How you can test-drive your retirement plans today

When you buy a car, you will likely research which cars may fit your needs and liking, ask family and friends if they have experience with the models you are looking at and also test drive the cars to have a good feel of what you will end up driving.

You may think that putting in this effort is worthwhile because a car is a substantial expense and you would likely be driving it regularly. In the same token, you also need to make a really well-considered decision when planning for your retirement.

Spanning close to 23 years (between the current statutory retirement age of 62 years and life expectancy in Singapore of nearly 85 years), your retirement will cost you even more dearly and will impact your life a lot more than a car. 

A study by the Lee Kuan Yew School of Public Policy estimated that a couple in retirement may need close to $649,000, based on the Minimum Income Standards (MIS), necessary to live on in Singapore over 23 years of retirement.

With that said, here are four ways you can test-drive your retirement plans to see if you can truly support the lifestyle you hope to enjoy in retirement.

While the notion of finally leaving the stress-laden working world behind might seem attractive, you have to consider whether you would even enjoy life without work. After spending close to four decades in your career, a major part of your identity and source of motivation is the work that you do.

Often, the things you think you will get out of bed for each day is little more than a pipe-dream. You may realise that passions you thought you were missing out on were just activities you wanted to try and not things that actually motivated you or even things that you want to do for an extended period of time.

If you think you will spend your free time getting physically fitter, cooking your own meals, or participating in any other hobbies or interests then these are things you should actively be doing even before retiring to find out if you actually enjoy doing it in the long-term.

If you want to figure out if you find fulfilment doing the things you planned for in retirement, you can always take a sabbatical or even use your annual leave to have a taste by trying out those activities.

When you stop working, you have to fill a void of 10 hours or more each day to find something else to do. 

This makes a test-drive of your days in retirement important to understand if it is even something you will enjoy. To do so you can simply take an extended leave or sabbatical from work, before officially tendering your resignation. This will allow you to discover potential challenges that you might not realise you would face.

If you find that you don’t have a lot to do after the initial few weeks, you may need to rethink your life in retirement. You could also realise that retirement isn’t as alluring as you thought it would be.

This question is more for those who want to right-size to a smaller home or live in a more affordable retirement destination such as Malaysia or Indonesia.

Before undertaking the drastic action of selling your home and buying a smaller one or moving to another country, you could rent the space for a year or two (while renting out your current place). While this may be an additional cost and inconvenience to bear, it can end up saving you a lot of time and money if you realise your plan to be unsuitable.

Of course, if you are planning to live in a cheaper overseas country, you might have to combine taking a sabbatical and renting a place overseas in your test-drive.

It’s easy to think that you can cut back on your monthly expenses while in your retirement. You may think you can simply go without things like overseas holidays, eating out, Grab rides and other forms of entertainment you currently indulge in. However, it’s another thing to actually forego the luxuries you have become accustomed to.

For a reality-check, you can easily test-drive this lifestyle for a year to see if you truly can live without these things. If you can’t, then retiring early might not be an option unless you can learn to wean yourself off these indulgences. Or if you’re young enough, you might need to work harder to grow a bigger nest egg.

You may think you will be able to drastically change your lifestyle in your retirement. In reality, after you get used to a certain standard of living or way of life, it can be difficult to make changes – both financially and emotionally.

To ensure you will be able to adjust to the lifestyle you are aiming for during retirement, you should test-drive it before you actually retire.

One important component is having sufficient retirement income. Understand how much you stand to receive in CPF LIFE, build supplementary income streams with investments and savings. One way to boost your retirement nest egg is with AIA Platinum Retirement Elite, which ensures you consider your retirement needs with a target monthly retirement income, the flexibility to start drawing down from age 50 as well as choosing to receive a yearly stepped-up income between 0% and 5% to account for inflation. 

As you put away savings towards a retirement that you are dreaming about, you also need to ensure that you protect your nest egg from uncertainties. Having sufficient life insurance not only protects your dependents in the short-term, but also the plans you have built with your spouse in the long-term.

With life insurance, such as AIA Guaranteed Protect Plus (II), you can protect your young children, spouse or elderly parents from any potential financial hardship, should any unforeseen events occur. It covers you for up to 5 times your insured sum till age 65 or 75, and thereafter the protection continues to cater for your spouse’s retirement plans in the event of death or total permanent disability. For enhanced coverage, you can purchase add-on riders to cover critical illness as well. This protects you and your spouse from needing to dip into your retirement funds in any unforeseen scenarios.

At the same time, if you are healthy in your golden years, the plan accumulates a cash value that will mature once you turn 100 or as legacy to leave behind for your loved ones when you pass on.

To encourage you to adopt a healthier lifestyle, AIA Vitality rewards you with discounted health screening, gym membership discounts and exclusive deals on fitness-related gadgets, and travel and leisure activities.