Financial planning for retirement can feel scary, given the large amount that has to be saved. But protecting your financial security in retirement does not need to be quite so overwhelming, especially if you have a solid plan in place. Here are a few tips to help :
As with any plan, retirement planning should start with clear goals, followed by an action plan of how to achieve those goals. What exactly are you expecting from retirement in terms of lifestyle and spending needs? What sources of income will you have? Have you adequately accounted for all expenses, including unpredictable costs such as healthcare and longevity risk? Most people underestimate their retirement needs, so it helps to be rigorous in your self-assessment.
Understand Your Time Horizon
The most effective retirement plan is one that starts as early as possible. That said, experts make several recommendations for retirement planning at different stages of your life.
Young adulthood (18-35)
While spare cash may be readily available, time is on your side. Even a small amount set aside each month will eventually be maximised, thanks to the power of compound interest. See table below that illustrates how saving retirement at a younger age will put you in a strong financial position for retirement without pressuring you to save more when you’re are older and have more financial commitments.
Early middle age (35-50)
This is a time when financial pressures such as mortgages and education costs are at their peak. Even so, continuing a savings plan is essential. If you have not already done so, this is also the time to think about a wider savings strategy – for example investing in formal savings, insurance or real estate.
Late middle age (51-65)
As you get closer to retirement, it is time to secure your investments and if possible,secure a regular income source for retirement and avoid unexpected possibilities.
Age of starting to save for retirement |
Amount to save monthly |
Duration to save |
Retirement Goal |
18 years |
99,206 MMK |
504 |
50,000,000 MMK |
35 years |
166,666 MMK |
300 |
|
45 years |
277,777 MMK |
180 |
No investments are risk proof, but there are ways to manage risk and protect your retirement savings. You need to start by asking yourself just how much risk you are willing to take to reach your retirement goals. The answer to this question may change depending on your age and income, but broadly speaking it helps to have a diversified group of investments including savings, pension, insurance, property/land, gold – to protect against losses against any single investment.
Protect Yourself With Insurance
Health-related expenses, including the possibility of long-term care, are some of the most damaging in retirement. Consider your insurance options at all stages of your retirement planning, particularly medical, life and long-term care insurance. Speak with a Chubb Life Financial Advisor about your insurance options.
Consider An Annuity Plan
One insurance-related policy designed in part for retirement is an annuity. Think of an annuity as working much like a pension. You pay money to your insurance provider, either as a lump sum or monthly payments. In return, upon retirement, the provider will pay out a guaranteed minimum amount on a periodic basis until death or over an agreed period.
If you want to explore how insurance can help you with your retirement planning, discuss with Financial Advisors to get appropriate financial solutions.
