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It is the festive season and for some, bonus time.
While some of us may be planning to indulge ourselves and our loved ones with gifts and overseas holidays, why not give yourself a gift that will last you a lifetime – a retirement plan.
Planning well for your retirement is the best gift you can give yourself and your loved ones. You can be assured of a financially secure retirement and also free your loved ones from the financial burden of providing for you.
Here are the three simple steps to build your own retirement plan:
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| 1) Set your retirement goals |
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Ask yourself three questions:- (i) At what age do you wish to retire? (ii) What is the monthly income you need during retirement? (iii) How many years do you want this monthly payout to last? From here, work out what is the level of savings you need to achieve by the time you reach your desired retirement age.
For example, you are now age 35 earning $2,500 a month. You wish to retire at age 62 with a monthly payout of $2 ,000 for 20 years. Simplistically speaking, you need to accumulate around $480,000 in today’s dollars by the time you retire. However, do bear in mind this figure does not factor in inflation and investment returns during retirement.
For a quick estimate of the lump sum savings you need at age 62 factoring in inflation rate and returns on investment, use the Retirement Estimator at the CPF website now. |
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| 2) Make a check list of your current financial position |
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Make a list of all your assets including your CPF savings in the Ordinary and Special savings, the cash savings in your bank accounts, tangible assets owned and your investments. Do the same for your liabilities and list down any outstanding loan you might have such as mortgage loan, renovation loan, car loan or any bank overdraft. Compare your assets and liabilities to arrive at the value of your net assets. Next, establish your savings pattern. List down your total expenses and subtract them from your income to see how much you are saving. Your net asset value and your saving pattern would give you a good indication of your financial position. |
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| 3) Determine if your retirement goals are achievable |
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Project the value of your financial assets to see if you can accumulate enough by the time you reach your desired retirement age. If the outcome is not favourable, review your retirement goals or improve your financial position. You can choose to retire later or retire with less monthly income. You can also cut down on some expenditure so as to save more or invest more of your savings for long term gains.
If you are still unclear of how to do your own retirement plan, approach a professional financial advisor. Alternatively, use the CPF Retirement Calculator at the CPF website. All it takes is less than 30 minutes for you to complete your own assessment. Be sure to get ready the details of your financial position such as your bank statements, information on your existing investments, etc. The more details you key in, the more accurate the Calculator will be in helping you to project whether you are on track to meet your retirement goals.
Once you have done your retirement plan, review it periodically. A secure retirement does not happen by chance nor is it a given after years of working hard. It is something you have to work at to make it happen. So, do up your retirement plan today and give yourself the gift of a lifetime!
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When Mrs Allison Lau left her job as a financial analyst three years ago to take care of her two young children full time, the family adjusted well financially despite the loss of her income. Unlike most couples in Singapore, the Laus are debt-free. “We have always been debt-averse when making monetary decisions,” says Mrs Lau. The couple leads a modest lifestyle with no maid and only dines in restaurants once a week. Mr and Mrs Lau, who are in their forties, believe that their humble background has conditioned them to live simply. Both came from lower income families and have learnt since young to differentiate between needs and wants.
They are also on track for their retirement planning. To begin with, the couple put aside at least 25% of the household income as savings. Their 5-room flat is fully paid for using their CPF savings accumulated through the years. They grow their savings through investing in equities and fixed deposits. The couple also protect the family with insurance cover.
Mrs Lau believes that it is important to lead by example and teach her children to be financially prudent as such values will stay with them for life. In fact, she herself has learnt from her father’s financial prudence. She says, "Despite having limited education and income, my father managed to provide me and my brothers a decent lifestyle with no debt other than the HDB loan for his 3-room flat. He is my role model!” |
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Wish to sell your discounted SingTel shares but do not have a trading account? Just bring your NRIC to any SingPost before 31 March 2007. Once you complete a form, your shares will be sold within the next four trading days by SingPost's partner, Phillip Securities. A transaction fee of $17.95 (before SGX fees and GST) is payable to SingPost. Sale proceeds will be credited into your CPF Ordinary Account. You will only be able to withdraw the amount if you meet the CPF withdrawal conditions. From 1 April 2007, you can only sell your discounted SingTel shares though a trading account with any of the Singapore Exchange brokerage firms.
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Need to check your CPF account balances regularly but do not have ready access to the Internet? View and print your latest account balance with your CPF Phone PIN at any of the AXS stations located islandwide. Don't have a Phone PIN? Just use your SingPass to get a CPF Phone PIN instantly at the CPF website. |
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