Skip to main content
  • Search
  • AIA Singapore
  • Our Products
    • Life Insurance
    • Medical Insurance
    • Critical Illness Insurance
    • Disability Income Protection
    • Accident Protection
    • Savings
    • Investments
    • Platinum
    • Travel & Lifestyle
    • AIA Vitality
    • Employee Benefits
    • Corporate International Medical
  • Life Matters
    • Health Matters
    • Wellness Matters
    • Money Matters
    • Wealth Matters
    • Your Financial Needs Matter
  • About AIA
    • Our Leadership Team
    • Environmental, Social and Governance
    • Careers
    • Media Centre
    • Awards
    • Our Top Awardees
    • MDRT Members
    • AIA Financial Advisers
    • AIA Brunei
  • AIA Vitality
    • About AIA Vitality
    • How It Works
    • Rewards & Partner Benefits
    • Join AIA Vitality
  • Help & Support
    • Contact Us
    • ONLINE PAYMENT WITH AIA PAY EZ
    • AIA HealthShield Support
    • Lodge a Complaint
    • SGFinDex
    • FAQs
    • Form Library
    • Submit a Claim
    • Notices To AIA Policyholders
    • AIA Funds Information
    • AIA Annual Fund Reports
    • AIA's Participating Fund Commentaries
    • Consumer Guides
  • My AIA
    • My AIA SG
    • My Rewards
    • AIA Altitude
    • Make Payment Online
    • Submit a Claim
    • Request HealthShield Pre-Authorisation
    • FSC Access
    • Bank Partner Access
    • FA Broker Partner Access
    • eBenefits
  • AIA Vitality
    Visit the AIA Vitality website
  • YOUR FINANCIAL NEEDS MATTER
    Explore our financial calculators and resources for your long term and short term goals at different life stages.
  • Recent Promotions
    Find out more about our latest campaigns and promotions
AIA
AIA Logo AIA Logo
  • Our Products

    Our Products

    Find our products and services according to your protection needs.

    See more
    YOUR FINANCIAL NEEDS MATTER

    Explore our financial calculators and resources for your long term and short term goals at different life stages.

    EXPLORE NOW

    Recent Promotions

    Find out more about our latest campaigns and promotions

    See more

    For Individuals

    For Business

    • Life Insurance

      Protect your loved ones’ future from life’s uncertainties

    • Medical Insurance

      Adequate coverage for medical bills so you can focus on getting better

    • Critical Illness Insurance

      Protect against the financial burdens of critical illness

    • Disability Income Protection

      Protect your ability to earn an income.

    • Accident Protection

      Be financially prepared for the unexpected

    • Savings

      Start planning early and fulfil your saving goals.

    • Investments

      Make your money work harder for you – your dreams matter

    • Platinum

      Plan your enduring legacy, and share it with the generations to come.

    • Travel & Lifestyle

      Cover your personal belongings from loss or damage

    • AIA Vitality

      AIA Vitality is one of the most comprehensive wellness programmes with a wide spectrum of tools and benefits that target different aspects of your health.

    • Employee Benefits

      Secure your company’s most important asset through our market-leading domestic solutions

    • Corporate International Medical

      Give your local and international employees world-class healthcare with our corporate international medical solutions.

  • Life Matters

    Life Matters

    We take care of the matters of your life because your life matters

    VIEW ALL IN LIFE MATTERS
    • Health Matters

      Kick-start your journey to better health

    • Wellness Matters

      Live life to the fullest

    • Money Matters

      Prepare for your lives ahead

    • Wealth Matters

      Start protecting your wealth and enabling succession and legacy for your generations

    • Your Financial Needs Matter

      Explore our financial calculators and resources for your long term and short term goals at different life stages.

  • About AIA

    About AIA

    For almost a century, AIA has served the ever-changing needs of millions of people all across the Asia-Pacific region.

    Healthier, Longer, Better Lives

    • Our Leadership Team

      The Executive Committee and Board & Board Committees of AIA Singapore

    • Environmental, Social and Governance

      Our ESG commitment aims to deliver value to all our stakeholders

    • Careers

      Explore opportunities to work at AIA

    • Media Centre

      News and information about AIA

    • Awards

      Check out our awards and achievements over the years.

    • Our Top Awardees

      Presenting our top performers of FY2022

    • MDRT Members

      Presenting our top performers of FY2022

    • AIA Financial Advisers

      Who we are, what we do. Let's forge a partnership that lasts beyond a lifetime.

    • AIA Brunei

      Find out more about our branch office

  • AIA Vitality

    AIA Vitality

    AIA Vitality supports and motivates you every step of the way towards achieving your health goals. What’s more, get rewarded for healthy choices and earn points when you get active, eat well and complete Health Checks!

    Find Out More
    • About AIA Vitality

      AIA Vitality is a comprehensive programme that motivates you to keep fit and helps you to manage your health.

    • How It Works

      ​Discover how you can live a healthy lifestyle by staying active, eating well and maintaining good health with AIA Vitality.

    • Rewards & Partner Benefits

      Discover the rewards and benefits you have unlocked with your AIA Vitality points.

    • Join AIA Vitality

      Join us today, and get motivated to live a healthier, longer and better life!​

  • Help & Support

    Help & Support

    We strive to assist you for all your inquiries with high touch customer service.

    Contact AIA

    For Customer Support

    For Resource/Useful Links

    • Contact Us

      Cannot find the answer in our FAQ section? Contact us now

    • ONLINE PAYMENT WITH AIA PAY EZ

      Manage all your AIA payments from one convenient location

    • AIA HealthShield Support

      Quality Healthcare Specialist Partners exclusively for AIA HealthShield Gold Max customers

    • Lodge a Complaint

      On the sale of insurance products under the Financial Advisers Act (FAA)

    • SGFinDex

      Connect securely and view all your financials at one glance

    • FAQs

      Have a question? You may find the answer here

    • Form Library

      A selection of forms you can download, fill in and send back to us

    • Submit a Claim

      Need to make a claim? Learn more about the claim process.

    • Notices To AIA Policyholders

      Useful information for policyholders

    • AIA Funds Information

    • AIA Annual Fund Reports

    • AIA's Participating Fund Commentaries

    • Consumer Guides

  • My AIA

    My AIA SG

    Exclusive for AIA policyholders and Vitality members to conveniently access policy information, Vitality membership and rewards

    Register For My AIA SG

    If you are an AIA customer, and do not have a login, you can register for My AIA SG account here.

      Customer
    • My AIA SG

      My Rewards

      AIA Altitude

      Submit a New Request
    • Make Payment Online

      Submit a Claim

      Request HealthShield
      Pre-Authorisation

      Distribution
    • FSC Access

      Bank Partner Access

      FA/Broker Partner Access

      Employee Benefits
    • eBenefits

    My AIA SG

    Exclusive for AIA policyholders and Vitality members to conveniently access policy information, Vitality membership and rewards

    Register For My AIA SG

    If you are an AIA customer, and do not have a login, you can register for My AIA SG account here.

      Customer
    • My AIA SG

      My Rewards

      AIA Altitude

      Submit a New Request
    • Make Payment Online

      Submit a Claim

      Request HealthShield
      Pre-Authorisation

      Distribution
    • FSC Access

      Bank Partner Access

      FA/Broker Partner Access

      Employee Benefits
    • eBenefits

    Home

    My AIA Perks

    Logout

  • Search
  • Contact Us
    • Book an Appointment

    • Contact us

Money Matters
Prev | Next
  • {{title}}

    {{label}}
  • What If There Is A Recession When You Retire? How To Build A Stable Retirement Nest Egg


    How to build a stable retirement nest egg

    No one can predict exactly when a recession will hit, but everyone knows that it will eventually happen. This is why it’s important to plan for your retirement with the assumption that your retirement portfolio has to withstand an economic crisis.

    A case in point – despite a record 11-year bull run in the stock markets, the COVID-19 pandemic has jolted many industries and led to a nearly 30% plunge in the stock markets.

    What if a recession hits when you retire?

    For individuals, the worst possible time for a recession to occur is when you are on the cusp of retirement.

    Just as you are about to start withdrawing from your retirement nest egg, the value of your investment portfolio plunges. Furthermore, you now need to liquidate more of your investment assets to drawdown the same amount of income. This double whammy can deplete your financial resources much more quickly than you had initially planned.

    Worse still, if you are heavily reliant on a few investments for your retirement income, you may end up not just with a depleted portfolio value, but may also experience a cash flow threat if coupon payments, dividends and rental income are reduced, from your bonds, stocks and property investments respectively.

    Apart from financial pressure, this will likely also cause emotional stress that may lead to sub-optimal personal and money decisions.

    To avoid this, you can’t simply settle on an arbitrary number you want to save for your retirement – like $1 million – or pray that an economic downturn does not happen at the wrong time. You need a game plan to build a stable retirement nest egg capable of riding out such downturns.

    Start early

    You never know what may derail your retirement fund – recessions, personal health crises, retrenchments and other factors can affect your ability to continue earning an income to put towards your retirement. Some people may even be forced into retirement early.

    By starting early, you can grow your retirement fund for a longer time and be able to endure periods when you may be unable to make regular contributions.

    Another important reason to start early is to allow you to take full advantage of compound interest. By earning interest on your past returns, you can grow your portfolio to a substantial sum over a runway of three to four decades spanning your career, even with a smaller contribution.

    Living a modest lifestyle

    Few people start off living a luxurious lifestyle. Only when they start climbing the corporate ladder does lifestyle inflation creep in, sometimes without them even realising.

    By living well within your means, you put less financial and emotional pressure on yourself and your loved ones. This can lead to better outcomes in your career as you can choose to enjoy your work, without constantly being occupied by financial worries.

    As you limit your lifestyle expenses, you can channel more funds towards a larger retirement nest egg as well.

    A modest lifestyle today will also prepare you for a modest lifestyle in retirement. Often, you may think it is easy to downsize your lifestyle once you retire. However, after being accustomed to a certain standard of living for a long time, be it living in a condominium, owning a car, going on multiple overseas holidays or always buying the latest gadgets, it may be difficult to scale it down during retirement.

    Work so that retirement is not the end-goal

    If you are dreaming of an early retirement, or are just waiting for the moment you reach the official retirement age, you may be in the wrong job.

    Consider work that gives you fulfilment. Even if it does not pay as well, being happy with your job is a fantastic trade-off. It means that you are happy to work, rather than to see your job as simply a means to an end.

    The reality is that many things can wreck your plans for early retirement. There is also a greater risk that once you retire early, your nest egg will not be able to last your entire lifetime.

    If you are truly unhappy in your current line of work, think about what it is you want to achieve after being able to retire early. You can choose to do that today, and earn less but be happier to work past your retirement age.

    This also goes back to the earlier point about living a modest lifestyle because it gives you freedom to work in the job that will give you more meaning instead of chasing a larger pay cheque.

    Diversify income streams

    Don’t put all your eggs in one basket.

    This is a good analogy for why you should spread out your investments. If anything affects one investment, your entire retirement income will not be in jeopardy. Doing this will also prevent you from reacting emotionally during downturns.

    In retirement, your CPF LIFE monthly payouts forms the base layer of your financial security. However, the payout may only be able to pay for a basic standard of living.

    To enjoy a higher standard of living during retirement, you can choose to contribute more to your CPF accounts during your younger days for higher CPF LIFE payouts. To diversify your income streams, you may also want to invest in other assets, including stocks, bonds and, if you are able to afford it, investment properties.

    You can also supplement your retirement income with a retirement plan, such as AIA Retirement Saver (III). You can enjoy guaranteed monthly income for 15 or 20 years, starting from your desired retirement age. Regardless of how the economy fares, every dollar you contributed on yearly basis will also be guaranteed upon reaching your chosen retirement age. If the markets perform well, your retirement income stands to grow, cushioning you from the impacts of inflation and potentially enhancing your living standards in retirement.

    Remember, if one income stream is affected, you need to be able to rely on other sources to continue receiving an income.

    Recession-proof your retirement

    By over-preparing for retirement, you can make use of the recessions to bulk up your nest egg. Beyond just your working years, a recession early in your retirement can also be a boon as you have several decades worth of funds to continue growing in the markets.

    As you near your retirement, you could also be prudent in gradually reducing the risk in your investment portfolio. Apart from just diversifying, you may want to allocate a larger proportion to bonds or even contributing a lump sum to your CPF LIFE for higher monthly payouts.

    You can also look to keep your mind and body working by taking up smaller roles to provide a token allowance during your retirement. Alternatively, if you do not need the money, contributing your time and effort to a worthy cause you believe in can keep you actively participating in the community.

    Each individual will have his or her own unique retirement needs. If you are unsure about how to start planning for a secure retirement plan that can overcome a downturn, it can be beneficial to speak to a trusted AIA Financial Services Consultant who has experience and knowledge of helping their clients navigate uncertainties.

    Related Articles

    • LIVING ON THE MINIMUM INCOME STANDARD– HOW MUCH YOU NEED FOR 20 YEARS OF RETIREMENT
    • HOW TO LEAVE BEHIND A LEGACY FOR YOUR LOVED ONES
    • SHOULD YOU RIGHT-SIZE YOUR HOME WHEN YOU RETIRE?

    Recommended Products

    Savings

    AIA Retirement Saver (III)

    Charting the perfect course towards your retirement dream is easier than you think. Rather than searching for the right plan to get you there, take charge with AIA Retirement Saver (III) and discover endless possibilities for a retirement worth dreaming about. So get started now – with no medical check-up required, it couldn’t be simpler.

    Critical Illness Protection

    AIA Power Critical Cover

    AIA Power Critical Cover protects you extensively for 175 conditions without disrupting your coverage, from as early as the detection of chronic conditions to diagnosis of multiple critical illnesses and relapses.

    Disability Income Protection

    AIA Premier Disability cover

    AIA Premier Disability Cover protects you against loss of income when you’re unable to work.

    Get in touch

    What’s your name?*

    What's your mobile number?

    What's your email address?

    Are you an existing AIA Singapore customer?*

    Area of concern:




    Thank You

    Partial NRIC / Passport / FIN No.

    (last 4 characters)

    Date of Birth

    CONTACT AIA

    1800 248 8000

    1 Finlayson Green
    Singapore 049246
    View Details

    BOOK AN APPOINTMENT

    GO TO

    AIA.COM

    Visit our corporate site to learn more about AIA.
    Go To
    CONTACT AIA

    1800 248 8000
     

    1 Finlayson Green
    Singapore 049246

    View Details

    BOOK AN APPOINTMENT

    GO TO

    AIA.COM

    Visit our corporate site to learn more about AIA.
    OUR INSURANCE PRODUCTS
    Life Protection
    Medical Protection
    Critical Illness Protection
    Disability Income Protection
    Accident Protection
    Savings
    Investments
    Platinum
    Travel and Lifestyle
    EXPLORE AIA
    AIA Retirement Solutions
    Your Learning Buddy
    AIA Altitude
    Careers
    AIA Vitality
    Sitemap
    USEFUL LINKS
    Recent Promotions
    AIA Funds Information
    FAQs
    Form Library
    Digital Payments
    Security Advisories
    Report a Vulnerability

    This website uses cookies for the purpose of enhancing your user experience. You can find more information on the types of cookies we collect, what we use these for, and how to manage your cookie settings in our Cookie Policy and AIA Personal Data Policy (Singapore).

    ABOUT AIA
    Explore AIA
    AIA Retirement Solutions
    Your Learning Buddy
    Wealthbeing by AIA
    Careers
    AIA Vitality
    Sitemap
    OUR INSURANCE PRODUCTS
    Life Protection
    Medical Protection
    Critical Illness Protection
    Disability Income Protection
    Accident Protection
    Savings
    Investments
    Platinum
    Travel and Lifestyle

    This website uses cookies for the purpose of enhancing your user experience. You can find more information on the types of cookies we collect, what we use these for, and how to manage your cookie settings in our Cookie Policy and AIA Personal Data Policy (Singapore).

    USEFUL LINKS
    Recent Promotions
    AIA Funds Information
    FAQs
    Form Library
    Digital Payments
    Security Advisories
    Report a Vulnerability

    Copyright © 2022 AIA Group Limited and its subsidiaries. All rights reserved.
    Terms of Use | AIA Personal Data Policy (Singapore) | Cookie Policy