With increasing life expectancy and low birth rates, Singapore faces the prospect of a shrinking and ageing population and workforce. The number of elderly citizens will triple to 900,000 by 2030 and they will be supported by a smaller base of working-age citizens. There are currently about 6.3 citizens in the working ages of 20 to 64 years for each citizen aged 65 and above. By 2030, this ratio will go down to only 2.1.

The Government has tried to tackle the challenge with policies such as MediShield Life and increasing the minimum sum requirement in the Central Provident Fund. Singaporeans, however, should do their part in planning well and responsibly for their retirement.

To be sure, more elderly people close to retirement age today are keen to explore new work opportunities or carry on with their careers. Most want to keep their minds engaged and continue having a source of income. Some factors contributing to this include the fact we are living longer and healthier lives.

PLANNING EARLY

Take proactive steps to build a comprehensive savings plan for your future financial needs so that you can look forward to a better retirement. Discussing your long-term savings and investment options with a financial adviser will help you decide what product is right for you, as it is important that it is tailored to your unique future needs.

Based on our global experience as a leading savings and investment provider, there are four different stages of a typical retirement journey cycle.

1. Ages 20 to 55: Save it

The most common pitfalls people make in planning for retirement and future needs is not saving enough; starting too late; and underestimating the effects of inflation. There is no perfect time to start saving, but the key is to start early. Putting a little aside each month can make a big difference later in life. Your money will have more time to grow and this will help you cultivate fiscal discipline, a good habit that will put you on the right path towards saving for your future retirement and financial needs. You will also be able to put in less each month compared with someone who starts later.

2. Ages 55 to 70: Review it

As you get closer to your retirement age, it is important to review how your savings plans for retirement and future needs to make sure you are on the right track. You can start by first finding out what your current savings plan is worth. You will also need to take into consideration your current contributions. You can boost your plan by increasing your contributions and/or paying in a lump sum.

Secondly, you have to take into account retirement income. Asking yourself questions such as: “Will I be able to enjoy the life I want on the income that I will likely receive?” This will help you decide whether you should allocate more money to your savings plans.

Lastly, you should examine the risk profile of your investment portfolio. As you near retirement age, it is crucial to assess the different asset classes in which your savings plan is invested to make sure you are comfortable with the level of risk.

3. Ages 70-80: Spend it

Your retirement and savings plan is there to provide an income for the rest of your life, so now is the time to decide how to spend it wisely. On retirement, you can take a cash lump sum or, depending on your circumstances, invest in other appropriate savings plans.

4. Ages 80+: Share it

Once you have looked after your retirement needs, you may want to think about sharing your wealth with the people you love. You should review your financial situation, assess your will, get your family affairs in order, and minimise your liabilities.

As we can expect to spend more than 20 years in retirement, it is important to plan carefully ahead. Having a plan in place for retirement and future needs can help us secure the lifestyle we want. It’s not just about putting money into a savings plan and forgetting about it — we need to be proactive and take responsibility for our planning.

ABOUT THE AUTHOR:

Neal Armstrong is CEO and Principal Officer of Standard Life Singapore, which provides long-term savings and investments solutions.