3 Practical Tips to Build Enough Retirement Savings
Got your retirement planned out? Do you want to build enough retirement savings? Then, check if you are ready with these practical tips.
Over the years, Singaporeans have changed their perspective on retirements. Years ago, people thought that retirement stops work and then relax with time at their own disposal.
Now, millennials think that retirement is earning passively or with a job related to something they enjoy. They also aim for a life with financial freedom. As a result, they are more optimistic about their retirement plans than the older generations.
The Manulife Investor Sentiment Index revealed that eight (8) in every 10 Singaporean investors believe that they can maintain or improve their lifestyle even after they retire.
However, this same survey says that 49% of millennials fall behind their original financial goals due to finances and health concerns. In addition, most of them want to work (at least part-time) after retirement age. But, health conditions might make it impossible.
Also, they expect to take care of their own children and their retired parents. These responsibilities sandwich them. Moreover, they believe that they must not expect financial assistance from their children by the time they retire. If this is not enough financial concern, they must consider possible debts and mortgages even after retiring.
So how will Millennials build enough retirement savings?
3 Tips to Ensure and Build Enough Retirement Savings
Know your retirement goals
The first part of planning is knowing your goal. It has to be specific and attainable by ensuring that your goal is realistic. Here are things to consider.
Due to inflation, your money’s worth now will not be the same in a decade. What your $1,000 can buy now will not be as much by 2028. Recognise that inflation will weaken your purchasing power. Therefore, it will give you an idea of how much you should save up before retiring.
- Retirement age
Decide when you would like to retire. The retirement age in Singapore is 62 years old. If you would like, you can retire earlier, but you have to consider the lifestyle you will adapt to during retirement. Then, you can tell yourself the number of years left to save up.
Aim to draw an amount of at least two-thirds of your last monthly income. It may be an ideal amount, but this can still vary. It depends on the amount of your salary and current lifestyle.
- Life expectancy
Another thing you have to consider is the number of years you would expect your savings to last. There is a strong possibility to live up to 80 years old. However, imagine if you have outlived your savings by 75. How are you going to survive then?
- Retirement Calculator
A retirement calculator is a tool that gives you an estimated retirement income. We may all have our own individual needs, but it is better to know how much you might be spending during your retirement. Also, these calculators may give you an insight into what else you should consider. Make sure that the retirement calculator assumes the inflation.
Assess your current finances
Now that you have worked out how much you’ll need to save, you need to evaluate how much you can save. But you need to base it on your current financial status. At this stage, you need to maximise the ability of your savings. Therefore, pay off any outstanding loans and liabilities before you retire. Or at least minimise your debt obligation.
After knowing the funds, you expect to save until your retirement. So calculate its difference with the amount you will need. Do not forget to review your insurance coverage. It can help you reach your goal.
Start your retirement savings plan.
Take the time to learn about investing. You may have heard about its risks and potential returns. But, understanding the trade will help you get the most out of it.
Ask yourself how much you can afford to lose and not risk anything beyond it. Consider your insurance policy, CPF Special Account and Supplementary Retirement Scheme (SRS), Index Funds, Mutual Funds and other Equities and Property investments.
Moreover, constantly monitor your retirement plan. Make necessary adjustments if needed to avoid falling behind. Finally, create a budget and stick with it. It ensures that you can save as much as possible. Also, talk with a financial adviser if you are unsure where to start with your retirement plan.
Of course, there will be times when you have to get a personal loan. You can use a loan to get to a better financial status without getting back to stable finances. Make sure that you get your personal loans from trusted moneylenders such as Cash Mart.
Cash Mart offers multi-purpose personal loans. The 45 years of experience building a lasting relationships with satisfied clients sets it apart from the others. Aside from loans, Cash Mart also offers tips to its clients on how to handle their finances better.
Visit CashMart.sg today to find out more.