Retirement Planning

Are you planning to retire? Is the fear of retirement bothering you night and day? Are you sure about your retirement planning and whether you have enough savings?

Well, these are some of the most common questions that one might ask oneself several times while planning for retirement. Retirement can be said to be the phase of life where a person leaves or losses his employment or professional identity forever. In fact, I have even read newspaper articles that suggest retirement as a concept is actually fairly new in our human history. Afterall, people in the past used to work as long as they were able to. There was no such thing as a retirement age!

I shudder at the thought of retirement. Afterall, I find it hard to imagine sitting at home having nothing to do. Yet I can't help notice the trend that these days, older people are increasingly moving towards semi retirement by reducing daily or weekly work hours before they actually go into full retirement. I have seen many real life examples. Others have even gone a step further and taken a more radical approach - by suggesting that one can go on mini-retirements throughout one's life. (Read the 4 Hour Work Week and you will know what I am talking about)

In today's world with its ever increasing cost of living, it is hard to imagine somebody retiring and totally stopping work and not drawing an income. How certain can one be that he will not outlive his or her savings? Based on the average life expectancy of Singaporeans, I think the average male or female will live to age 80. But that is being average and if one happens to be above average, you could possibly be living till 90 or even 100! What if you had only enough savings for 10 years or 20 years and retired at the age of 60. You will be too old to find employment then!

There are in fact some employment opportunities out there that allows for flexi work arrangements for the elderly. Singapore is also introducing a Re-employment Act to make employers offer older employees some kind of employment even after the official retirement age. In the future, it is not hard to imagine that elderly folks can work from home as they have easy access to the computer and internet.

For me, I believe I will try to work for as long as I can. I have changed my thinking about retirement a few times in my life. In the past, I wanted to retire as early as possible. Now, I see retirement as something that I want to avoid. If I can find something that I love to do, I don't mind doing it for the rest of my life!

It is useful to note this: Your retirement age is not fixed by law; in fact it’s fixed by your potential and willingness to work. In short, a retirement that makes your retired life fun loving and worthwhile is the best retirement plan that one can have. In fact, I would not call it retirement at all but rather active ageing.

Getting Married - Steps to Take

I realised that a frequent question I get from people is how much savings one needs to get married. I am not that old but I guess being married- being a person that has walked down that path, makes me a qualified individual.

Or perhaps people know that I am a person who likes to plan ahead and seems to have everything under control. And that is why they ask me for advice.

Recently, when browsing through the IMSavvy site, I realised that it was one of the discussion topics too. So I guess I will chip in to the many opinions out there. But perhaps a better way is to tell you my story.

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I decided to get married when I found the right person. Of course, it is a commitment that one takes as you never ever know whether there might be someone out there in the world who might be prettier, or better suited for you. But one does not have time to meet all members of the opposite sex in the world so you take the leap of faith.

Having known my girlfriend then for sometime, I decided that enough was enough and I was ready to settle down. It was getting tiring to just date without anything to hold us or bind us together.

So I sat my girlfriend down and asked her how much we needed to get married. (Yes, I know it is not romantic at all). But for most guys, I guess this is the preparatory stage before the actual proposal. You just want to make sure that the both of you have sufficient resources to hold a wedding. buy a house, buy some furniture and if possible, go for a nice honeymoon.

Of course, on 2nd thoughts, I should have just bought a ring and proposed straight up, then do the planning later on. But like I told you before, I am really a planner kind of person. And it simply did not make sense to hide my plans from my girlfriend. (okay, i admit that I am not romantic)

Well, the conversation went well and she actually got excited. I think she was just happy that I was actually thinking of settling down. We did our math on a rough sheet of paper which I grabbed and listed down item by item the things that we had to pay for. In fact, she kept that sheet of paper and we still have that piece of paper as a sort of memory.

In short, we added up every single item we could think of that we needed and tallied the total bill. We then forecasted how long it would take us to save that amount of money.

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Now came the savings part.

As we were both working and literally quite fresh out of university, we basically were able to save quite a bit each month as long as we did not splurge on unnecessary stuff.

So it was actually quite workable. And we realised that we needed less than 1 year to save up for marriage. In this manner, we sort of revealed our finances to one another.

Good thing: we both did not have any debt.

Bad thing: we would be in debt the moment we got married as we wanted to buy our own place.

But that did not deter us and basically, we continued to save up fervently. Of course, I eventually did propose, buying the ring with a hidden stash of cash that I did not reveal to her at the start =)

Were there fights? Well...not really. We really stuck to the budget as the wedding day draw nearer. We tried to keep to the budget for most of the items and I am glad that such detailed budgeting helped solve a lot of the problems I believe couples face. As the budget was worked out by the both of us, we gauge all prices quoted to us based on what we have budgeted for. Anything too expensive...sorry...we looked for a lower quote. If there was anything that happened to be cheaper..then good..we saved some money.

The few months before the actual wedding was really a mad frenzy. Each weekend was spent trying to buy some item or furniture for our new home. The credit card bills came in fast and furious and it was not uncommon to be signing off thousands of dollars in a single shopping spree. But like I said, we stuck strictly to what we budgeted for.

I still remember that there were times I had to call up the credit card company to ask them to temporarily increase my credit limit so that I could pay for the big items. In fact, I have never ever spent money like that in my entire life before. Thinking back on it, I guess it is a phase that everyone has to go thru especially if you are getting your own place to live in. Furniture after all can be very expensive.

In fact, the renovations were the most expensive item that we budgeted for. But we decided that it was worthwhile to spend that money as we will want our home to be a nice and comfy place to live in.

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We counted down the months. As each month drew closer, our bank accounts got more and more depleted. It can really be quite stressful at times to realise that you are spending almost all your savings just to set up a home with somebody else. It was during this period that I really could see the sacrifices that my parents have made.

(I actually went further and started planning for life together and calculating our recurrent expenditure when we would move out of our parent's place and live in our own flat. It was then that I realised the amount my parents have been paying in terms for water, electricity, cable, etc over the twenty years of my existence. The amount they have spent on me must be lots!!!). Love you Mum and Dad!

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D-day arrived. It happened quickly and before I knew it, we were off to our honeymoon. When we returned home, we looked at the damage that the wedding had done to our finances, shrugged it off and decided that it was worthwhile. We did not spend a lot but it was still quite a substantial bit.

Nevertheless, because we did not spend our entire savings, we were able to start off our married life with a sure footing. (For example, even after our wedding and paying for all the bills, we still had 6 months of expenditure as an emergency fund set aside with room to spare)

Getting married is an expensive affair. It can be cheap if you want it to. But the best thing one can do is to sit down with your partner and work out the sums. Create a detailed budget and see whether some things are good to have and really necessary. The most important thing is open communication.

I hope this post has been useful for those who are planning to get married.

The writer has been married only once in his life. He does not plan to get married again. He thinks that weddings can actually be a lot cheaper if couples are willing to take the unconventional path of not having a huge celebration that Asians are so fond of doing. Perhaps a bbq or buffet will suffice in the future?

5 Secrets For Sustainable Spending

Spending sustainably comes down to living within one's means. Living beyond this may mean a lower standard of living in the future, as debts need to be serviced. Some sacrifices initially may actually mean a higher level of spending can be sustained in the future. This is much more preferable to being at risk of debt collection

Make a Budget

Old habits die hard, so it's worth fostering good habits early on. This starts with making a budget. One should set aside sufficient funds to handle standard expenses, like rent or mortgage repayments, credit card payments, car repayments, car running costs, council rates, electricity, water, other utilities and the like. Additional funds should be allocated for unexpected expenses like car repairs.

Hopefully there are still some funds left over. The remainder should be split between current discretionary spending and future savings for a rainy day. One needs to enjoy life and spending for enjoyment is part of this, but it needs to be kept in check. As long as one can consistently allocate even a small amount of funds to be saved, then one is on the right track.

Investments

Allocating savings into an investment fund is a good way to save for the future. Long term stock market returns of around 10% per annum are well above average deposit rates, and well above the inflation rate. Consistently adding savings to such a fund is a positive way to build up a nest egg. What has this got to do with spending you may ask? As your investments start to perform, the investor bears fruit in the form of managed fund distributions or dividends, and capital growth.

Spending From Surplus

These dividends, distributions, or profits taken on an investment can be allocated to spending. The difference to standard spending is that one is spending from a surplus. The investment can be left to continue to grow and provide further distributions in the same way that a tree continues to bear fruit. Re-investing distributions should mean even greater distributions (and hence even greater spending capacity) in the future. Continuing to regularly allocate savings to such investments will also enhance this capacity.

Save First, Spend Later

The strategy above admittedly does require a little sacrifice at the outset. One needs to curtail immediate spending for the benefit of future spending. The alternative of going into debt is a poor option. If consumer spending is financed by debt, then this debt acts as a restricter on future spending.

Credit can indeed boost spending, but this does have a limit. The more one spends on credit, the more future income one is then forced to apportion to paying off debt. Importantly, getting into the habit of spending more than one earns can make breaking this habit very difficult.

Purchase Outright

For all but the most expensive items (like a property!), one should really be able to save up funds to purchase them. It may be tempting to go out and buy the latest Plasma TV on credit, but waiting and saving will mean no interest payments, and the TV will also probably be cheaper by that time!

No one wants to have to negotiate debt repayments with debt recovery companies. Keep control of your finances by following the above steps to sustainable spending. Stick to a budget, and allocate some funds to savings and investments, so that future spending is worry free and enjoyable.

[This is a guest post]

Saving for Child's Education

After many months of saving, I am glad to say that the amount in my child's POSBKids Savings Account has reached a nice tidy sum of $3,600. I have basically been putting all the red packet money that he has been receiving into his bank account. (For those who live overseas, the Chinese have a custom of giving these red packets which are filled with money for occasions like Chinese New Year, birthdays, etc).

So all these money has come in handy. Unfortunately, if I do a straight line projection, it shows that I will still be severely short of the $50,000 that I hope to accumulate by the time my child hits the age of 18/20.

Sagrada Familia at Barcelona

I read the news recently about the Sagrada Familia in Barcelona being restored and how the first mass is going to be conducted there. I remember travelling to Barcelona sometime back and took some pictures of the Sagrada Familia. It is really an impressive looking building. Too bad the pictures I took had all these hovering cranes around the building as they were still working at restoring it.

Deepavali

Happy Deepavali to all my readers.

It is a rainy day and it helps that it is a public holiday so we can all sleep in. Wanted to go to a park or a beach but since it was raining, we decided to stay home.

I bought breakfast back for the family. Nice yummy food. Comfort food in fact. Nice hot coffee from the coffee shop, wanton mee, carrot cake and chui kui. Yummy!

Going to tuck in now, and catch up on my soccer news which I have missed for the past one week.

Standing Out from the Crowd

Everyday I board the MRT, I cannot help but notice how packed it is. But more importantly, I can't help but notice how small I am in this world.

The MRT is filled with people dressed in their office wear, all geared up to go to work. Some of them look confident. Others look tired.

When I look out of the MRT, there are blocks and blocks of HDB flats. Each block probably containing close around 1000 residents. And I am but an insignificant person living in one of those flats.

It makes me wonder how different I am from each of these individuals. How do I make myself stand out from the crowd? Am I a better person compared to the person standing next to me? How do I differentiate myself from all the other people around me? In short, what are the skills and experience I need to acquire to ensure that I stand out from the rest of the crowd?

Of course, there are the days when I just can't be bothered and resign myself to fate that there are probably zillions of people who are much better than me in every aspect. And perhaps, I should just be contented to live my quiet and peaceful life... Not to seek fame and fortune but to live a quiet and happy life with my family.