Retirement Planning

Picture showing the process of financial planning

The financial planninng process will not be complete without the need for retirement planning. Retirement planning captures the essence of financial planning. Investing to accumulate enough resources for a comfortable retirement is important but dealing with the health and insurance issues are equally important.

Most people will hope to stop working at some stage in their life and take things a little easier. However, to be able to stop working and give up a regular income is a very big step. Most will not only want to maintain the lifestyle they are accustomed to, but also to do the things that they did not have the time to do in their younger days.

The average life span at birth for a Singaporean is 74 for men and 79 for women. If the life expectancy when one at age 60 is 18.4 years for men and 21.6 years for women, one has to accumulate enuogh assets to last for this period of time if he retires at 60. More resources will be required if he wants to retire sooner. With better health and living conditions, significant improvements in life expectancy can be expected. Do you have enough to see through your twilight years? The biggest mistake that one can make is to delay making preparations for retirement. Some may think that with a successful career and hard work for some forty years, they should be able to accumulate enough savings in their CPF account and other assets to retire in comfort for the rest of their lives. Some of these people may be right. However, one should not be complacent and take chances with their retirement program. Nobody plans to fail in his quest for blissful retirement but many fail to plan.

Retirement planning is a very important part of the financial planning process. For a young graduate who is in his early twenties, he can expect to live for another fifty to sixty years, out of which he will be able to work fo rthirty-five to forty years and end up spending fifteen to twenty years in retirement. It is rather difficult to feel the urgency to prepare for an event that will take place only thirty to forty years later. There are always more important and immediate financial concerns like buying a home or paying for college costs. Add the fact that there are many uncertainties like inflation, the amount of assets to retire with, changes in the CPF system, it is small wonder that many are not inclined to start planning.

The inertia is difficult to overcome but it is precisely because of this uncertainty that one has to place retirement planning as top priority. To cope with this uncertainty, one must plan for possible outcomes and continuously moinitor progress and if the need arises, to modify plans as personal circumstance changes.