What each of us want in retirement is different. You may want to play golf every day. Your spouse wants to visit her sister once a month. And your next-door neighbor wants to volunteer more and take up zumba classes.
That’s why you need a personalised strategy—one that works for you and what you want. That’s a key part to turning years of savings into retirement income.
Three steps to building your retirement income plan
Step 1: Define your retirement goals.
What do you envision doing during your retirement? How does that change the budget you’ve had during your working years? If you have a spouse or partner, do you plan to retire at the same time or do you have different goals? Lots to think through when you dream about the next phase of your life.
Step 2: Analyse your financial situation.
Review your current asset allocation and how it’s working for you in your investment portfolio and retirement accounts.
Also consider your expected income during retirement. Make note of debts you’ll have in retirement. Then estimate how long your savings may last.
Step 3: Evaluate your options and adjust.
If your analysis reveals you may not achieve your retirement goals, decide on some next steps. Here are a few ideas to manage expenses and boost savings.
• Increase your voluntary contributions to Private Retirement Scheme.
• Make cash investments into a Unit Trust fund.
• Short of funds to invest? Use funds in EPF's i-Invest to maximise your savings. (link to page)
• Adjust your budget to reduce expenses.
• Manage debt so you have more money for long-term savings.
Pay attention to the details.
When evaluating your choices for retirement income, consider the differences in fees and expenses, as well as tax and legal implications, for each option. Also consider your risk tolerance and the length of time before you retire.
By taking a planned approach to creating a retirement income paycheck, you help reduce your chances of outliving your savings. Because no one wants that, right? Plus, when you know you can’t outlive it, you’re not afraid to spend your money and enjoy your life more.