What the expert says
FINANCIAL stability in retirement begins with early planning and involves more than just basic insurance coverage.
Ms Jenny Tan, senior manager of Manulife Singapore, offers advice on long-term financial planning for Mr Terrance Pek.
PLAN EARLY AND AHEAD
Adults in their 30s usually have big financial commitments, as they may have just started a family.
This comes with the huge financial burden of providing an education fund for their child and servicing mortgage loans, among other things.
Unlike the typical Singaporean, Mr Pek started a family at a relatively younger age, and is enjoying having four generations living close together.
I am glad that Mr Pek has set up a stable financial pyramid, by building a strong base for protection, followed by savings for the future and, finally, wealth accumulation. I am also happy that Mr Pek believes in planning early and that he is willing to take charge of his financial destination.
BUILD A PASSIVE INCOME
As a business owner, it is important that Mr Pek builds a source of passive income to take care of his family should there be a downturn in his business prospects.
The passive income can also serve as a regular stream of income for his future retirement.
The Manulife Income Series has three funds: a Singapore balanced fund, a global bond fund and an Asian balanced fund. Each is designed to provide monthly payouts that act as a steady stream of income for the holder.
Depending on a person's risk profile, he can choose any of the three funds to be part of his investment portfolio.
For example, the Manulife Strategic Income Fund, a global bond fund, pays out 4.2 Singapore cents per unit per annum, or 0.35 Singapore cents per unit per month.
If you are not in need of the cash payout, you may opt to reinvest the distribution and get additional units in the fund.
Manulife's Strategic Income Fund takes advantage of bonds with different characteristics to capture investment opportunities in different market environments.
The plan also allows one to top up his investment fund as and when he has extra cash to do so.
In view of his big family, Mr Pek needs to enhance his children's education fund by topping up regularly his current single- premium plan. If not, he might want to consider taking up a new regular-savings plan.
HAVE A CONTINGENCY PLAN
As a final thought, Mr Pek needs to have a contingency plan in the event that he faces challenges in continuing his business, which might have an impact on his financial status.
For more information on retirement solutions, visit www.manulife.com.sg or call 6833-8188.