retirement Archives | Page 3 of 9

Open These 3 Bank Accounts If You Have A Family

What is wrong with having one bank account for the entire family? Nothing! However, financial stability may be reaped through spreading your eggs in several baskets. Setting aside enough cash to maintain one account is already a tough task, especially if you are barely making ends meet.

If you can afford to keep your money in separate accounts, the management of your finances will be better. Firstly, you will be able to track expenses related to your specific financial goal. Secondly, you will get a clearer picture of how much you actually have. Lastly, separate accounts enable you to stay within a certain budget.

ACCOUNT #1: HOUSEHOLD FUND

The purpose of the “household checking account” is to satisfy your monthly bills as well as your daily and weekly expenses. A checking account enables you to have an ATM or Debit Card, which you can easily use when you are making a transaction. Put at least 20% of your income in this fund. Do not go beyond that allotted range. It is your job to ensure that your weekly meal plans or expenses are within your budget.

You may use this fund for your weekly trips to the grocery or for an evening birthday celebration in a restaurant nearby. You can charge your utility bills and phone bills to this account too.

ACCOUNT #2: EMERGENCY FUND

People see the value of setting up an emergency account now more than ever. Large, unforeseen events such as this pandemic can take a toll on your wallet. Hospitalization costs can cost you a huge chunk of money. How can you survive without having access to emergency fund? Is debt a viable option?

An emergency fund is recommended to last you for about 6 months. Fill this up before any other savings account because you do not want to be caught unprepared in an event of crisis. It is a good idea to set an automated scheme where a portion of your income will automatically go there. You may also employ another banking institution for this.

ACCOUNT #3: RETIREMENT FUND

Apart from your CPF, you may put some of your savings to your retirement fund. A golden rule of thumb is having a fund that is eight times your current annual income. To get here, you will allot money in the course of several years. Do not touch this account until you retire.

Unlike the emergency fund, growth takes precedence over easy access here. Feel free to explore other options apart from having a regular savings account. You may try growing your retirement fund in the stock market or long-term time deposits. The goal is to have enough dividends to last you during retirement.

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Consider opening one or more of these bank accounts. It is better to scatter your money to secure your finances. If one of your ATM or debit cards has been stolen or skimmed, you have other accounts to back you up. Separate accounts will cushion the blow of unfortunate events such as being scammed or being unemployed.

Source: 1

4 Money Moves To Take On Your 20s

On your 20s, you will encounter a myriad of firsts. From earning your first full-time job to surviving your first failure, your early experiences shape who you become in the future. Your major accomplishments and significant failures are your best teachers.

You will become more independent and responsible as time passed. You will begin to live on your own, to solve your own problems, and to budget your own finances. Hence, it is important to take the following money moves as early as now.

MONEY MOVES #1: MAKING QUALITY PURCHASES

Living in the modern generation where everything is handed with significant convenience, you can buy anything you want with a few taps or clicks. It is tempting to bite into every online promotions or group deals available. However, you need to survive these temptations to make good decisions.

Identify your financial goals and work towards it. You may succumb to your wants from time to time, but you are the only one who can recognize what is important. Invest on things that have a greater value in the future.

MONEY MOVES #2: CREATING A BUDGET

As a young adult, it may be your first time to dissociate yourself financially from your parents. Your independence comes with the responsibility to understand what comes in and what comes out from your pockets. You can either go the old-school route through journalling or the digital route through Excel or budgeting tools. Do whichever feels more comfortable to you. Leave some money for your unexpected and recreational expenses.

What if you are romantically involved with someone? With love and care comes the acts of service. You may choose to spend money for your beloved and that will open another expense category. It is up to you to allocate how much you want for your dating budget.

MONEY MOVES #3: SAVING AND INVESTING

Time is of the essence. There is no perfect time to save and invest than right now. Let your budget direct you to how much you can save each month. It is recommended to save at least one-third of your income. This way, you can cushion unexpected expenses brought by sudden life changes. Do not get me started about layoffs and home repairs!

As for investing, you may consider maximizing your contributions to your CPF account. You will reap what you sow.

MONEY MOVES #4: OPEN TWO BANK ACCOUNTS

As a responsible young adult, you may open two bank accounts. One account can handle your operations and the other can handle your reserves. By operations, I am referring to the money you will spend for your everyday needs. Money from your operational account can be used to pay for your bills and daily purchases.

While, the reserve account can be used to secure your savings. It is the account that can help you reach your financial goals.

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BOTTOMLINE

When everything is said and done, you want to take advantage of the time you have now. Make smart choices as you will reap its benefits later in life. However, do not forget to live a little. You work for a reason – to a live a pleasant life. Do not forget to reward yourself for all the hard-work you have been

Sources: 1 & 2

Delayed Retirement Age And Other Changes In Singapore Retirement

Despite the economic headwinds, the retirement age will begin to shoot up in 2022. Manpower Minister Josephine Teo highlighted they “did not arrive at this date lightly even though towards the later part of our deliberations, it was clear to us that the economic conditions have changed quite considerably.” All that is left for us to do is to adapt to the recent changes in the retirement age and CPF contributions.

INCREASED MOM RETIREMENT AGE

Foresee a gradual increase in Ministry of Manpower’s retirement age. Currently, the official retirement age is 62 years old. This number will increase to 63 years old in 2022 and to 65 years old in 2030. Do you think a higher retirement age is desirable?

Nonetheless, Prime Minister Lee Hsien Loong greatly emphasized that there is no change to the CPF payout ages and withdrawal. You may withdraw money from your CPF RA upon reaching 55 years old and start receiving CPF LIFE payouts from age 65. All these were discussed during the National Day Rally.

ALTERED EMPLOYMENT PROCESS

Possibly one of the most affected with the changes in the retirement and re-employment age is your employer. It is completely legitimate to work up to the MOM re-employment age. Your employer cannot deny you that.

At the moment, the re-employment age is 67. It will increase to 68 years old by 2022 and eventually become 70 years old by 2030. It is highly encourage that employers equip these employees with necessary training and skills to help them tackle the contemporary positions.

In light of the aging workforce, the Tripartite Workgroup on Older Workers made several other suggestions to restructure the work environment in Singapore.

RAISED CPF CONTRIBUTION RATES

Aside from the changes in retirement and re-employment age, the CPF contributions for workers beyond age 55 will be raised. This will be felt from January 1, 2021 onwards. The extra CPF contributions will go straight to your CPF Special Account.

When the CPF contributions for the 55-60 years old age group increases by 2021, the allocation for your CPF (SA) will jump from 3.5% to 5.5%. The rest will remain the same.

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May these guidelines and significant changes help you decide for a better future ahead!

Sources: 1 & 2

Countdown To Retirement: The Final 5 Years

One of the most significant transitions in your life is about to begin. In a blink of an eye, you have reached your 60s. Retirement may not be a pressing concern for most of your working life, but it is surely happening soon.

The sense of urgency stimulates your awareness. You will begin to pay close attention to insurance commercials and to the company’s retirement benefits. You will go through your CPF savings and analyze whether it is enough. How about your investments? Is your money invested on an aggressive portfolio or not? More importantly, do you have a last will and testament?

Many of us consider retirement as a vague and seemingly distant concept rather than something happening in the near future. With this mindset, you may not be able to prepare well it. Use the last five years to examine your financial situation. Make the appropriate moves to substantially improve your life during retirement.

CLOCK: FIVE YEARS BEFORE RETIREMENT

There is no doubt in the saying: “the first cut is the deepest”. You can call it a rude awakening, but this initial step will dictate your future actions. Examine your overall financial situation.

Be honest with yourself. How much have you saved up while you were working? Do you have other streams of income that can generate enough cash to cover your fixed expenses in retirement? How much can your CPF cover?

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I understand the brewing worries tied up to these numbers. It is time to face your fears! Know that there is still time to change your investment strategies, to eliminate unnecessary expenses, and to re-frame your retirement expectations. Seek the help of a qualified financial adviser who specializes in retirement planning. He or she can sort out all your concerns including the making of you last will and testament.

CLOCK: THREE YEARS BEFORE RETIREMENT

While work can be stressful, it can also give a sense of accomplishment. What will happen once it is taken from you?

Aside from organizing your financial plans during retirement, you must determine how you will occupy your time. Many of us forget this aspect of aging. It is important to contemplate on how you will occupy yourself in retirement. Consider the Psychological or emotional impact of not having a steady job or not having a routinely “purpose”. Your feelings may be similar to undergoing loss.

Yesterday, my grandfather told us that he is planning to travel overseas. He wants to dedicate this time of solitude on searching for peace and happiness. This may sound cliché to some, but he never had the time to travel on his own. You may want to spend your retirement touring the world. Like my grandfather, consider what will bring you happiness.

Do not be afraid to explore hobbies or join social group within your neighborhood. These things will keep engaged once you are retired.

CLOCK: A YEAR BEFORE RETIREMENT

During this time, your primary goal is to cut down your debts and spending. This is where your retirement budget comes in handy!

You will probably experience a considerable drop in income once your paychecks go away. Following this logic, your retirement expenses should not necessarily mirror your current expenses. You need to adjust your lifestyle following a monthly budget that will include costs like healthcare and leisure activities. Know how much you can realistically afford with the help of your financial adviser.

Lastly, you must take a look at your investment portfolio. If your savings appear to deliver the income you need in retirement, some experts recommend to pull back on your stocks. Use this money to invest on short-term investments or other conservative asset classes. I am not saying that you should suddenly become a risk-averse investor. Instead, you need to make more calculated moves. Growing your portfolio over the next couple of decades entails exposure to stocks.

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Ultimately, preparing for retirement will support the remaining years of your life.

Source: NY TIMES

The Risky Assumptions When Planning Your Retirement

Have you ever wondered how much money do we need in our silver years to be able to afford our desired lifestyles? Most adults would be relying solely on their CPF funds to finance their retirement. Asset-rich but cash poor retirees could be thinking of renting their HDB flats out to supplement their retirement funds. There are indeed several ways to build up our retirement income. However, we must be mindful of avoiding some of the dangerous assumptions when planning for our retirement.

Oversight To Account For Inflation

Inflation can have a big impact on retirees even if they have been historically low. According to Monetary Authority of Singapore, Singapore’s historical core inflation averaged an annual 1.7% since 1990. While 1.7% per annum may not appear alarming, it will compound to a staggering 66% over a span of 30 years! If you are a retiree receiving a fixed amount of stipend, the value of your money will decrease with each passing year. Hence, your retirement funds will be eroded by inflation if they are not carefully managed. Unfortunately, inflation does not stop just because you have stopped working. Therefore, it becomes important that your investment grow at rates that are at least equal or better than the rate of inflation to protect the value of your retirement funds. How do we then continue to enjoy the taste of life at our retirement years without feeling the pinch of inflation, especially when we have stopped working and receiving salaries?

Reliance on Rental Income From Property

Some adults plan to rely on rental income from investment properties to supplement their retirement funds. However, with the recent cooling measures announced in July 2018, investing in a second residential property is increasingly out of reach for most working adults.

Some retirees might be thinking of renting out the vacant rooms in their HDB flat especially as their children gradually might have left the home that they grew up in. However, this option comes with its own set of inconveniences. It could take a couple of months before a tenant can be found. There is also the administrative hassle of providing tenant’s details to HDB for record-keeping. Of course, all these pale in comparison to stories of horror tenants who damage the HDB flat or are tardy in their rental payments. In such circumstances, renting out their HDB flats may not be the best option to supplement your retirement income.

CPF LIFE Alone Might Be Insufficient

For a retiree who sets aside the maximum Enhanced Retirement Sum (S$271,500), the monthly payout from CPF LIFE is expected to be about $2,000 per month. If this amount is sufficient to pay for your daily expenses during your retirement, then this is definitely a good safety net for you to rely upon. However, it is not true that all Singaporeans and Singapore Permanent Residents can depend on their CPF funds to finance their retirement entirely. In fact, it is widely reported that almost 4 in 10 CPF Accounts do not even have enough funds to meet the Basic Retirement Sum. For the group of retirees who do not generate enough funds from their CPF LIFE payouts, it is necessary to generate extra income from alternative sources such as investments.

Future-proof Your Retirement Funds With The AIA Retirement Saver (III)

Given that young professionals lead hectic lifestyles, they may not have the time and energy to plan for their eventual retirement. Yet, planning ahead to future proof our retirement is essential and the AIA Retirement Saver (III) is one of the ways to do that. The AIA Retirement Saver (III) is a simple and hassle-free retirement solution which provides a guaranteed stream of retirement income for 15 years. Your hard-earned savings is safely secured since the capital is guaranteed; you will get back every dollar that you contributed at your desired retirement age. On top of that, you will receive potential monthly dividends which could help to cushion the impact of inflation. Premium payment duration is also flexible; single lump sum, 5 years, 10 years or simply pay till your desired retirement age – 55, 60, 65 or 70. It is easy to get started because no medical underwriting and check-up is required. In essence, the AIA Retirement Saver (III) is truly an easy and stress-free solution tailored to any individual retirement plan.

Conquer The Uncertainty & Plan For Your Desired Retirement

With the AIA Retirement Saver (III) solution, individuals can cast aside their retirement worries as their savings will be in the good hands of professionals. The AIA Retirement Saver (III) can be an additional pillar to supplement your retirement funds. As it can be tailored to maintain the purchasing power of your retirement funds, you can be assured that you will still be able to enjoy your desired lifestyle during your twilight years. Don’t leave your retirement to uncertainty. You can certainly plan for the uncertainty by taking action now.

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