Have a game plan ready for retirement
THE general rule of thumb for the financially savvy is to hold a reserve of three to six months' equivalent of one's expenses and invest the rest.
Yet, Singaporeans have as much as three years of their salaries sitting idle in the bank, according to survey results released in July by Manulife Singapore.
It is good to save for a rainy day but holding so much cash gives people the illusion that they are wealthier than they really are, said Ms Yona Foo, Manulife Singapore's director of sales.
"Inflation will constantly erode the value of our savings. We need to make our money work harder," said Ms Foo yesterday, at a seminar on retirement planning organised by My Paper.
Addressing some 200 participants, she said it is important for one to have a game plan on how much money to save for retirement and whether it can sustain his or her lifestyle.
"Basic daily necessities that seem small now can add up to a huge sum during retirement," said Ms Foo, adding that there will be other expenditures like mobile-phone bills and the occasional holiday.
While monies from the Central Provident Fund Life can offer a basic standard of living in retirement, she said that it does not factor in inflation and may not be sufficient to cope with the rising costs of health care.
Retirement planning is an ongoing process and, depending on the stage of life, a person can have a larger risk appetite or be more conservative in their choice of investments, which can range from properties to long-term retirement products, said Ms Foo.
During yesterday's seminar, Manulife senior director Jeffrey Tan also touched on the importance of estate planning. An individual is never too young to start drawing up a will and one can start doing so from the legal age of 21, said Mr Tan.
"As long as you have dependants - parents, children or siblings, it's time (to write a will)."
It can be problematic when one dies without a will. For example, if no beneficiaries are named, the person's assets will be divided according to law, and they may not go to those who need it the most, he added.
Yesterday's event also saw principal trainer Chan Ngee Key share his expertise on taking charge of one's career. Master trainer Michael Lum also gave tips on tackling challenges in the different stages of life. On staying positive, Mr Lum said it is best to focus on how to complete one's existence, rather than to just finish running life's journey.