Retirement Archives | Page 3 of 8

Countdown To Retirement: The Final 5 Years

One of the most significant transitions in your life is about to begin. In a blink of an eye, you have reached your 60s. Retirement may not be a pressing concern for most of your working life, but it is surely happening soon.

The sense of urgency stimulates your awareness. You will begin to pay close attention to insurance commercials and to the company’s retirement benefits. You will go through your CPF savings and analyze whether it is enough. How about your investments? Is your money invested on an aggressive portfolio or not? More importantly, do you have a last will and testament?

Many of us consider retirement as a vague and seemingly distant concept rather than something happening in the near future. With this mindset, you may not be able to prepare well it. Use the last five years to examine your financial situation. Make the appropriate moves to substantially improve your life during retirement.

CLOCK: FIVE YEARS BEFORE RETIREMENT

There is no doubt in the saying: “the first cut is the deepest”. You can call it a rude awakening, but this initial step will dictate your future actions. Examine your overall financial situation.

Be honest with yourself. How much have you saved up while you were working? Do you have other streams of income that can generate enough cash to cover your fixed expenses in retirement? How much can your CPF cover?

Image Credits: pixabay.com

I understand the brewing worries tied up to these numbers. It is time to face your fears! Know that there is still time to change your investment strategies, to eliminate unnecessary expenses, and to re-frame your retirement expectations. Seek the help of a qualified financial adviser who specializes in retirement planning. He or she can sort out all your concerns including the making of you last will and testament.

CLOCK: THREE YEARS BEFORE RETIREMENT

While work can be stressful, it can also give a sense of accomplishment. What will happen once it is taken from you?

Aside from organizing your financial plans during retirement, you must determine how you will occupy your time. Many of us forget this aspect of aging. It is important to contemplate on how you will occupy yourself in retirement. Consider the Psychological or emotional impact of not having a steady job or not having a routinely “purpose”. Your feelings may be similar to undergoing loss.

Yesterday, my grandfather told us that he is planning to travel overseas. He wants to dedicate this time of solitude on searching for peace and happiness. This may sound cliché to some, but he never had the time to travel on his own. You may want to spend your retirement touring the world. Like my grandfather, consider what will bring you happiness.

Do not be afraid to explore hobbies or join social group within your neighborhood. These things will keep engaged once you are retired.

CLOCK: A YEAR BEFORE RETIREMENT

During this time, your primary goal is to cut down your debts and spending. This is where your retirement budget comes in handy!

You will probably experience a considerable drop in income once your paychecks go away. Following this logic, your retirement expenses should not necessarily mirror your current expenses. You need to adjust your lifestyle following a monthly budget that will include costs like healthcare and leisure activities. Know how much you can realistically afford with the help of your financial adviser.

Lastly, you must take a look at your investment portfolio. If your savings appear to deliver the income you need in retirement, some experts recommend to pull back on your stocks. Use this money to invest on short-term investments or other conservative asset classes. I am not saying that you should suddenly become a risk-averse investor. Instead, you need to make more calculated moves. Growing your portfolio over the next couple of decades entails exposure to stocks.

Image Credits: pixabay.com

Ultimately, preparing for retirement will support the remaining years of your life.

Source: NY TIMES

The Risky Assumptions When Planning Your Retirement

Have you ever wondered how much money do we need in our silver years to be able to afford our desired lifestyles? Most adults would be relying solely on their CPF funds to finance their retirement. Asset-rich but cash poor retirees could be thinking of renting their HDB flats out to supplement their retirement funds. There are indeed several ways to build up our retirement income. However, we must be mindful of avoiding some of the dangerous assumptions when planning for our retirement.

Oversight To Account For Inflation

Inflation can have a big impact on retirees even if they have been historically low. According to Monetary Authority of Singapore, Singapore’s historical core inflation averaged an annual 1.7% since 1990. While 1.7% per annum may not appear alarming, it will compound to a staggering 66% over a span of 30 years! If you are a retiree receiving a fixed amount of stipend, the value of your money will decrease with each passing year. Hence, your retirement funds will be eroded by inflation if they are not carefully managed. Unfortunately, inflation does not stop just because you have stopped working. Therefore, it becomes important that your investment grow at rates that are at least equal or better than the rate of inflation to protect the value of your retirement funds. How do we then continue to enjoy the taste of life at our retirement years without feeling the pinch of inflation, especially when we have stopped working and receiving salaries?

Reliance on Rental Income From Property

Some adults plan to rely on rental income from investment properties to supplement their retirement funds. However, with the recent cooling measures announced in July 2018, investing in a second residential property is increasingly out of reach for most working adults.

Some retirees might be thinking of renting out the vacant rooms in their HDB flat especially as their children gradually might have left the home that they grew up in. However, this option comes with its own set of inconveniences. It could take a couple of months before a tenant can be found. There is also the administrative hassle of providing tenant’s details to HDB for record-keeping. Of course, all these pale in comparison to stories of horror tenants who damage the HDB flat or are tardy in their rental payments. In such circumstances, renting out their HDB flats may not be the best option to supplement your retirement income.

CPF LIFE Alone Might Be Insufficient

For a retiree who sets aside the maximum Enhanced Retirement Sum (S$271,500), the monthly payout from CPF LIFE is expected to be about $2,000 per month. If this amount is sufficient to pay for your daily expenses during your retirement, then this is definitely a good safety net for you to rely upon. However, it is not true that all Singaporeans and Singapore Permanent Residents can depend on their CPF funds to finance their retirement entirely. In fact, it is widely reported that almost 4 in 10 CPF Accounts do not even have enough funds to meet the Basic Retirement Sum. For the group of retirees who do not generate enough funds from their CPF LIFE payouts, it is necessary to generate extra income from alternative sources such as investments.

Future-proof Your Retirement Funds With The AIA Retirement Saver (III)

Given that young professionals lead hectic lifestyles, they may not have the time and energy to plan for their eventual retirement. Yet, planning ahead to future proof our retirement is essential and the AIA Retirement Saver (III) is one of the ways to do that. The AIA Retirement Saver (III) is a simple and hassle-free retirement solution which provides a guaranteed stream of retirement income for 15 years. Your hard-earned savings is safely secured since the capital is guaranteed; you will get back every dollar that you contributed at your desired retirement age. On top of that, you will receive potential monthly dividends which could help to cushion the impact of inflation. Premium payment duration is also flexible; single lump sum, 5 years, 10 years or simply pay till your desired retirement age – 55, 60, 65 or 70. It is easy to get started because no medical underwriting and check-up is required. In essence, the AIA Retirement Saver (III) is truly an easy and stress-free solution tailored to any individual retirement plan.

Conquer The Uncertainty & Plan For Your Desired Retirement

With the AIA Retirement Saver (III) solution, individuals can cast aside their retirement worries as their savings will be in the good hands of professionals. The AIA Retirement Saver (III) can be an additional pillar to supplement your retirement funds. As it can be tailored to maintain the purchasing power of your retirement funds, you can be assured that you will still be able to enjoy your desired lifestyle during your twilight years. Don’t leave your retirement to uncertainty. You can certainly plan for the uncertainty by taking action now.

Living Your Dream Life – A reality in Horizon Hills

The Award-winning Horizon Hills is an artistic composition of architectural design, natural greenscapes and community living, making it the first of its kind lifestyle development in Johor.

A home designed to embrace your lifestyle set against a backdrop of undulating terrain in a resort like ambience, enveloped by the rejuvenating freshness of nature. Truly a dream to behold for those who choose to make their homes in Horizon Hills. The 1228- acre residential paradise jointly developed by Gamuda Land and UEM Sunrise comprises of 11 secured precincts, each featuring designer-homes for contemporary living and sharing its picturesque setting with an award-winning international championship 18-hole par 72 golf courses.

In one with nature

Living in Horizon Hills is about harnessing the fullness of nature. The estate is home to 150 acres of themed park and gardens and homes that leverage on the topography of the land to create a green and tranquil ambience. From stately bungalows to semi-Ds, to cluster and links as wells condominiums and villas, there is a home to suit every lifestyle in Horizon Hills. The latest offerings in this green township are 2-storey link houses in the Green Precinct as well 2 and 3 storey semi-Ds in the Cove precinct, targeted for completion in 24 months. Both home designs feature a contemporary design and natural lighting. The link homes are of a cube design while the semi-Ds enjoy additional air ventilation features.

The mesmerising beauty of Horizon Hills lies in the exacting manner in which contours of the estate has been curated to allow the hills’ lush foliage, weaving waterways and soft slopes to remain undisturbed in their natural state. It offers an idyllic setting where listening to the land is a natural part of living in harmony with the environment. The Horizon Hills masterplan boasts of at least 45% of its selected areas of secondary forest being retained as a green lung with water from natural streams and lake channelled to it for a cooler atmosphere. Their natural filtration system of lakes and ponds and preservation of flora and fauna through open spaces and thematic gardens are all directed at minimising the township’s carbon footprint. The natural ambience enjoyed by residents has encouraged a communal effort in practising eco awareness and sustainable living.

Promoting community closeness

The Horizon Hills town square pulsates with the energy of people brought together to create laughter and lasting memories. Placemaking events that help bond the community such as festive celebrations and fun activities take centre stage in this township with residents of over 40 nationalities. It is a town where community living is a way of live and everyone is made to feel as important as the next. Other friendly facilities that positions Horizon Hills as a township with a difference are its pockets of green spaces and a cycling path that encourage outdoor activities for elderly, children and even the physically challenged. Homes, public buildings and recreational zones such as the Clubhouse are designed to be friendly to all. Facilities and amenities in Horizon Hills that contribute to greater community interaction are best described as world class. An international standard 18-hole par 72 golf course that is visually spectacular, crafted by Australia’s most acclaimed golf course designer, Ross Watson presents itself as the perfect playground for golf enthusiasts. Overlooking the course is the equally enchanting 145,000 sq ft clubhouse designed by the renowned Ernesto Bedmar, a hub for recreational and dining activities for residents and their guests.

Second to none in security and connectivity

Residents safety is a top consideration in this gated and guarded township which is facilitated by the Crime Prevention Through Environmental Design (CPTED) Concept. A 3-Tier security system consisting amongst other features perimeter fencing, central monitoring, guard tour patrolling, gate access and panic button are part of this sophisticated security network. Complementing the dream lifestyle Horizon Hills offers, a perfectly connected location. Regarded as one of the best golf course residential properties in Johor Bahru. Horizon Hills takes full advantage of its incomparable location being set in the booming Iskandar Malaysia and just a mere 30 minutes’ drive to Singapore. Horizon Hills is the perfect south side retreat for locals and expats alike who seek homes in an exquisite hideaway. Situated at the heart of Iskandar Puteri places Horizon Hills in direct access to Johor’s major education, health, shopping, transportation and recreational amenities. The township provides 5 easy accesses and enjoys hassle-free connectivity via the state’s 5 major highways.

A collaborative effort by two property giants

Gamuda Land and UEM Sunrise are stalwarts of the Malaysian property industry. Renowned developers of award winning townships, both property giants have made a name for themselves with their excellent craftsmanship of architectural masterpieces – townships that feature the foremost in town planning, residential design and environmental conservation. Horizon Hills is a testament of the joint effort of these two unrivalled giants of the industry.

For more information, please visit our website at gamudaland.com.my/horizonhills or contact our Property Galleria at +607-232 3433

Why Investment-Linked Policies Still Have Its Merits

As consumers get savvier about insurance, the Do-It-Yourself (‘DIY’) approach of “Buy Term and Invest the Difference” is gradually gaining in popularity. Briefly, it is the combination of buying a term life insurance and investing the “savings” from the lower premiums being paid. This contrasts with Investment-Linked Policy (‘ILP’) which has both life insurance and investment components. An example would be the AIA Pro Achiever which has been designed to include both insurance and investment elements in the most optimal manner. In general, ILP is preferred by consumers who want more exposure to investments than what other life insurance products may be able to provide. Therefore, it will be too foolhardy to dismiss ILP altogether. It definitely still has its merits and exists to benefit certain groups of consumers and situations.

ILP invests in a methodological and structured manner

One of the biggest merits of purchasing an ILP is to have investment professionals take over the actual investing. An example would be Mercer’s partnership with AIA to manage the investments under the AIA Pro Achiever policy. As a leading global investment consultant, Mercer possess the requisite expertise and rigor to manage and grow the investments in a methodological and structured manner.

Furthermore, the premiums collected under the AIA Pro Achiever policy will be fully earmarked for investment right from the start. Expenses for this ILP are also low since no sales charge will be levied. Bid-offer spread is also not applicable. What these imply are that every dollar contributed will have the potential to experience investment growth. Therefore, policyholders can afford more time with their loved ones with the knowledge that their investment portfolios are under the experienced hands of Mercer.

On the other hand, the DIY approach is prone to possible lapses. That is because it is not uncommon for one to juggle multiple roles (eg: the hardworking worker, the responsible parent) simultaneously today. During stressful periods, emotions could go on overdrive while investment may take a backseat instead. As a result, a case of “overwhelming emotions” or “absent-mindedness” could potentially ruin any well-planned investment strategy. However, by buying an ILP, such incidents can be avoided since the investment component has been outsourced to professionals. Regular-premium ILPs also employ a dollar-cost average approach that helps to even out market volatility. Over the long term, it allows the policyholder to fully reap the benefits of staying invested in the market.

ILP is a flexible finance instrument

ILP is a flexible finance instrument that can be catered to investors according to their risk-appetite profiles. For instance, the AIA Pro Achiever policy offers 3 types of portfolios; Adventurous, Balanced or Cautious. This provides a choice for policyholder to select a portfolio that best matches his or her expected returns/risk profile. The flexibility extends further as policyholders are able to switch or rebalance their funds from time to time at no additional fee. This is critical as risk appetites would naturally evolve when certain life milestones are reached.

In addition, AIA provides leeway for policyholders to adjust monthly premiums especially since one’s cashflow could fluctuate from time to time. For instance, during an unexpected windfall or upon receipt of annual bonuses, policyholders have the option of topping up their premiums. Likewise, when liquidity gets tight, policyholders are at liberty to take a premium holiday. Finally, there is always the option of making withdrawals when a critical need or emergency arises.

ILP also serves as a life insurance

Let’s not forget that ILP also doubles up as a life insurance which means that there is a death benefit attached to it. On this, investment-linked policyholders are typically covered up to the policy value or to the amount that they have invested. This offers an extra peace of mind as immediate family members would be able to receive the sum assured in the event of an untimely passing. A noteworthy feature of the AIA Pro Achiever is the additional death benefit payout of 100% total regular premium paid in the event of accidental death during the first 2 policy years.

AIA also recognises that with increased life expectancies, policyholders may prefer to stay invested longer. Therefore, AIA Pro Achiever allows policyholders to stay invested till age 100 (also the policy maturity)! Furthermore, AIA Pro Achiever actively rewards policyholder that stays invested for the long term. Firstly, charges for premium holidays, partial withdrawals etc are waived after the 13^th year of paying premiums. Upon reaching this milestone, policyholders are also awarded an extra 5% allocation on their premiums annually. Such loyalty features suggest that the AIA Pro Achiever provides even more value for money for policyholders that stay invested longer.

Get in touch with an AIA appointed representative to find out more about the AIA Pro Achiever today!

Nothing in this article should be construed as constitute or form a recommendation, financial advice, or an offer, invitation or solicitation from Money Digest to buy or subscribe for any securities and/or investment products. Any past performance, projection, forecast or simulation of results is not necessarily indicative of the future or likely performance of any company or investment. The content and materials made available are for informational purposes only and should not be relied on without obtaining the necessary independent financial or other advice in connection therewith before making an investment or other decision as may be appropriate.

3 Ways To Make The Most Out Of Your SRS

Prudent individuals go through great lengths in order to build retirement fund. Many Singaporeans completely rely on the government-mandated Central Provident Fund (CPF). It is a savings plan to fund important expense categories such as retirement, housing, and healthcare. Unbeknownst to some, there is a scheme that is meant to complement the strength of CPF. I am talking about the Supplementary Retirement Scheme (SRS). SRS flourishes your retirement savings by providing tax relief and investment options. Unlike CPF, SRS is a voluntary scheme. SRS members are free to contribute varying amounts which are subjected to a specific limit.

Make the most out of your SRS account by employing these tips:

MAXIMIZING YOUR TAX REDUCTIONS

While helping you cultivate your future, SRS simultaneously reduces your tax expenses at the present moment.

There are different types of tax relief that you can claim, such as the Earned Income Relief, Qualifying Child Relief, NSman Self Relief, and Parent Relief. The first one refers to the deduction of taxable income for every dollar deposited into the SRS account. Furthermore, you can reap tax-free investment gains made through your SRS account (i.e., not applicable to Singapore dividends).

SCHEDULING YOUR WITHDRAWALS

Let us be honest! You can withdraw funds from your SRS account even before you retire. Unfortunate instances such as medical emergencies and bankruptcy are among the significant reasons why this happens. Withdrawals can be completed in the form of cash or investments.

You must strategize your withdrawals to receive the most profitable scenario. You see, there is a chance that you will end up paying more tax if you withdraw the entirety of the SRS account upon retirement. By “more”, I am referring to the comparison between the “withdrawal tax” and the income tax savings. Consider scheduling your withdrawals spanning the period of 10 years.

GROWING YOUR INVESTMENTS

SRS is more than just a scheme to reduce your tax as it is an efficient tool for growing your retirement funds. It is meant to supplement your retirement money by embracing investment options. An increasing number of Singaporeans had been making contributions to their SRS accounts. For instance, the contributions made until December 2015 reached more than S$4 billion.

Why are people drawn to investing their SRS funds? For starters, gains are non-taxable. Furthermore, the long-term returns are higher when invested as compared to leaving your SRS fund in idle. From the retirement age and beyond, only 50% of your withdrawals will be taxable. It goes without saying that your bigger risk appetite is subject to the volatility of the stock market.

Image Credits: pixabay.com

A local institution that allows using SRS funds for unit trusts, index funds, unit trusts, or blue chip shares is OCBC.

Sources: 1 & 2

The Award-winning Horizon Hills is an artistic composition of architectural design, natural greenscapes and community living, making it the first of its kind lifestyle development in Johor.

Search the site