scheme member by law. Monies and deposits denominated in Singapore dollars under the CPF Investment Scheme and CPF Retirement Sum Scheme are aggregated and separately insured up to S$75,000 for each depositor per Scheme member. Foreign currency deposits, dual currency investments, structured deposits and other investment products are not insured.