Wednesday, October 28, 2009

What it takes to retire well?

Everyone wants to retire. But the truth, retirement planning is often overlooked and let chance to take place. So how do we ensure the joy and the fund would last?

3 pointers to share with you.

1. When should I start preparing for my retirement?

Right now. It's always good and easier to start early. In Singapore, most would prefer to retire at an average age 54, although the "national standard" is suggested at age 65 to counteract longevity risk, i.e. the risk of living too long. Some population experts has expected the recent expectancy would last another 30 - 40 years after retirement age!

The earlier you start, the more you could have.

2. How much money will I need when I retire?

This is not too difficult exercise. Attached worksheet (Disclaimers applies) would be a useful tools for you to find out your gap. A general rule of thumb in planning for retirement income is about 2/3 of your last drawn salary just before your targeted retirement age, in order to maintain your current standard of living. The big-ticket items such as your home mortgages and your children's tertiary education fees might be reduced or finished, you need to have enough income to fund daily household expenses and medical costs before you calculate how much is needed for traveling and pursuing hobbies.

Retiring well needs good planning.

3. Isn't CPF enough for me to retire on?

Think again. Will CPF be enough after which you have serviced your mortgage loan and pay your children's tertiary education? Whether is it enough also depends on your desired retirement lifestyle needs. Usually, the CPF LIFE would provide approximately 30% of your last take home salary before retirement.

For example, based on $100,000, the "CPF LIFE Income" option would gives you S$700 (estimates) a month for during your lifetime. This is an non-refundable plan provides the highest monthly payout than the other plans but does not leave anything for your beneficiaries. To be relevant, information is available @ &

Longevity risk is something that cannot be ignored too.

Knowing what you want for your expected retirement lifestyle needs, fortunately, is a choice. Engage a Certified Financial Planner who gives quality and adhere to a holistic approach. You won't want to find out that you have not enough when the time arrived.