Not sure how to start planning for retirement? This step-by-step guide will help you kick-start your preparations with ease.

Retirement planning is a crucial aspect of financial planning that often gets overlooked due to its far-off nature. Given that the life expectancy at birth for Singapore residents was 83 years in 2022¹, the number of post-retirement years that need to be planned for is significant. Couple that with high cost of living², and the need for effective retirement planning becomes essential. That's why it's important to start saving for retirement as early as possible. By doing so, you'll have a better chance of accumulating the amount of funds needed and secure your financial future.

Charting a retirement plan
 

1. Evaluate your financial status

A solid grasp of your financial standing lays the groundwork for a well-structured and realistic retirement plan. This entails calculating your income, expenses, assets, and liabilities. Evaluate your monthly expenditures to identify potential areas where you can save.

2. Set clear goals
Defining your retirement goals is crucial to developing a successful retirement plan. Take a moment to imagine the lifestyle you desire during your retirement years. Consider important expenses such as housing, daily expenses, health care insurance, and leisure activities such as travel. By having clear goals, you can make informed financial decisions and ensure you are well-prepared. Enlisting the expertise of a Financial Planner can assist you in establishing clear and attainable retirement goals, as well as devising an actionable plan to achieve these objectives.

3. Build a diverse investment portfolio
Investing can play a pivotal role in building and safeguarding your retirement fund. But remember, investing isn’t just about quick wins—it’s a long-term game where steady progress often yields better results. Therefore, embarking on your investment journey earlier will afford you more time to build your funds. Moreover, consistency can help balance the inevitable fluctuations that come with market volatility.

Your risk appetite should also be a significant factor in your investment decisions. A well-balanced portfolio can help mitigate risks while optimising returns. Consult your Financial Planner to explore investment avenues that align with your risk appetite, offering stability and potential growth.

4. Optimise CPF contributions and benefits
The Central Provident Fund (CPF) plays a pivotal role in retirement planning for Singaporeans and PRs working in Singapore, ensuring individuals can secure a financially stable future as they approach their retirement years. This fund serves as a comprehensive savings platform, covering healthcare, housing, and even investment options. Understanding the various CPF schemes and utilising them effectively can significantly enhance your retirement prospects. For instance, the Supplementary Retirement Scheme (SRS) is a voluntary government scheme that allows you to invest a portion of funds from your CPF account into an array of SRS-approved financial instruments. Moreover, you can enjoy tax relief for every dollar contributed to your SRS account, up to the maximum yearly limit. It's also worth considering voluntary top-ups to your CPF Special Account for tax relief and to earn higher interest rates.

5. Regularly review and refine your plan
Retirement planning is not a one-time endeavor; it requires consistent monitoring and adjustments.

The amount of funds you allocate for retirement will not remain the same as your circumstances and income levels change over the years. Make it a habit to revisit your plan periodically to ensure it remains aligned with your goals and priorities. Be prepared to adapt to market fluctuations and life events that may impact your financial situation.

It's never too early or late to start

Planning for retirement goes beyond saving money; it's about securing long-term financial stability. Effective retirement planning ensures financial independence, allowing you to maintain the quality of life you are accustomed to and pursue your interests, or even embark on new ventures. By understanding government schemes, devising a detailed plan, and making well-informed financial decisions, you are setting yourself on a confident path towards retirement. The earlier you embark on this planning journey, the smoother your transition from work to retirement will be.

To kick-start your retirement planning, leave your details below to get in touch with one of our Financial Planners.

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¹ Complete Life Tables for Singapore Resident Population 2021-2022 | Department of Statistics Singapore

Disclaimer:

This webpage contains only general information and does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person. The views expressed herein do not necessarily reflect the views of HSBC Life (Singapore) Pte. Ltd. and should not be construed as the provision of advice or making of any recommendation. There is no intention to distribute, offer to sell, or solicit any offer to purchase any product. You may wish to seek advice from a Financial Planner before making a commitment to purchase the product. In the event that you choose not to seek advice from a Financial Planner, you should consider whether the product in question is suitable for you. Whilst we have taken reasonable care to ensure that all information provided was obtained from reliable sources and correct at the time of publishing, information may become outdated and opinions may change. We are not liable for any loss that may result from the access or use of the information herein provided.

This advertisement has not been reviewed by the Monetary Authority of Singapore. Information is correct as of 11 December 2023.