The definition of financial independence varies with individual needs, depending on one’s lifestyle and goals. For instance, some people see holidays as an indispensable aspect of life which cannot be compromised. Others may see it as having the liberty to pursue passions without the burden of working for income. This is because people often cannot leave their unhappiness behind due to economic reasons, which often hinders their ability to pursue passions.


Planning for retirement enables us to give ourselves a sense of security. More people are recognizing the importance of having robust retirements plans in place, and there are many types of retirement plans in the market compared to a few decades ago.


Here’s some advice for those planning for a comfortable retirement:

1. Use your current lifestyle as a baseline

Many people think that they will spend less after retiring, but that is often a misconception. The reality is that with all the newfound freedom and time, most retirees are likely to spend more than they did before they retired. This is because the early years of retirement are where they have the opportunity to pursue interests they never had the chance to earlier in life. So, give some thought to the luxuries and activities you would like to pursue in your sunset years. Activities such as travelling or picking up a new hobby are additional expenses you may want to factor in.

2. Eliminate reinvestment risks during retirement.

When you are a retiree, you may not want to take on risks by investing like you did in your younger days. Moreover, purchasing power erodes with time due to inflation, which can be highly distressing as you have stopped generating an active income at this point. Generally, the recommendation here is to stick with regular retirement payouts over lump sum payouts; they provide a steady stream of income – from a growing pool of funds – to last people for the rest of their lives. Always remember: the point of a retirement plan is to ensure your future financial security, which means mitigating risks when you are no longer in a position to take them on.

3. Uphold personal responsibility in spending.

Some people who receive a lump sum retirement payout become cavalier with their spending – this is because they find themselves suddenly being in possession of an abundant amount of money. In some cases, some people may find themselves spending frivolously. It is advisable to focus on being aware of temptations, and then resisting or even removing them. You can see your retirement fund as a reward for a lifetime of hard work – prudent spending is necessary to safeguard everything you have worked so hard for, through both good and uncertain times.

4. Do not solely rely on CPF savings, diversify your savings

Many people think having CPF savings are enough, but the reality is that most people maximise their CPF monies on housing purchases, leaving them with inadequate funds for a comfortable retirement. The reality of the situation is that while CPF is a good starting point, a vast majority of people currently in the middle to upper income brackets will see substantial losses in quality of life and spending power when they reach retirement. So, instead of solely relying on CPF, an individual could diversify his or her investments. Speaking to an adviser about retirement goals and how one can achieve them is a good option.

5. Study other good financial frameworks for retirement, and use them to refine your retirement plan.

A good financial plan to draw reference from is the CPF savings scheme. It has all the components one requires to safely retire, covering all the important aspects of life.

The three accounts under CPF, well thought through by the government, provide a framework of what a healthy portfolio should look like. A key component of CPF is the Special Account, which provides annuity for the duration of your lifetime upon retirement. While this presents Singaporeans with an affordable baseline, it does not provide enough for the average individual’s lifestyle. Currently, the Full Retirement Sum (FRS) of $181 000 will equate to roughly $1400 in monthly payouts at age 65. If your lifestyle requirements exceed this amount, you may wish to consider additional plans to reach your ideal retirement income.  

Planning for financial independence is like planning a holiday – you plan in advance for everything, so that you will have an enjoyable time. It is the same for retirement planning – the only difference is that you don’t have a second chance to do it better, unlike a holiday destination which you can always revisit. Plan early, and plan properly, so that you can live your golden years to the fullest.


Ronnie Wong

“Clients have a sense of security in knowing that someone is actively watching over their financial well-being, now and in the future, and I relish being a part of that,” says Ronnie Wong.

Almost two decades into his career in advisory, Ronnie takes care of the financial well-being of about 100 clients, most of whom are professionals or specialists on their trade. He is adept in a comprehensive range of advisory aspects, with a particular interest in wealth protection and wealth accumulation – one of his key goals is to guide his clients towards early and comfortable retirements.


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IPP Financial Advisers Pte Ltd

78 Shenton Way #30-01 Singapore 079120Tel: +65 6511 8888