Retirement Planning Tips You Should Know

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We will all reach that point in our life when we can just take it easy and tear away completely from the daily grind. Finally, gone are the days for us to go to our 9 to 5 job, and we can just breeze through our days, sip our coffee slowly, read the paper as long as we want, and perhaps even travel occasionally. Ah, the simple joys that retirement offers!

But then, unless you play your numbers right and prepare well before this day, you may be up for a rather unpleasant surprise when you retire. You see, retirement means there will be a limited amount of money coming in since you are no longer counting on your monthly income. There is no more overtime pay or what-nots that come with being employed. This is why you need to be really sure about the amount you have left in the bank once you get to this point in your life.

If you are a middle-aged employee who has not been too disciplined with how you handle your money, then you may be taking out loans left and right from a bank or a money lender just to cover your daily expenses. Without an emergency fund, there is nowhere for you to take some money out to settle an urgent expense. Although Singaporeans are covered by MediShield and MediSave, these two might not be enough to cover the total amount. Thus, your only lifeline at this point may be a loan. But at the same time, you are bound to an even tougher financial future if you have plenty of loans because there are debts you need to pay for who knows how long.

This is why retirement planning must be your game plan even if you are not even reaching this stage in the next 5 years or so. Even if you are far from retirement, it makes perfect sense to prepare for this day in your life, so you can count yourself as one of those lucky ones who just take it easy and enjoy life every single day. After all, planning for your retirement is a long-term activity, and you have to keep yourself in line when it comes to your spending and saving habits to get things right in terms of your finances.

Basically, you will need an effective strategy coupled with a strong sense of discipline when you plan for your retirement. But do not worry – this whole thing is not at all tedious or complicated. Our tips can guide you on how to get started, so you do not have to find yourself confused or overwhelmed about retirement planning.

1. Make time work for you

If you are aware of the magic that compounding does, then you need to harness the power of time and make the most out of it. The younger you find employment, the sooner you can grow your savings and investment. It is a matter of being aware of what needs to be done at a young age, and be consistent with your actions. Invest as early in life as possible and increase your wealth beginning at your 20s. Then, you will be able to have a powerful hedge against the fluctuations in the economy.

Meanwhile, there are some people who tend to plan for their retirement later on in their life. The thought of saving for their retirement probably only enters their mind at age 50 or even later. But this is a terrible mistake to make since you are pressed for time at this point. You will have to work harder to grow your money through your investment or other means, and it may be one very challenging task.

2. Consider growing your investments – but be very careful at the same time

So you probably want to speed up the growth of your investment, yet you are not even aware of how to get there. The worst you can do is to try an investment option without being even packed with essential knowledge on how it works. This is why people tend to lose their money because they become too aggressive in the investment field, yet they are unaware of what is most profitable for them.

Be logical with your decisions. If you have a CPF Special Account that is making money at 5 percent per annum, then you should think more about investing in high-yield options. There is pretty much less risk with your CPF Special Account, so you can count on growing it constantly over time. But if you pair it off with a very risky investment option, then you may just lose instead of gain along the way.

In case you are thinking about buying stocks, yet you are not even abreast with the latest news regarding the performance of these stocks, then it only spells out a major disaster for you. You may want to go for an index fund investment that can gain money over time. This spares you from having to choose the “best” stocks while timing the stock market as you do so.

The idea is to go for a safer investment option that will gain you some money slowly, but steadily. There are risk-free choices out there with higher interest, such as the CPF Special account. You can consider putting more of your money here and letting it grow without adverse risks as time goes by.

3. Get the protection you need

You can never tell what the future may bring. This is why you need to have ample protection against uncertainties in life, including health and accidents. You need insurance policies with ample coverage for your needs such as medical treatment, hospitalisation, and similar things. You may also want to get yourself home insurance and even term insurance for optimum security. In you can afford the rather higher premiums, there are health insurance policies with critical illness plans included that should hedge you and also your family members when there is a significant amount of money to be paid for medical expenses. You do not want this to put a strain to your already improving retirement plan.

4. Buy a home that you can afford

We all have our dream homes. But then, we need to be sure that we can afford it, otherwise, the cost of paying it off for years may just ruin our retirement funds. You may take out a loan to buy a home, but then the interest rate that is placed on top of it makes payment a little tougher. The longer the tenure, the smaller the monthly payment. But of course, the longer will you also have to allot a chunk of your income for your loan repayment.

Consider purchasing a home that you believe you can afford by taking a close look at your income and other expenses. You should never blow up your budget for the sake of buying a dream home that is beyond what you can afford. Be practical with your decisions and this can help your retirement fund grow exponentially over time.

5. Include your loved ones in the retirement planning

If you have a partner, then be sure to include him or her with the retirement planning process. You need to make sure everyone is on board with the plan, so you can work together towards turning it into reality. You can also get the inspiration and support from your loved ones since you have to admit that retirement planning can be a tough thing to do when you are alone. What’s more, you may even get some brilliant suggestions that you have never though of before, so things can get lighter along the way.

Retirement planning is not at all that hard – with a little help from these tips we have presented to you today. So, enjoy every moment of your life and look forward to a comfortable retirement by managing your finances as early as now.