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A Guide to Financial Planning for Singaporeans from Graduation to Retirement

Hey there! Are you a young Singaporean who’s just graduated and starting to think about your financial future? It’s never too early to start planning for retirement! If you’re in your 20s, financial planning might not be a top priority compared to planning your next holiday, but it’s crucial for living the life you want in Singapore. Whether you want to travel overseas, propose to your partner, or buy a property, all these milestones require careful planning and good money management skills. By taking control and starting your personal financial planning now, you can seize every opportunity that life has to offer.

First things first, let’s talk about retirement age. In Singapore, the official retirement age is 63, but you can keep working until 68 if your company offers re-employment. That means you’ll be earning a full-time income for quite a while.

Lastly, think about what you want to achieve in life. Maybe you want to travel the world, start a business, or retire early. Whatever your goals are, write them down along with the resources you’ll need to achieve them. And if you need help figuring out how to make it happen, don’t hesitate to reach out to our friendly financial advisors.

Remember, it’s never too early to start planning for your financial future. By being smart with your money now, you can achieve the lifestyle you want in retirement.

There are six major milestones to look forward to between graduation and retirement, and here’s what you can do to prepare yourself financially.

Milestone 1: Your first job and first salary

Congratulations on landing your first job after graduation! While it’s exciting to have a new income, it’s essential to resist the temptation to spend your entire salary right away. Instead, take a moment to think about what you’d like to do over the next few years.

Even if your starting pay isn’t what you hoped for, you can still build good money habits that will form the foundations of a secure, stable future. Start by planning for your retirement as early as possible. You might think it’s too soon, but time is one of your most valuable resources when it comes to saving for retirement. Consider using CPF’s Investment Schemes to get a head start on your retirement savings.

Apart from retirement, you may want to save a portion of your salary for short- and mid-term goals such as travelling, starting a business, or pursuing further studies. Consider using saving tools like GXS Bank‘s saving pockets to build the discipline of saving for these goals.

Milestone 2: Buying your first home

Buying property in Singapore is the most expensive purchase you’ll make, so it’s crucial to plan ahead. Whether it’s a flat from the HDB or a condo from a private developer, start by doing your research and getting an idea of how much you can afford. From 21 years old, you are eligible to buy a build-to-order flat (BTO) with your partner, private property, or a resale HDB flat if you’re part of a family nucleus. If you are single, consider getting a bank loan or seeking financial assistance from your family.

Milestone 3: Starting a family

Starting a family is an exciting and life-changing event, but it’s also expensive. Plan ahead by considering the costs of childbirth, healthcare, and childcare. You may want to start building an emergency fund to cover unexpected expenses, as well as consider getting insurance coverage for yourself and your family.

Milestone 4: Growing your wealth

Once you’ve established a stable financial foundation, you can start looking into ways to grow your wealth. Consider investing in stocks, bonds, or property, but be sure to do your research and understand the risks involved. You may also want to seek advice from a financial advisor to help you make informed decisions.

Milestone 5: Planning for retirement

As you approach retirement age, it’s essential to review your financial plan and make any necessary adjustments. Consider the lifestyle you want to lead in retirement and plan accordingly. Make use of tools such as CPF’s Retirement Estimator to get an idea of how much you need to save.

Milestone 6: Passing on your wealth

Finally, consider how you want to pass on your wealth to your loved ones. Make a will and review it regularly to ensure it reflects your current wishes. You may also want to consider setting up a trust to manage your assets and provide for your family’s future.

How much will you need to retire?

Retirement planning can seem like a daunting task, but it’s important to start thinking about it early. In Singapore, the official retirement age is 63, but you can continue working until 68 if your company offers re-employment. This means you’ll likely have a full-time income until 63.

To figure out how much you actually need to save for retirement, you should aim to save about 25 years’ worth of living expenses. For a basic retirement lifestyle, $1,200 a month may be enough if you stay in your own flat and have no mortgage to worry about. But if you have bigger plans, such as traveling or becoming an entrepreneur, you’ll need to save more.

There are plenty of tools available to help you calculate how much you’ll need for retirement, such as CPF’s Retirement Calculator. Once you have a figure in mind, compare it to how much you’ve already saved. If you’re falling behind, your 40s are a good time to catch up. You’re likely earning more money than ever before, and still have a couple of decades to save.

Consider adding to your retirement portfolio with CPF LIFE, a low-risk annuity scheme that provides monthly payouts for life. However, this alone may not be enough to fund all of your retirement expenses, so you should also explore other options like the Supplementary Retirement Scheme (SRS). The SRS allows you to invest in certain products like unit trusts, investment-linked plans, and even blue-chip shares and index funds.

Ultimately, retirement planning is about figuring out what you want to achieve in life and making a plan to achieve those goals. Whether it’s starting a charity or retiring earlier than usual, list out your dreams and the resources you’ll need to make them happen. And don’t be afraid to seek help from a financial advisor to make sure you’re on the right track. By being smart with your money, you can make your dreams a reality.

In summary, financial planning is crucial for living the life you want in Singapore. By taking control and starting your personal financial planning now, you can seize every opportunity that life has to offer. Remember to plan ahead and manage your money well to achieve

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