Smart retirement planning Tips
Smart retirement planning Tips
If you are in your 50s, you have just reached your half-century with retirement looming. We can relate our life like a train journey and our lives to MRT line from Tuas to Paris Ris. If you have not started your retirement planning in Singapore, you are like only a few stops left to get your finances back on track before reaching the final stop for your retirement.
In this section, we list out content that can help you know more about retirement planning
- How much do we need to retire Singapore
- How retirement blueprint helps one of my clients retire 5 years earlier than expected
- How to plan for retirement in Singapore ( 3 things you can’t do without)
Here are 3 smart retirement planning tips at this stage of your lives.
#1 Risk vs Return
You are in a stage of life where you should be preserving what you have accumulated over the years through working so hard as time is never in your favour in any event you have big investment losses. But at the same time being too conservative will allow inflation to “eat” up your cash value.
Portfolio volatility might be something to look at as reducing your exposure to lower risk asset class from the 50s to 60s There might be a need to have some equities in your portfolio to hedge against the inflation.
Ensure the sustainable flow of retirement income coming from different stream allowing more cash flow.
#2 Finical report card
You need to be clear of your finance before you can start to plan and have a retirement blueprint for yourself. You have to take into account like your CPF life payout, your policies maturity payout, assets and of course any outstanding mortgage loans and liabilities. With that, we will need to determine our how much we need to retire by our desired retirement lifestyle.
“Knowing when your active income stop will allow you to calculate how much you need and the period you have to grow your money”
#3 Managing debts
With increasing rising interest rate environment, ones’ debt servicing period should not extend beyond your desired retirement age. Setting up emergency funds is also crucial.
#4 Estate planning
Doing up your CPF nomination, will, LPA or even AMD so your assets can be distributed to your wishes according to your wishes. LPA and AMD are important so that in the event of mental incapacity, both your financial and non-financial affairs and be entrusted to someone.
#5 Unlocking the value of your home during Retirement
Especially for people who are asset rich, cash poor.
You might no longer need such a large space as you used to be as your kids have grown up and moved out to start their own family. Considering to downsizing to a smaller house as the profit from the sale of the flat can add on to your retirement pot.
Another option is to sublet your rooms if you do not want to downgrade you home. One main advantage will be they are enjoying the rental income as part of your retirement income and enjoy the potential appreciation of the property as well.
For HDB owners, you might want to consider the scheme like Lease buyback scheme to continue to live there but at the same time unlocking funds for your retirement.
Studies found that significant sums would be cashed out if people downgrade to smaller units during their retirement. These amounts can then be placed in an annuity for monthly payouts during their retirement.
Downsizing seems to be the best financial option among the 3 choices at most times. After all, most retirees would not need such a big flat during their retirement.
This option is preferred by some people as it can help to reduce their debt if they are still repaying their mortgage. You can unlock cash out for their retirement, clear your debt and use the proceed to buy a smaller home and be debt-free
If you wish to find out more on how to plan for retirement in Singapore, I’m more than happy to have a conversation with you! Simply fill out the form below: