Saving up for baby and old age
In this first instalment of a six-part series brought to you by Manulife Singapore, we explore the topic of preparing for retirement at different stages of your life
ERIC KOH AND PRISCILLA TAN, BOTH 30, MARRIED WITH ONE CHILD
THEY tied the knot in March last year and about two months ago Eric Koh and Priscilla Tan became the proud parents of a boy, Travis.
Besides the bundle of joy, Mr Koh and Ms Tan have a new home to look forward to: their four-room Build-to-Order flat in Punggol will be ready next year.
For now, they live with Mr Koh's family in Serangoon.
The couple, who are foodies with a love for travel, are keeping a close watch on the purse strings and, since two years ago, had started saving and planning for the future.
Mr Koh is a product manager for computed tomography, while Ms Tan works at a property firm as personal assistant to the chief executive.
WHAT ARE YOUR LONG-TERM FINANCIAL GOALS?
We want to retire comfortably and not stretch ourselves till too old an age. Hopefully, by age 55, we can be semi-retired and, by then, our investments would have reaped some rewards. We also hope to shorten our housing loan to 10 years, and build up a fund for Travis.
WHAT HAVE YOU DONE TO ACHIEVE THESE GOALS?
We each have long-term investment-linked plans. The interest rates given by banks are quite low and are not enough to cover inflation, so this is one way to get better returns on the money we are putting aside.
As our risk appetites are quite low, we have our financial advisers to manage these.
We also have our own life insurance plans with saving components. This is to make sure our loved ones have some funds, should there be any accidents or illnesses.
Close to 30 per cent of our incomes go to these plans, and we save another 30 per cent. For now, we still need some cash on hand, for housing renovations and for Travis' needs.
About three to six months' worth of our salaries are also kept in an emergency fund for a rainy day.
HOW FAR DO YOU THINK YOU ARE AWAY FROM YOUR GOALS?
We started saving seriously about two years back. Before that, we used to be more casual in how we spent our money.
For now, we have cut back on our travels, and are planning to go on shorter holidays and even staycations.
We will likely do a reassessment when we reach 40, to see if we are on course.
The financial planning we have done so far is based on certain assumptions, such as higher incomes as we grow older.
HOW ARE YOU PLANNING FOR YOUR CHILD'S FUTURE?
We have started an endowment fund, with a 20-year maturity, for Travis. This will help pay for his university tuition fees.
WHAT KIND OF LIFESTYLE DO YOU WANT FOR RETIREMENT?
We don't want to bum around and do nothing, but work for what we are passionate in, maybe run our own business, like a cafe or microbrewery.