Read this article about how to prepare for a financially sound retirement. Several tips refer to the tax situation in America which does not apply to Singapore. Some of the other tips, e.g. do not have debts, how to spend within your means - are relevant.
Always remember that insurance agents are NOT retirement planners but salesmen who push so called retirement products. Retirement is not about buying these products. A host of other issues are to be taken into consideration.
ReplyDeletePeople are not able to ascertain their monthly expenditures.
ReplyDeleteAt best, its a vague sum and highly inaccurate.
The first step to financial literacy is actually to know how much does one spend in a month.
It is shocking that when I ask my friends, who are married with kids, with maids, mortage and car, they have a rough idea only. ( maybe they are just withholding facts!)
But this is really the first step.
If we do not know how much is spent a month and where does your money go, it will be very difficult to save, to budget, to measure, to determine the holes. You'll end up like Europe & USA.
next is to be reasonable with your own targets and living expectations.
When I read the Sunday Times about how people hope to achieve financial freedom, I think they are living in dreamland. The numbers just do not add up!
Of course I do not have the full picture but their lifestyle and their incomes is not sustainable!
I am 55 now, unemployed by choice and I calculate that I should be gone by 80. That is 25 years from now. With annual expenses budgeted at $60,000, I will need $1.5 million to last 25 years.
As i grow older, I will very likely eat less and travel less but will need more medical treatment and aids.. a constant 60K should suffice including inflation effects.
Sorry to point out some mistaken beliefs,
ReplyDelete1. it may not be true that when we grow old, we eat less or want to travel less or spend less
2. one medical ailment can easily wipe out the 60k for the year and still won't go away
3. what if live past 80?? cannot wait till then to worry right?
# The older I get I lose more teeth
ReplyDeletetherefore its possible I eat less
It is also possible that my tastes change and I prefer less quantity ( for health reasons ) and go for quality. So expense can remain static. Travelling using a wheelchair now days is not very difficult.. the buses, MRT can accomodate.. so the expense is affordable. If you suffer severe mobility issues, see # 2 below:
#2 The probablity of massive and costly medical treatment is small. How many get cancer? how many get heart transplants? how many suffer illness that require more than 10,000 a month to keep alive?
In that case, sign an advanced medical directive ( AMD ) and get the plugs pulled.. to save money.
#3 Live past 80?.. no problem.. stay at home, wear diapers, stare into blank space, eat when fed... how much does Maria or Suwati costs? $1000 per month ( all inclusive, food, levies, salaries)
Lets make that $2500. You still have $2500 balance to pay for medication,transport,utilities,diapers,conservacy charges. No need for internet, fixed line or cable TV, newspapers.
My father-in-law is 92. He cannot hear, he cannot see very well, he cannot walk, he has no teeth.He wears diapers x 2 pcs every day.
he eats rice porridge with minced pork/fish/chicken/vegetables. all blended into a paste. He eats 3x a day! How much does he costs? negligible.. its the time expended to haul him into wheelchairs, haul him into the toilet, haul him to have his shower... cut his hair, trim his nails, wash his clothes ( seperately) shave him.. this takes up alot of time and physical strength.
Money for 80 years old not an issue
Sorry to correct a few more mistaken beliefs
ReplyDelete1. As we lose our teeth, I believe most elderly, if they could afford it, would want to get a good set of dentures. That unfortunately would not be cheap.Once you can eat better, you find that quality of life is more important than how old you live up to .
2. Chance of getting cancer increases as a person grows older. In fact, chance of getting heart diseases, stroke, Alzheimer's etc all increases with age. Think you agree, that's why you brought up AMD. Unfortunately, signing an AMD does not equate to euthanasia or suicide because you cannot pull the plugs on yourself unless further treatment does not improve your chance of survival. So maybe still have to undergo chemotherapy, surgery as long as there is hope.
Ironically, like you said in your first 2 sentences, that is why people are not able to ascertain their expenditures, which many times can be vague and unpredictable.
3. Money for 80 years old may not be an issue. But to live up to 92, you need at least another 720k on top of your 1.5 million. That is considering no emergency medical charges or ICU fees during the last few months of your life.
Have we forgotten to factor in inflation too??
So start planning for the $5000 a month income now when you are young. Don't fall for the so called retirement products that pay very little monthly payouts despite keeping 30 years.With 30 year time horizon you can achieve your retirement by investing in a moderate risk portfolio that can return 8 to 10%. Of course , make sure you get a proper adviser and honest planner. It is crucial because if you get a salesman disguised as adviser or financial consultant or those executive financial consultants with logos like mdrt, cot or tot you are finished from the start.You have hired a wolf to take care of your chickens, are they safe?That is.when you have salesman as adviser. You will be sure of having lots of limited pay wholelife or limited pay endowment or anticipated endowment that they con you to believe it is some kind of annuity.
ReplyDeleteThat is what salesmen and women will do with your old age money.Can't blame them...they are unqualified and worse, they are trained in conmanship by their trainer.