How To Plan For A Comfortable Retirement In Singapore: 10 Tips To Follow

How To Plan For A Comfortable Retirement In Singapore: 10 Tips To Follow

The lack of retirement confidence among Singaporeans is at an all-time low. Along with the ongoing rise in the cost of living in the country, another factor contributing to this is the absence of financial planning for the future. 

In fact, in a recent survey conducted by Manulife, 72% of respondents revealed that they regret not saving for retirement sooner and wished they had drawn up a retirement plan in their earlier years!

With the pandemic also in play, job security and financial stability aren’t guaranteed, which reiterates the need to plan to live comfortably in our golden years. 

Planning for retirement may seem like a daunting and complicated process. But it doesn’t have to be this way. 

To help you get started, here are 10 simple yet actionable ways you can begin planning for your retirement as early as today!

1. Plan out how much monthly income you will need

The first step is to monitor your cash flow regularly. Your monthly income will determine how much you need to set aside for your retirement savings. Putting 5% to 15% aside from each paycheck is a manageable way to get started. 

An overview of your monthly income also provides you with insights on certain lifestyle habits that need to change to cut down on unnecessary expenses. 

Here’s an interactive retirement calculator that can determine whether your retirement goals are attainable based on your monthly income.

Plan-out-your monthly-income

2. Save up first for your rainy day emergency fund

Make it a goal to build an emergency savings fund as early as possible. Unlike cash cushions that are made up of smaller balances, emergency funds are used to cover any unexpected life events such as medical emergencies or job loss. 

Start by assessing your monthly expenditure to get an idea of how much you can put aside every month. 

From there, set a monthly savings goal and move that amount into your savings account automatically until your emergency fund has enough to cover at least six months’ worth of living expenses.

For more effective ways to save money, click here.

3. Start buying insurance policies to future-proof your retirement

Some may not see the value of it now but buying insurance policies can do wonders for your retirement plans. 

For instance, life insurance offers financial protection and back-up to our families if we pass on.

Similarly, endowment plans provide a disciplined way of saving money for future needs while also offering financial protection for families in case of an unfortunate event. 

Find the insurance policy that serves your immediate needs the most. Although peace of mind may sometimes come at a price, it’s usually worth it in the end.


4. Minimize & start clearing your debts as soon as possible

Carrying your debts into retirement is one of the biggest financial red flags. Studies have shown that elderly persons who retire without outstanding dues such as mortgages and student loans are less likely to face financial stress and insecurity than their fellow seniors who don’t. 

Tallying up your debt accumulated from student loans, credit card payments, mortgages, car loans, and other personal sources. From there, create a debt repayment plan. Two of the most common debt repayment strategies are the avalanche and snowball debt payoff methods!

The avalanche method focuses on paying off debts with the highest interest rates first. This may save you more money in the long run but might take some time before you pay off that first debt. 

In contrast, the snowball method is where you pay off debts with the smallest amounts and work your way up. While this may result in more interest rates, it’s easier to keep the momentum going when celebrating small wins. 

Depending on your needs and personal goals, choose the method that works best for your and your budget. 

5. Start building multiple income sources apart from your day-job

Even before the pandemic, side hustles have been closing the income gap among working professionals by providing them with additional income on top of their regular jobs. 

With multiple income streams, individuals can have greater financial independence and better chances of hitting their personal retirement goals earlier than planned. 

Apart from side-income jobs, diversify your income sources by looking into fixed annuities and dividend stocks and fixed annuities if you can tolerate market fluctuations.


6. Invest to start building your nesting egg 

From investing in stocks to tapping into your savings plans, investing is one of the many ways to build your retirement nest egg effectively. 

Some of the best investment options for retirement in Singapore include savings bonds and regular shares savings. Other avenues that can help you kickstart your investment journey include real estate investment trusts, bonds, and unit trusts. 

Investing has the potential to provide long-term financial growth and stability. But it also comes with a unique set of challenges. Evaluate the risk levels before deep diving and invest your money wisely.


7. Consider topping up your CPF for better long-term returns

More often than not, most people fail to see the value of topping up their CPF at such an early age. 

Since the money can only be withdrawn after retirement age, younger Singaporeans prefer to keep their cash liquid. However, topping up early can yield significant results in the years to come. 

With higher and risk-free interest rates compared to average bank rates, you can enjoy greater savings during retirement. On top of that, tax reliefs and deductions for cash top-ups are also in the cards. 

8. Protect your health with the relevant health & hospitalization insurance policies

As we get older, we tend to become more susceptible to a variety of health issues. Besides taking the necessary steps to stay healthy, another way to safeguard our health is by applying for health insurance plans and premiums. 

In Singapore, certain insurance premiums cater to specific critical illnesses like major cancers and kidney failure. Finding the right insurance plan that suits your needs most can help defray the costly expenses associated with all things medical. 

When you reach retirement age, the last thing you’d want is to be juggling both health and financial problems at the same time. 

9. Start practicing money-saving habits early

It’s common for younger people to blow off their money on impulsive purchases, thinking that it can be easily earned back regardless. 

However, having this mindset can have detrimental impacts on your spending habits in the future!

One way to practice effective money management is to adopt the ‘pay yourself first’ method. 

The goal is to consistently move money into your savings account first before spending your paycheck on personal wants. This way, it promotes frugality and helps you build up your nest egg effectively. 

Use this as a way to build your initial investment fund and pay down various liabilities. Don’t be easily swayed by seasonal discounts and material purchases and only spend within your means.


10. Create a budget & stick to it for the long-term

Creating a personal budget plan may seem like a minuscule task when compared to topping up your CPF or buying insurance policies. 

But this is one of the simplest ways to get your finances in order. Having a budget and sticking to it helps individuals develop better spending habits and eliminate expenses that they can do without. 

Besides your utilities, loan payments, and other expenses, consider adding ‘retirement savings’ as a line item in your budget plan as a reminder to consistently put money away for it each month. 

In the long run, this ensures that your savings are on track for the future for a happier retirement — free from financial stress. 

Make The Most Out Of Your Retirement By Saving Early Today

Regardless of whether you’re part of the sandwich generation or fresh out of university, it’s never too late or too early to start saving for the future. 

The path to retirement savings starts now!

To take it a step further and contribute more to your retirement nest egg, explore iSwitch’s residential plans that’ll allow you to save up to 30% off your electricity costs each month!


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