What the expert says
BEING happy and content during one's retirement is fully within one's control, says May Chan, senior manager of financial services at Manulife Singapore.
And computing how much one needs to save for retirement can be done in just a few minutes at www.manuliferetirement.sg/#calculator
Ms Chan offers advice on how people can attain their desired lifestyles in the golden years.
PASSIVE INCOME DURING RETIREMENT
Creating a regular stream of income for life is key to retirement planning. The passive income that you have built comes in handy to take care of your daily needs once you stop working.
CPF Life provides a monthly payout to cover your basic needs. To maintain your lifestyle, you need to create additional resources.
Manulife Retirement Solutions has a suite of plans to cater for many retirement needs.
For instance, Manulife 3G provides lifetime guaranteed and non-guaranteed payouts. With a premium-paying commitment of just 10 years, you can enjoy early coupon payouts starting from the end of the 10th policy year.
Each yearly coupon payout consists of 2 per cent of the sum insured, and this is a guaranteed benefit. There is also an additional non-guaranteed 1.87 per cent benefit.
Over time, the coupon payouts may far exceed the premiums paid and you can continue to enjoy the stream of income for as long as you live.
The plan also offers protection for loss of life, total and permanent disability, and terminal illness.
You may take up an optional premium waiver for coverage enhancement during the first 10 years. Should anything unfortunate, such as critical illness, happen to you, the plan will be self-funded.
This means Manulife will pay the premiums, the policy will not lapse and you will get to receive the coupon payouts.
After living your life to the fullest, you can leave behind the sum insured plus any accumulated bonus to your beneficiaries.
MAKING YOUR MONEY WORK HARDER
It is great to know that Federick has already started his retirement planning. He has 17 years from now to build his income stream before he semi-retires at age 65.
Federick should have the discipline in segmenting his money and practise "paying himself first".
As a business owner, he needs to pay himself a salary and, from this salary, he should set aside money to save or invest for the future.
He can invest a portion of the money to build a passive income stream. Inflation has been on the rise and it will erode his purchasing power.
Federick should review his retirement income needs every two to three years to ensure his savings keep pace with his desired retirement lifestyle.
Retirement planning is an on-going process and one needs to make adjustments and fine-tune it along the way.
Federick may also consider legacy planning through life insurance.
Such policies offer liquidity in an estate, by providing timely cash to pay off liabilities such as taxes or mortgages after a person's death.
This will ensure that non-liquid assets, such as a house, do not have to be sold off and can be left to a person's beneficiaries.
The added liquidity to a person's estate from life insurance also facilitates the distribution of wealth to loved ones.
For more information on retirement solutions, visit www.manulife.com.sg or call 6833-8188.