Yes, even if you only just started working recently. Just like people plan for their educational and career goals, retirement is something worth spending time on, even though it may seem like a daunting task at the moment. It can be done in 3 simple steps, using some online tools. Do read my earlier post for tips.
Why plan for retirement now?
There are five good reasons for you to get started as as soon as possible.
1. The earlier you start to save, the longer time you have to grow your nest
This is common sense. The earlier you know how much you need to retire, the earlier you can start setting aside money and maybe even investing for the future to grow your nest towards your retirement goals.
2. Having clear goals motivate you to work towards them
It is always beneficial to have a clear picture of what you are working towards. With the right goal-settings, it will motivate you forward to work harder towards achieving more in life.
Often, you find that highly successful people have a list of clear goals which they work towards. Planning for retirement can be one of these.
3. You never know when life will throw you a curveball
Touchwood, but you will never know when life might throw you a curveball. There could be a sudden lost of income due to retrenchment which may be no fault of your own, but due to global economic situations; one could suddenly be diagnoised with a chronic illness. What’s next?
It definitely helps if you already planned for your retirement earlier. You can then adjust your goals accordingly, reassessing your current situations and move it towards something more realistic.
4. Cut down on unnecessary spending in the current
When you have a rough idea of how much you need in the future to sustain your desired retirement lifestyle, you will be better able to control your current spending with the concept of delayed gratification.
In other words, slog now, enjoy later.
5. Know how to manage your CPF and the options available
Surprisingly, I find many Singaporeans do not factor in CPF and other retirement options made available by the government in their retirement plans. Make use of what is there!
Be well-informed of various initiatives and how they may benefit you. Some schemes may not seem relevant to you at the moment, but life situations change and it is always good to know more.
For instance, there is the CPF Life initiative whereby there are two options catering to different group of people:
- LIFE Standard Plan – you receive a higher monthly payout but a lower bequest (money left to your beneficiaries when you pass on).
- LIFE Basic Plan – you receive a lower monthly payout, but a higher bequest.
It hinges on whether you would like to get more yourself or to leave more of your CPF for your beneficiaries when you pass on. More details.
Also, for conservative individuals who prefer less risky investments, consider topping up your CPF for higher, stable returns. More details.
CPF Interest Rates (01 January 2016 to 31 March 2016)
(reviewed quarterly)
Ordinary Account
Up to 3.50% p.a.
Special & Medisave Accounts
Up to 5.00% p.a.
CPF Interest Rate (01 January 2016 to 31 December 2016)
(reviewed yearly)
Retirement Account
Up to 5.00% p.a.
Additionally, you may want to learn more about unlocking the value of your home as an asset, by either exploring subletting rooms or participate in the HDB’s Lease Buyback Scheme.
So that’s it! Five simple reasons to start planning for your retirement now. If you’re looking for a great place to start relaxing and retiring.)
