Have you set aside enough for your retirement?
For Gary Tey and Jacqueline Ng, retirement planning isn’t the big problem that some people make it out to be. While it is an issue that requires serious thought and financial discipline, the couple has already made plans to address their retirement concerns.
For Gary Tey and Jacqueline Ng, retirement planning isn’t the big problem that some people make it out to be. While it is an issue that requires serious thought and financial discipline, the couple has already made plans to address their retirement concerns.
Chief among these concerns are the cost of living and healthcare expenses. Healthcare costs increased by 176 per cent* from 1981 to 2011. Inflation means that these expenses are likely to continue rising, so anyone who does not have enough coverage could face high medical expenses should they fall seriously ill or be involved in an accident.
Said Jacqueline: “These are our main concerns because of inflation and rising costs in Singapore. Medical expenses will also rise in our old age.”
Because of this, and despite already having savings plans in place for their golden years, the couple expects that they will need to tighten their belts.
“We will probably need to change our lifestyle so as to have more savings after retirement and to stretch our money,” said Jacqueline.
Plans in place
Jacqueline, who’s 36 years old, is a homemaker while 37-year-old Gary is a civil servant. They have been married for nine years and have two children, six-year-old Megan, and Sarah, who’s aged two.
After Sarah was born, the couple reviewed their insurance policies to address potential gaps in their coverage. While they don’t plan on investing in any new policies, they are open to doing so if “any suitable ones become available”.
One of their immediate financial priorities is planning for their children’s education. The couple also plans to retire at the age of 60 with a monthly retirement income of S$2,000. They expect to spend 30 years in retirement and have set a retirement savings goal of S$800,000.
Gary and Jacqueline say they are currently about S$600,000 shy of that goal but believe they can eventually meet these goals. “We have made plans and are prepared, and we are working towards it by saving up,” said Jacqueline.
Playing it safe
These plans include investing in relatively conservative products such as “cash savings, fixed deposits, time deposits (foreign currency), and insurance policies”.
Each month, Gary and Jacqueline set aside S$2,000 in cash savings and an additional S$1,000 for insurance products.
The Teys began saving for their retirement about eight years ago and believe their early start has made saving for their golden years easier.
Said Jacqueline: “It’s easier to save for retirement earlier when you have fewer financial commitments since you have more cash flow. We did not spend too much and looked towards planning for retirement earlier.”
*Source: https://secure.mas.gov.sg/calculator/goodsandservices.aspx. The health cost is based on the percentage increase between 1981 and 2011 derived from the Goods and Services Inflation Calculator.
^Source: https://secure.mas.gov.sg/calculator/goodsandservices.aspx. The cost of education is based on the percentage increase between 1996 and 2011 derived from the Goods and Services Inflation Calculator.