Ms S, decides to retire at 50.
She already have been actively saving and have built up a portfolio of insurance, savings and investments prior to the decision to retire from work completely. While she keeps to a simple lifestyle, she is not sure exactly how much is needed or if she have accumulated enough.
Some questions she had include:
- What insurance policies should she keep? Does she need any insurance in retirement?
- What are the effects of inflation on her lifestyle over the next 30 years?
- How do CPF schemes such as CPF-life work?
The biggest concern is that there is no investment income. Thus, there is the worry that her savings may eventually run dry if she keeps drawing down over time.
A comprehensive review was done based around creating the necessary conditions in retirement – Regular Income, Place to Stay, Debt Free and Insurance Coverage.
A detailed cashflow statement was created, a consolidated networth statement was done to organize the different assets and liabilities into one page to better understand the current financial situation and a detailed review of existing insurance policies was made to understand which policies must be maintained even during retirement.
Eventually, a budget plan was set up for short-term needs and purchase of property. Insurance and investment plans put in place to provide a regular stream of income over the long term which is designed to complement the existing plans in place such as CPF-Life.
GEN Planner’s Thoughts:
In Ms S’s words, she should have done all these 5 years ago. The good thing is that she have saved and accumulated well over her working years and there was enough assets to provide for her retirement. She would have enough whether I was there or not but the work of helping her organize everything together to provide that sense of clarity have given her confidence.
Article by Lee Meng Choe
The writer is the Executive Director (Distribution) of GEN Financial Advisory