What the expert says
SINGAPOREANS in their 40s are usually in a sandwiched situation, as they need to look after their ageing parents and their children at the same time.
Breadwinners need to ensure that they are well covered, so that their family will be well taken care of should unfortunate events occur.
Ms Kalyn Quek, a financial planner with Manulife Singapore, offers her advice to Mr Johnny Ng on retirement planning.
INVEST IN TERM INSURANCE
My advice for people at this stage of life is to get term insurance, to boost life coverage until their children are financially independent.
They should also ensure that the family is well covered, in terms of hospital and surgical expenses.
If budget permits, one should also consider a limited-premium- payment whole-life plan with critical-illness coverage, to ensure that one has sufficient life and medical protection throughout the span of his lifetime, without a lifetime of premium payments.
ENSURE SUFFICIENT COVERAGE
It is great that Mr Ng understands the importance of planning his financial journey early.
Although he started investing at a relatively young age, he should also ensure that he has comprehensive coverage before looking into investments.
Statistically, a person requires 10 times of his annual salary for the average protection needs.
Mr Ng should also set aside an emergency fund equivalent to six months of his salary to take care of his family's daily expenses, in case he is faced with challenges that might affect his income, such as a change of job, which he had struggled with previously.
He should also ensure that he has sufficient medical and hospital coverage for himself, as well as his family.
CONSIDER A SHORT-TERM SAVING POLICY
To boost his children's education fund, Mr Ng can consider a short- to medium-term saving policy.
He should select a policy that will mature in time to coincide with his children's university entry age. It is a little too late to obtain a typical education policy now, as his younger child is already 10 years old. The best age to leverage on a typical education policy is when the child is born.
DIVERSIFY INVESTMENT PORTFOLIO
Mr Ng seems to have a large portion of his investment portfolio in property - he should consider diversification.
To build his retirement nest egg, he could consider Manulife 3G as part of the diversification, as well as to build a legacy that can benefit three generations.
With just 10 years of premiums, Mr Ng can enjoy a lifetime of security.
This plan provides lifetime protection with yearly coupons equivalent to 3.87 per cent - 2 per cent guaranteed and 1.87 per cent non-guaranteed - of the sum insured, starting from the end of the policy's 10th anniversary.
He can also maximise the potential of Manulife 3G by taking up the policy on his children's life.
Mr Ng can enjoy the coupons for as long as he desires, until he is ready to transfer the plan to his children. His children will then continue to receive the yearly coupons for their lifetime.
Additionally, the sum insured, together with the accumulated bonus, will eventually be payable to his grandchildren.
For more information on retirement solutions, visit www.manulife.com.sg or call 6833-8188.