Planning ahead for retirement is something many people overlook. Many people would delay this until they realise they’re about to retire, so it’s much harder. If you didn’t plan ahead for your retirement, you may find yourself visiting a licensed money lender Singapore often in your senior years.
Of course, the best thing is to not get into debt at that stage of life. Here are five things you can do today to prepare for your retirement.
Assess your financial status
This is the first and most important step. Take a look at where you stand financially at present. How is your income and your expenses? How are your assets and liabilities? These are the basic questions you should answer.
The rule of thumb here is this: Your income must always be greater than your expenses, and your assets more than your liabilities. With that, you’re sure to have positive cashflow every time. You will always have money for your needs, and you will not have to take on debt.
If your cashflow is negative, take immediate steps to fix your budget. Remove unnecessary expenses, downgrade your lifestyle, and prioritise saving. Later on, you will have money to spare for your retirement.
Obtain health and life insurance policies
When you reach retirement age, chances are you won’t be in your best health. Medical conditions will begin to surface. Health expenses can easily bleed your finances. With that, financially preparing for this stage of life is crucial.
If you already have health and life insurance, review your policies. Find out if the conditions you may have are covered. Also, take a look at how much of the possible medical expenses are covered. You may still have to pay a portion of them out of your own pocket.
If you don’t have insurance policies yet, now is the time to get them. It’s not yet too late, especially if you have not reached retirement age yet. Take note, though, that the older you get, the higher the premiums are for health and life insurance. For this reason, it’s best to get insurance as early in life as you can.
Diversify your investments
If you already invest a portion of your money, then good. Keep adding to those investments to grow your money. Once you reach retirement age, you will have a significant sum for your senior years.
It’s also a good idea to diversify your investment portfolio. Let’s say that you only invest in the stock market now. Try adding Real Estate Investment Trusts (REITs) or Singapore Savings Bonds (SSBs) to your portfolio. With that, you have more than one thing helping you grow your money. Before diving into an asset class, though, make sure you know how it works first.
Maximise CPF contributions
Your CPF can be the biggest contributor to your retirement income. Make sure to maximise your contributions – as much as your income and budget will allow. This way, you will have a lot of savings upon retirement.
Add SRS to your retirement plan
The Supplemental Retirement Scheme (SRS) is a good addition to your retirement plan. Set aside a portion of your money for SRS as well so you can maximise your benefits from the Government once you retire.
Conclusion
The best time to prepare your finances for retirement is always now. If you’re still young, you can maximise the spare money you have to prepare way ahead for the future. If you’re a bit older, it’s still not too late. You can still take steps to make sure you can live a satisfying life once you retire. Keep these five tips in mind to help yourself create a stress-free retirement.
