Retirement Checklist: 5 Things To Check Off Before You Actually Retire

Preparing for retirement is a goal we all have to work towards, but many of us procrastinate doing. Like it or not, there will come a day when we can no longer rely on the income we earn from our jobs to provide for our living expenses.

It takes decades of careful planning and a disciplined approach to saving and investing before a person can retire confidently. Along the way, we will ask ourselves important questions such as when we wish to retire, and how much we need before we can retire comfortably.

Simply put, retirement is not something we can plan overnight.

In this article, we have compiled a simple retirement checklist that you can use to ascertain whether or not you are prepared (or preparing well) for your retirement.

The first thing to do is to calculate how much you will need each month in your retirement. 

As harsh as it sounds, retirement is usually a one-way street. Once you retire, it’s generally quite difficult to “un-retire” yourself. You need to avoid retiring too early, only to find that you need to get a job in your older years because you miscalculated the amount you needed for retirement.

The amount you need for your retirement can be broken down into two main components. 

Essentials: This is how much you need in order to comfortably live life in Singapore. This includes what you spend on your accommodation, meals, utilities, groceries, transport and basic telecommunication needs.

Discretionary: When you retire, you also want to be able to pursue your hobbies or passions. This may include travelling around the world, picking up photography or just keeping yourself active by participating in yoga, badminton or other sports. 

Most of these interests will cost you so you need to be prepared for how much you will end up spending on them, and whether you can afford them.

By calculating the cost of these components in retirement, you will have a good estimate for how much you need.

In Singapore, the primary source of retirement income for most people will be CPF LIFE (Lifelong Income For the Elderly). CPF Life is our national annuity plan that provides a lifelong monthly payout for Singaporeans, aged 65 and above. 

The exact amount that you receive each month is based on two factors. How much you have in your Retirement Account (RA) and the CPF LIFE plan that you choose.

Naturally, the more you have in your RA, the higher your monthly payout is going to be. If you want to enjoy higher payouts each month, you can consider making lump-sum top ups to your RA when you can over the years. 

The choice of your CPF LIFE plans will also impact how much you receive each month. If you like to enjoy higher monthly payouts, you can opt for the CPF LIFE Standard plan. Alternatively, if you do not need such a high monthly payout, and would prefer to leave a higher level of bequest to your loved ones, you can opt for the Basic Plan. A third plan, the Escalating Plan, provides an annual increment of 2% for your monthly payouts. 

You should consider how much money you will be able to receive from your CPF LIFE each month, and whether it’s sufficient for your expected monthly expenditure. 

Do note as well that payouts for CPF LIFE only starts from age 65. Hence, if you want to retire before that, you will need to have other streams of income to make up for that shortfall.

During the course of your working life, you may have built up a diverse investment portfolio. This portfolio could include stocks and/or bonds that you have invested in, investment properties or even financial plans that you may bought when you were younger.

Based on the possible shortfall that you may have, after accounting for how much you need each month against your CPF LIFE payouts, you need to have a plan on how your investments can help fund your retirement.

For example, you may want to choose stocks and bonds that are safer and are able to give stable dividend or coupon payouts each year. This may provide for the extra funds required for you to pursue your interests.

Alternatively, you may be able to tap on financial plans that you bought in your younger days, such as AIA Wealth Pro Advantage, a unique 2-in-1 plan that offers the stability of long-term savings and the growth potential of investing.

Critically questioning how your investments can fund your retirement is important because not all investments are liquid or provide regular payouts. For example, if you have investments in private companies or overseas properties that are not being rented out, they will not be useful for your retirement even though they may have the potential for great investment returns over the long-term. 

Even the healthiest amongst us will eventually grow old and face health-related issues, geriatric conditions or chronic illnesses.

As part of your retirement checklist, it’s important to ensure that you have sufficient health insurance coverage. Common health insurance plans that you should consider include AIA HealthShield Gold Max, a Medisave-approved medical expenses plan that covers your medical bills in private hospital or A/B1 Class Wards in public hospital.

Last but certainly not least, estate planning is an important part of financial planning, since it concerns how our assets will be distributed among our loved ones when we are no longer around.

By ensuring that your retirement planning matters are well taken care off, you can #BeLifeConfident in your pre-retirement phase of life, knowing that you are prepared anything life throws at you.

AIA offers solutions that are made simple to keep up with your every-changing wealth accumulation and protection needs. With up to 30% savings on selected plans from now till 30 April 2018, there’s no better time to get your financial planning on track. So take the first step to Be Life Confident. Speak to us at 1800 248 8000 or visit www.aia.com.sg/BeLifeConfident.