What the expert says
Singles in their 40s should ensure they have sufficient money for life after retirement, and comprehensive medical coverage for potential illnesses.
Ms Saffron Poh, senior manager at Manulife Singapore, offers the following advice for Ms Koon Lili.
KNOW YOUR FINANCIAL NEEDS
Singles in their 40s need to be more cautious about their financial needs in order to be self-sufficient. This is especially so for women, who have a longer life expectancy than men.
According to the Department of Statistics Singapore, the average woman is expected to live up to the age of 87. In Ms Koon's case, she is left with only 20 odd years to save up for her retirement, if she is to retire at the official retirement age of 65.
DRAFT A WILL
Apart from preparing for the above, it is also very important to have a will in place as part of the overall estate planning, so that Ms Koon can eventually distribute her assets according to her wishes, rather than leave it to the law to decide.
Those with children can also appoint a guardian to care for them under the terms of the will.
Unnecessary disputes within the family can be avoided or reduced if instructions are stated clearly in a will. This will also facilitate a smoother and hassle-free procedure.
GET SUFFICIENT MEDICAL AND HOSPITAL COVERAGE
In Ms Koon's situation where she is financially constrained, she should make sure that her medical and hospital coverage is in place. This is the most fundamental aspect of financial planning so that one can have peace of mind should any unfortunate events occur.
ENSURE SUFFICIENT CPF SAVINGS
Should she wish to have her own flat, Ms Koon needs to ensure that she has sufficient savings in her CPF Ordinary Account (OA) to fund the down payment for her flat.
She also needs to have some cash available in case she needs to top up above the valuation price, as well as sufficient savings to pay for monthly mortgage instalments.
However, she should try not to fully utilise the OA by setting aside at least a one-year buffer for mortgage loans. Should she be unemployed, the OA can continue to sustain the instalment, while giving her time to look for a job. In addition, Ms Koon also needs to make sure that she has proper mortgage insurance.
SAVE REGULARLY AND EFFECTIVELY
Ms Koon should start planning for her retirement needs by setting aside a sum in regular savings, no matter how small it is now.
She can consider Manulife's Premier Saver 65, a regular- premium endowment plan, for retirement. Under this plan, Ms Koon needs to pay the premium only till the age of 60 and she can receive a lump-sum payout by the age of 65.
For an insured sum of $50,000, the projected yield is 3.45 per cent per annum, based on a projected rate of return of 4.75 per cent per annum on the Participating Life Fund.
The benefit can help to provide for her golden years by taking care of her basic retirement needs, or a much deserved holiday.
Throughout the duration of the plan, Ms Koon will be protected for the loss of life, total and permanent disability and terminal illnesses.
For more information on retirement solutions, visit www.manulife.com.sg or call 6833-8188.