Our advisers / APEX ADVISORY GROUP
Alex Ang, Sarah Khoo, Genevieve Shee
What is the is most common misconception about retirement?
Genevieve Shee: Many Singaporeans assume that CPF Life will take care of their retirement needs and that they do not need to do any additional saving or investment for their retirement.
Alex Ang: The more common misconceptions I have encountered are:
• People put off thinking about retirement in favour of more short-term gratification
• CPF monies are more than enough to retire, this is relative to the individual’s situation and lifestyle needs.
• The belief that you will have less expenses during retirement than while working
• The idea that you will work as long as you can and therefore will not be retiring so soon.
Lishan: Solely relying on assets like property, especially when you have more than one property. Replying on rental income upon retirement. Similarly, there are those who believe they can choose to rent out rooms or downgrade to a smaller apartment at retirement.
“A lot of people underestimate how fast time goes by, those in the earlier stages of life often feel like they can still wait. More often than not, clients accumulate more unexpected adhoc expenses which eat away at their savings.
Is there anyone or any scenario whereby an individual need not save for retirement? If so, how common is this?
Genevieve Shee: Yes, if your house is already fully paid and you have passive income or a big enough nest egg to draw down from to meet your expenses.
Alex Ang: To add on, there are those with generational wealth, and have the luxury of inheriting a big fortune. In these cases, you would still be encouraged to work towards growing your wealth.
What is an often-overlooked factor that goes into retirement planning?
Genevieve Shee: The effects of inflation. Some of my younger clients have difficulty forecasting how much they might need for their monthly retirement income. I recommend checking out some simple online retirement calculator to get a better understanding.
Alex Ang: A lot of people underestimate how fast time goes by, those in the earlier stages of life often feel like they can still wait. More often than not, clients accumulate more unexpected adhoc expenses which eat away at their savings.
Lishan: It’s also very easy to instantly gratify our desires in our time. Spending on today’s wants rather than saving up on future’s need when we have surpluses is a common pitfall. That is not to say you cannot treat yourself, but you must take a more balanced approach.
Of your clients, past and present, what are some of the more common reasons they were unable to commit to their retirement plan?
Genevieve & Alex: There is always an excuse not to do retirement planning at every stage of your life
• In your 20s, you just started working, and your income is not stable
• In your 30s, you have to consider the expenses of big milestones like your wedding, house and family commitments
• In your 40s, you may encounter some career uncertainty and face some fears of retrenchment
• In your 50s- you may need to set aside large sums of money for your children’s education.
At the end of the day, what really helps is understanding what you need to and a plan of action. That is where we come in. Comprehensive financial planning is not about buying a suite of products, it about putting your milestones into perspective and the strategy to attain them systematically and realistically.
Do I still need to save for retirement if I never plan to retire?
Genevieve Shee: Personally, I believe everyone will have to stop working at some point. How many 75-year-olds are still working?
Alex Ang: It is theoretically possible, but rare in practice. There are not many opportunities for people looking to continue in the workforce over the age of 70. Thus, it is always better to have multiple solutions when it comes to your own retirement.
Lishan: Absolutely, yes! Planning for retirement does not necessitate that you have to stop working, rather planning for retirement is about creating choices: the choice between having to work and wanting to work.
Would my retirement strategy change if I plan to retire to a country with a lower cost of living? If so, how drastic?
Genevieve Shee: Yes of course. Lower cost of living translates to a smaller retirement nest egg requirement. With a smaller retirement shortfall to address, you have considerably more options like not take riskier investment strategies.
Alex Ang: Agreed. Building a smaller retirement nest can be easier and quicker. Another option is that you can choose a shorter time wealth accumulation horizon with the same risk appetite to yield the same return.
Lishan: Again, planning for retirement is about creating the option, you can plan for retirement in Singapore and eventually choose to retire some where more affordable. The idea is to plan to have your cake and eat it too.
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