You may think that it is too soon to plan for retirement when you are still young. However, it is important to financially make room for a retirement plan even in your younger years. Today, people are living longer. So, it is important to make sure that you are ready and prepared to enjoy your retirement years.
So, it does not matter if you are younger or older; you need to start planning for retirement now. Regardless of when you begin, you know that one thing is certain. You will need the money. If you put more money aside, then you will give yourself more leeway in how to choose you investments.
Setting up a Protocol for Savings
Therefore, in order to get the ball rolling, you should begin by saving as much as you can, given your current budget. You also need to follow a pre-set protocol such as a plan that is often prescribed by retirement planning advisors. If you follow these steps, you will be of those people who realised the importance of retirement planning in Singapore and came out ahead as a result.
When Will You Retire?
For instance, the first step that you want to take in planning for retirement is to identify and establish your pre-retirement objectives and retirement goals. Next, you want to project the length of your retirement. Do you plan to retire early? Or do you plan to enjoy the fruits of your labour for about 20 years?
Plan for Inflation
The next step in planning for retirement involves your assets and net worth. Also, estimate and write down your retirement expenses and project your retirement income. When you have these key figures, you want to balance the expenses and income. In addition, do not forget about the impact of inflation. This step alone may cause you to reassess and revise your retirement plan.
The Central Provident Fund
If you currently work in Singapore, you probably already know about the Central Provident Fund (CPF). This compulsory plan is designed to supply Singaporeans in the workplace with additional security when they get old. This fund is administered by the Central Provident Board, which is overseen by the Ministry of Manpower.
Three Types of Accounts
When you work in Singapore, you make monthly contributions into the CPF. You employer also makes contributions into the same fund. These financial outlays go into three accounts. One account is an ordinary account. An ordinary account is set up for housing and to pay for investments, education, and insurance. Another account, which is called a special account, is set up for retirement investments and related financial products. A Medisave account is also set up to pay for hospitalisation and medical insurance that is approved.
Understanding the Importance of Saving
The above fund will help you see why it is important to save. If you are not quite sure about how to manage this type of fund, you should seek financial assistance. Seek an expert’s advice as well in evaluating your plan for retirement.