Here’s My Beef With Retirement Planning Experts

Have you gone through a retirement planning exercise with your financial planner?

Let’s recap the typical questions you get asked.

Planner:      First, what age would you like to retire?

You:               I’m not sure…

Planner:      The typical retirement age in Singapore is 65 and it is expected to rise to 68 very soon.

You:               Okay, let’s say 65?

Planner:      Good, so how long would you like your money to last you in your retirement?

You:               As long as possible?

Planner:      Well the statistics in Singapore is that most men live expectancy rate is till 80 and women is 85. So we can plan for about 20 years?

You:               Ok I guess.

Planner:      How much do you think you’ll spend in your retirement? Same as today? Lesser? More?

You:               Don’t know eh? Lesser I guess? (*and you’re thinking to yourself – can I go back soon?)

Planner:      Let’s say you spend about half of what you’re spending today… we can work out your savings needed…

Alright I did exaggerate on the flow but if your planner did the process exactly like that, you might want a second opinion.

You see, this is what is taught in the financial planning textbooks. But here’s the question…

Does This Retirement Formula Work In Real Life?

We’re running the entire scenario on a series of assumptions and estimates. While it does help open our eyes to the fact that retirement planning is crucial, it makes it appear as if this is something only for the very rich or disillusioned individuals.

For anyone to really retire comfortably, it is not about the years spent in retirement or the amount of savings available.

If we could, I’m sure every single one of us would like to retire tomorrow.

This is why our Building Transferrable Wealth philosophy talks about this particular challenge which I’ll cover in a while.

But first, ask yourself this…

When Can You Really Retire?

I’m not talking about the age you would like to retire at, but rather when do you know that you can retire?

  • You don’t feel like working anymore?
  • You’ve hit the retirement age set by the government?
  • You find yourself suddenly unemployed?
  • You’re financially free?

I hope you chose the 4th option…

When you’re financially free.

But how do you tell when are you financially free?

Here’s the formula we use for all our clients and ourselves. Ready?

Income > Standard of Living

That’s all. So simple to understand yet so difficult to achieve.

The problem many people face is that most to all of their income comes from their work income.

When you stop working, your income stops coming in. And as you can see from the formula, the goal of being financially free will be an issue.

And that’s where the true retirement planning comes into the picture.

The critical thing here is to make sure you’re financially stable to continue paying your bills every month.

That’s when you no longer need your job, whether voluntarily or otherwise.

Because here at GEN…

That is when you truly have a healthy retirement plan.