Nov 06, 2013

    What the expert says

    THOSE in their 50s should have a comprehensive plan for health care and retirement, as well as drawn up a will and done estate planning to ensure a smooth transfer of their legacy to their loved ones.

    One must plan to ensure that he does not outlive his savings - a steady stream of income is needed for at least 20 years after retirement.

    Senior manager Chow Voon Shin of Manulife Singapore offers her advice to the Lees on retirement planning.


    Although the couple began planning for retirement relatively late, they have been disciplined in catching up on saving for retirement.

    The next 10 years will be very important for the Lees to build up their retirement nest egg.

    To achieve their goals, they will need to keep track of and strike a balance between their living expenses and savings monthly. They will also need to monitor their spending habits and plan wisely for big-ticket items.

    My advice would be to have two separate bank accounts: one for personal expenses and Giro deductions, for normal monthly expenditure, and the other purely for savings accumulation.

    They could also leverage the current low interest rate by investing in various instruments - based on their risk appetite - after setting aside an emergency fund.


    As Mr Lee has hypertension, he would need extra savings for his personal medical fund, in case he requires medical attention.

    It is vital that one has comprehensive medical protection when in good health. Mrs Lee should also ensure that she has sufficient medical coverage.


    It is good that Mr and Mrs Lee have existing financial plans which provide a constant stream of income to cover their basic living expenses during retirement.

    In the next 10 years, the Lees could consider reinvesting some of the maturity proceeds from their insurance policies to enhance their retirement fund.

    They could consider ManuRetire Secure, which would allow them to benefit from the potentially inflation-beating performance of equities while providing them with guaranteed income for retirement.

    ManuRetire Secure would enable them to grow their assets, while providing 80 per cent downside protection against investment fluctuations.

    Mr and Mrs Lee could choose to receive a lump sum or regular stream of income for their retirement, over a payout period of 10, 15 or 20 years.


    To fulfil his dream of setting up a beef-noodle stall, Mr Lee could consider using part of his potential maturity returns from his investment plan as start-up capital.

    My advice would be to ensure that he has a business plan with an accurate projection of cost and profit-and-loss analysis, in order to be financially prepared. He should also be in good health, in order to handle the business effectively.


    As their children have grown up, Mr and Mrs Lee should have a will to ensure that their wishes are clearly documented and to facilitate a smooth transfer of their legacy to their loved ones.

    If there is no will, how one's assets should be distributed upon death will be determined by state law. This could spell heartache for your loved ones when they are most vulnerable.

    The Lees could consider taking up Manulife Heirloom to amplify their current net worth as a legacy plan for their next generation.

    For more information on retirement solutions, visit www.manulife.com.sg or call 6833-8188.