It’s easy to get swept into the multiple facets of life and completely forget about a huge point in the future timeline: retirement! With all the busyness of life, we can forget to save up for our older selves. But building a nest egg to live off of when you retire is essential to a fulfilling life after your working years. Best part? There’s no one size fits all in saving and planning!
While there’s no right or wrong way to save and prepare for your future retirement plans (and lifestyle shifts), there are some great pointers to take advantage of. Here are our top tips for planning and saving without stressing yourself out.
No Time Like the Present
The biggest (and most costly) mistake people make with retirement is not starting because they think they’re “too late.” It’s better to start now than to never begin! And if you can get an even earlier start, that’s great, too.
Starting as soon as possible is a great way to cash in on compound interest and earn a few extra thousand dollars. Saving portions of each paycheck in your working years is part of your entire work life. Just as we’ve discussed budgeting for all of life’s emergencies, keeping 10-15% of your paycheck to put into a retirement account is the best way to build up your money.
Decide On a Retirement Plan
There’s a famous saying, “Those who fail to plan will plan to fail.” The same is true of retirement planning and making a dent in how much you’re saving up. To come up with a solid plan, here are a few pointers:
- Have a candid conversation with your partner about what you both want your lifestyle to look like after retirement. Do you want to live the same as you do now? Do you want to move and buy a smaller house? Do you want to live in a different country? Are you thinking about traveling a lot? These are significant questions to begin the conversation.
- Once you have your lifestyle ideals, it’s time to determine cost. Use a financial calculator to determine how much you are setting aside for retirement.
- Now that you know your lifestyle choices, your current financial situation, and how much you need to set aside for the future, it’s time to save! How do you save up for things like this? Cut unnecessary expenses, start investing, etc.
MoneyOwl gives expert advice for how much you need to save, “… the average safe retirement income floor for most retirees would be somewhere between $700 to $1,500 per month today. Now, if this number sounds familiar to you, it should. It is how much payout CPF LIFE would provide for someone who has set aside a retirement sum between the Basic and Full Retirement Sum. Given that CPF LIFE provides a stream of stable lifelong income, it is the perfect candidate to form any retiree’s safe retirement income floor.”
Invest, Invest, Invest!
Taking your hard-earned money and investing it can seem a little terrifying, but it’s actually quite normal! According to Manulife, investing earlier is for the better –
“Investing when you are younger allows you to take more risk and earn higher potential returns for your future use. As you move nearer towards retirement age, you may not want to risk your retirement savings in risky assets since you’d have more reliance on the funds.”
There are plenty of great resources to learn how to invest your money in Singapore and will explain the best steps towards growing your nest egg a little at a time.
Summary
While retirement may feel like light years away, you’ll thank yourself in the future!
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Resources used:
https://www.moneysense.gov.sg/articles/2018/10/introduction-to-retirement-planning
https://www.manulife.com.sg/en/insights/6-retirement-planning-mistakes-to-avoid.html