The choices you face in planning your retirement are complex and confusing. But for most people there is one major concern: how can I make my money last given the lifestyle I want to have after retirement? With the average retirement years about 20 years, it’s a good question to ask.
We’re demanding better lifestyles – including things like travel, hobbies and dining out. In addition to the above consideration, other issues like goals that you have during retirement, age you will like to retire, will you be in semi-retirement and how to get the most income will require some thoughts.
Why retirement plan is important.
If you are in your 40s and have never thought or did something about retirement planning, it is absolutely vital that you start IMMEDIATELY. Your CPF might not be enough due to outlays like paying for property.
* Sufficient savings to last throughout your retirement
* Property that is fully paid-up or adequately paid for every month.
* Sufficient savings to meet healthcare needs in your old age
The risk that any of the following basic points are not met means you will have delay retirement, give up your lifestyle or worse, forced out of retirement!
professor Olivia Mitchel of Wharton, University of Pennsylvania. http://knowledge.smu.edu.sg/article.cfm?articleid=1129
More retirement planning leads to higher net worth!.
The study finds that financial planning and wealth are positively related. Those who planned for retirement “hardly at all” had US$80,000 in median net worth, while those who planned “a lot” had US$202,000 in net worth! The study found it was a one-way relation: planning causes wealth! (High wealth does not lead to greater retirement planning.)
There appears to be large returns from even a little bit of planning.
Other studies have also shown that a simple planning activity, such as writing down the specific steps they would like to take to implement a task, can greatly increase follow-through. These successes may explain why merely thinking about retirement can produce wide differences in retirement wealth. Moreover, even ‘a little’ or ‘some’ planning generates large wealth differences, as compared to those who did not think about retirement at all.
Wealthy people need to plan too.
As financial literacy of an individual increases, level of planning also increases. Ironically, as Mitchell’s study discovered, planning appears to diminish higher wealth levels – that is, as people grow wealthier, they tend to plan less. Perhaps at very high wealth levels, households tend to feel no financial pressure. Unfortunately lack of planning causes inferior results to those who just planned a little.