ARTICLE

Thinking about early retirement? Here are 5 career-related options you should consider

2021

10 min read

It is possible to work towards an early retirement in Singapore.

You can start by living a frugal lifestyle, leveraging on government schemes, such as CPF LIFE and the Supplementary Retirement Scheme (SRS), and boosting your retirement nest egg by investing your savings.

However, you need to ask if early retirement is what you really want.

Whether you're just starting out or in the final leg of your career, if the only reason you are dreaming about early retirement is because you are unhappy at work, then you may not be doing it for the right reasons.

Similarly, if you are daydreaming about a life free from the stresses of tight deadlines, long working hours and a bad boss, early retirement doesn't have to be the only solution either.

Early retirement may not always work out for you

There are financial pitfalls an early retirement may present.

If you are pinning your hopes on rental income from an investment property or dividends from stocks you're invested in, an economic recession may downsize your monthly passive income.

If you or your loved ones fall ill and require a significant cash expenditure, your financial resources may dwindle to the point of not being able to afford to remain in retirement.

You might also miscalculate how much you need. One possibility is that inflation can outpace projected levels, leaving you short on funds when you need it the most. Between 1984 to 2016, the average inflation rate in Singapore was 1.4%. While this is a good gauge in accounting for the long-term inflation rate in the future, there is no guarantee of it staying at such a modest rate.

With increasing life expectancy and medical advancements, you could also outlive your retirement nest egg. In many instances, you will likely only realise this years after drawing down your nest egg. This works against you as the last thing you want is to have to find employment after being out of the workforce for decades and possibly in ill-health in your senior years.

Finally, you could simply end up being bored in retirement and lose your social circle, as you no longer have common topics to discuss or if your social life was revolved around your career.

This is why having a financial plan to protect against health-related concerns, while growing your nest egg over a long timeframe to ride out economic ups and downs is important.

AIA Pro Lifetime Protector (II) protects your dependants against your death, disability and being diagnosed with multi-stage critical illnesses. This gives you the peace of mind knowing that if you are unable to earn a pay cheque due to a serious health concern, your dependants will be taken care of and your spouse will get the financial backing he or she needs to cope.

As you progress in your career and when your children are financially responsible for themselves, you can shift the focus of your plan towards wealth accumulation with the option to receive regular income when you require it.

If you are indeed pondering early retirement, here are five career-related ways you can prolong your career, while also feeling better about the work you do.

1. Continue to stick it out in your job

Life in early retirement, without an income, may not be a bed of roses. In fact, besides not having a rosy life, you could also realise that the grass isn't always greener on the retirement side.

One thing you could consider is sticking in your current role to further bolster your retirement funds, especially since it's not 100% certain that you will enjoy life in early retirement more.

Even within the same company, you could look out for opportunities to switch roles and expand your scope.

2. Work in a job you actually enjoy

In the scenario you just cannot see yourself with the same company or being surrounded by the same people, you could explore switching jobs.

Singapore boasts one of the lowest unemployment rates in the world, and this means that you may be able to find another job relatively quickly.

Rather than resign yourself to the fate of an early retirement, working in another job you enjoy better can be the solution to a longer and more fulfilling career.

Even if you draw a slightly lower salary, being happier and more driven to succeed can push you ahead in your field after the initial transition. You could find it easy to work longer into your golden years, safeguarding your retirement nest egg when you eventually leave the safety net of a monthly salary.

3. Join the gig economy or freelance

The number of people going into the gig economy is increasing. According to the Labour Force in Singapore 2021 report by the Ministry of Manpower (MOM), there are close to 248,500 "Own Account Workers". This represents about 13.6% of the resident workforce in Singapore.

Given its increasing popularity and sustainability, you can also choose to join the gig economy rather than turn you back on work completely. With this, you can also get some of the things you were dreaming of in early retirement, such as greater flexibility in working hours and more varied job scope.

Even if you pull in less in the beginning, certain gig economy or freelance work can blossom into lucrative businesses. You may also become very specialised in your core expertise and gradually be able to demand a higher amount for your work as you win over the trust of your customers.

4. Ask for flexible working arrangement or to work from home

Flexi-work arrangements is also an increasingly popular way for companies to attract and retain talent, by offering employees more options to choose their working hours and/or scope that suits their needs in life.

According to current statistics from the Ministry of Manpower, 72% of employees in Singapore already work in companies with formalised flexible work arrangements. This means a large majority of you can speak to your existing company about such an arrangement if you truly desire it, or approach another company that offers it to their employees.

Going on a flexi-work arrangement can give you're the freedom you desire, while still delivering some financial security in terms of a regular pay cheque.

There are also many government schemes that help companies and employees figure out ways to continue having an economically productive relationship, while offering greater flexibility in work hours, location of work, or job scope.

5. Contribute to society in your work

Even if you can easily afford going into retirement, you may not enjoy it as much as you thought you would. Often, you may also find that you get bored after the initial months of freedom.

If you really don't require any form of income, you can choose to contribute your time and energy into charitable work. Being able to contribute back to society, after being privileged enough to leave a salaried job earlier than most, could bring you a different sense of fulfilment.

This can also be a rewarding pursuit, giving you joy and satisfaction from providing help to the less fortunate.

Stay physically active, even as you plan to be economically active

While there are many outlets to remain economically active even if you are set on leaving or reducing your involvement in the workforce, having good health is key to living life on your terms.

With AIA Vitality, we encourage you to live healthier, longer and better lives, by rewarding you for making even small lifestyle improvements. Beyond incentivising you to be healthier, we realise that your health journey begins with you. This is the reason we encourage our customers to have an answer to "What's your why?"

If you have family you want to spend time with, life experiences you want to accumulate or goals you want to achieve, your "why" can be a powerful motivation to ensure you have a healthy mind and body to do it.

With personalised health goals, AIA Vitality takes a holistic approach to walk hand-in-hand with you in your personal health journey. You can take holistic health assessments for fitness, nutrition, sleep, mental well-being. By understanding your Vitality age, we can provide you with multi-disciplinary and achievable personal goals to work towards.

Like compounding your wealth or career experiences, the more you focus on your health, the greater the benefit to your well-being and life.

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