Retirement doesn’t always mean that you need to stop living a meaningful life. Many people retire young to live a life pursuing the biggest passions and interests. In fact, giving the cost of living and calculating the inflation rates in Singapore, you need to plan your retirement today to secure your future. While you start planning for your finances for the post-retirement period, make sure you keep these tips in mind.
1. Know Your Priorities
To make a sound money management decision, you need to know what you’re priorities are now. Ask yourself – Do you want to travel around the globe? Do you want to spend more time with your grandchildren? Do you want to volunteer in social and community events? Knowing the priorities can help you devise a plan for your budget and manage the savings and income to achieve it. You might even avoid overspending and put the money in the things that you want to accomplish in life during your retirement period.
2. Draw Up a Budget for Your Retirement
Don’t wait until your retirement to figure out the expenses. In Singapore, the cost of living is pretty high. You can’t expect the cost of expenses to decrease by the time you retire. The prices of payment of medical bills and free time costs to fill up will only go up in the future. Draw up a budget that includes normal living expenses, old age contingency costs, and emergency buffer to prepare for the post-retirement period.
3. Identify Possible Cuts in Your Spending
While you prepare the budget and list them, you might be able to identify the areas where you are spending more than you have expected. Recognizing the possible cuts in the budget can help you manage the finance well during your retirement.
4. Look for Ways to Increase Your Income
You don’t always have to focus only on cutting down the unnecessary expenses. Making a budget also gives you innovative ways to increase your income. In case, you haven’t retired yet, you might have enough time in the last few years before retirement. So, track down your personal or workplace pensions and boost your sources of income before retirement.
5. Review the Performance of Your Savings and Investments
It is always good to keep track of your savings during an emergency. When you retire, not all income sources start at the same time. So, create an income timeline that lays all the sources of income for your analyze and fill your savings gaps during retirement. Also, consider the estimated income taxes that will be owed in retirement.
List all the insurance policies that need to be reviewed. Categorize the policies that are related to property or casualty such as life, health, disability, etc. This way, you’ll know which of your life’s expenses will be covered in the future.
6. Think of Your Home as a Source of Income
Many retirees tend to sell their home which they had raised for their families and buy something smaller but spacious for themselves. In case, you own a home and represents a large proportion of your wealth, you might want to consider evaluating the house. Before you sell or rent your house, be sure that you have done the math and clearly understood what the incomes and expenses that might incur with it are.
7. Check the Maintenance Fees
Some costs will incur when you retire. Expenses such as regularly maintaining your car, house interior repair costs of your house, and even health checkups can incur during your retirement period. You need to have some extra hundreds of dollars to spend every day to meet the maintenance costs. Don’t forget to include these extra maintenance and healthcare costs in your retirement budget.
8. Be Tax Efficient with Withdrawals
During retirement, every penny counts while managing your finances. In fact, every retirement account might be taxed differently. Consult a financial professional to do your taxation planning. These professionals will help you throughout your tax planning, filing, and expecting returns processes.
9. Check Your Risk Appetite
You need to consider your risk appetite by taking a look at the risk of the investments you are willing to afford for investments you made while you were earning. In case, you think that you don’t have enough retirement savings, try to let go of some investments if you cannot generate enough from them. Focus on the investments with less risk that you can handle during your retirement and provide stable returns. You surely don’t want to face any financial risks during the time when you’ll have limited resources to live.
10. Diversify Your Investments
The key to growing your retirement funds is to diversify your investment in your portfolio. There are few instruments that you can invest in such as fixed income, stock, bonds, mutual funds, ETFs, REITs, CPF life, annuities, or just retirement plans offered by insurance companies. When you diversify your instruments, your portfolio will also be challenging to manage. Hire a financial professional to help manage your portfolio to help you take conscious financial decisions and free yourself from unnecessary stress.
Retirement is not the end of the road of savings or managing money. In fact, you need to consider these tips to make the best retirement plan for you. So choose the best pension option for you and your family and invest in instruments that can bring income and growth in your retirement years.
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