Have you ever imagined yourself waking up to the smell of freshly-brewed coffee and the aroma of a home-cooked meal in the crisp morning air and not having to worry about how your day would go with all the traffic, the sweltering heat, and the seemingly endless pile of work at the office?
Sure, we’re all looking forward to that day that we can finally break free from work that we dedicated almost thirty years of our lives to. But the harsh truth is not everyone wakes up with a cup of brewed coffee nor a home-cooked meal in the morning after their retirement. Recent statistics from DBS revealed that the number of retirees would significantly increase by 2030, and although 76% of Singaporeans say that their main long-term financial goal is to provide for their retirement, only 25% have implemented a financial plan for their retirement, while another 25%are still at the planning stage, and the rest (50%) do not have a concrete financial plan in place. Retirement planning in Singapore can also begin with educating yourself on the rules of the country and how to adhere to them. While most people live in an open country like Singapore, you should make sure that you stay within the bounds of law. Not doing so could have dire consequences down the road.
This means that the continuously increasing inflation rates and decrease in retirement support from the government because of a rapidly ageing population may have adverse effects in the future and if you are one among those who do not have a concrete retirement plan by this time, this article may come in handy for you to guide you in making an informed decision:
What is Retirement Planning?
A survey made by DBS also revealed that Singaporeans generally perceive planning for retirement as a highly intimidating task that requires a lot of money, effort, and time yet will only pay off sometime in the far future. So, what is retirement planning really? Is it really intimidating? Simply put, retirement planning is the process of identifying financial goals and planning the allocation of your finances, whether in terms of savings or revenues after you stop working. Having a good retirement plan will enable you to achieve financial independence to help you deal with medical, estate, and tax expenses as you age. 365credit.com.sg has excellent tips on how to retire ideally, simply check out their blog articles.
Why Retirement Planning is Important?
There are several reasons why retirement planning is very important. Today, we’ll list the Top 5 reasons why you should start planning for retirement now.
Inflation
The continuous rise in prices of commodities severely affects the rate of inflation worldwide. In the coming years, it is predicted that if inflation rises by 5% annually, then the cost of retirement will also increase as retirees will still need to buy groceries, medicines, and pay utility bills. A great retirement plan can account for the anticipated inflation in the future and cover other needed expenses like emergencies.
Medical Emergencies
Along with inflation, medical emergencies also need to be considered in retirement planning. No matter how healthy you think you are now, age will eventually catch up and your body will start to weaken. Having a retirement plan that can cover medical expenses related to your own health and wellness may seem very intimidating now, considering your family’s expenses, but when an accident or illness hits you sooner or later, you’ll realize that you should have planned earlier.
Filling your Nest
You know the old adage, “fill your nest before counting the eggs”. It rings true even in retirement planning – to think that you’ll have lots of money to save after work by just merely relying on pension is both funny and absurd. Given the current economic, social and health situation, we can anticipate exponential growths in prices of basic necessities and related expenses by the time you retire. For a good start, calculating the amount of money you will need for your retirement goals and accounting for the help you will get from current wealth is the first step in identifying how much you need to save monthly to start filling up your nest.
Plant now, Harvest later
Another good reason why retirement planning is important is that it enables you to ‘plant’ or generate multiple sources of revenues that you can harvest later. There are various ways to create streams of income, borrowing money for retirement for one can allow you to put your money in different forms of investments that guarantee a high yield like forex trading, cryptocurrency, stock market, and e-commerce. By doing so, you’ll not depend on a single income when you retire and you’ll just harvest what you have planted earlier and you can even afford your expensive dream vacation or go cruising all over the globe!
Your Family
Perhaps the greatest reason why you should start planning your retirement is the very reason you are working hard today – your family. Can you bear seeing them suffer when you retire? Or your children arguing in front of you whether you should live with them or not? Your children will eventually build their own families and will be primarily responsible for their own children. When you retire, you are most likely left on your own or to one of your children, and any additional expenses may be burdensome to ask for. A good retirement plan will allow you to retire comfortably without having to worry where you will live, because it will provide you with the financial freedom to choose how you will spend the rest of your lives.
In conclusion, we can say that the earlier one starts to plan and save for retirement – even if it is with a small amount – the higher the probability of being able to meet one’s basic needs when retirement arrives. Conversely, the later one starts planning and saving for retirement, the more difficult it is to maintain decent lifestyles during retirement specially during the frail days of retirement.
Now that we have rounded up the importance of retirement planning, the choice is yours to make.
