Planning for your retirement is essential if you want to live comfortably in your golden years. One does not need $4 or $5 million for simple retirement even though it would be nice to have that amount. If you set a realistic goal and plan carefully, it makes it possible to achieve your objective. Some of the biggest mistakes that one tends to make are:
1. Failure to plan. Many of us are so focused on the economic challenges of today that we spare little time to think about retirement. Job security, education costs, insurance bills are all so pressing that setting money aside for retirement seems alomost impossible. Many plan how to spend their weekends but fail to get their act together for this serious phase of their lives - planning their finances for retirement. Some will simply just let fate take its course and decide if they will ever be able to retire. This denial approach has a big flaw in that there will come a time when you simply cannot work anymore due to physical limitations or lack of available jobs.Though one's goals will be constantly evolving, developing a framework which will fulfil your objectives is essential.
2. Relying on CPF solely is not a wise strategy. Studies have shown that many Singaporeans may not have enough CPF savings to fund their retirement. This is because the bulk of our contribution goes to financing acquisition of properties.
3. Hesitating to start a savings program. Time can be both your friend or your enemy. If you start saving early for retirement, the more time you have for your money to work for you. Compounding is the eighth wonder of the world so make full use of it. Start a monthly savings program now.
4. Diversification of your retirement assets is essential to the safety and long term accumulation of wealth. Tailor your portfolio to achieve your financial needs.
5. Do not ignore the inflation element. Everything costs more over time. Inflation erodes your buying power and is a deadly foe especially for those on fixed incomes like retirees. To continue to enjoy a certain standard of living, the inflation factor must be considered. Loss of purchasing power is hard to deal with even at the working life stage. It becomes more difficult when one is older and not able to work. Thus it is important to factor in inflation when calculating the amount of income needed at retirement.
1. Failure to plan. Many of us are so focused on the economic challenges of today that we spare little time to think about retirement. Job security, education costs, insurance bills are all so pressing that setting money aside for retirement seems alomost impossible. Many plan how to spend their weekends but fail to get their act together for this serious phase of their lives - planning their finances for retirement. Some will simply just let fate take its course and decide if they will ever be able to retire. This denial approach has a big flaw in that there will come a time when you simply cannot work anymore due to physical limitations or lack of available jobs.Though one's goals will be constantly evolving, developing a framework which will fulfil your objectives is essential.
2. Relying on CPF solely is not a wise strategy. Studies have shown that many Singaporeans may not have enough CPF savings to fund their retirement. This is because the bulk of our contribution goes to financing acquisition of properties.
3. Hesitating to start a savings program. Time can be both your friend or your enemy. If you start saving early for retirement, the more time you have for your money to work for you. Compounding is the eighth wonder of the world so make full use of it. Start a monthly savings program now.
4. Diversification of your retirement assets is essential to the safety and long term accumulation of wealth. Tailor your portfolio to achieve your financial needs.
5. Do not ignore the inflation element. Everything costs more over time. Inflation erodes your buying power and is a deadly foe especially for those on fixed incomes like retirees. To continue to enjoy a certain standard of living, the inflation factor must be considered. Loss of purchasing power is hard to deal with even at the working life stage. It becomes more difficult when one is older and not able to work. Thus it is important to factor in inflation when calculating the amount of income needed at retirement.
