Debunking These Four Major Misleading Myths about Retirement!
While a large number of people are aware of the importance of planning for retirement, some tend to really concentrate on it after they realize that age is catching up to them!
Indeed, retiring successfully requires that you put in a lot into planning and saving money to ensure that you don’t end up dead broke during our retirement years. Unfortunately, this morbid fear of retiring while broke is what has led many to believe in a series of myths about the journey to retirement.
Hence, to do you a service, let’s debunk some of the most misleading myths about retirement.
Ready? Great, let’s get started!
Only Relying on CPF Is Sufficient to Handle My Retirement Funding
Financial planning Group head at DBS Bank in Singapore, Mr. Brandon Lam, states that CPF Life, a national annuity scheme, is only geared towards providing retirees with a basic standard of living.
That being said, depending on the total amount of money that you have in your CPF, you could receive from $660 to $1920 on a monthly basis once you pass the age of 65 years.
Interestingly, the statistics show that 42.6 percent of CPF members who had surpassed the age of 55 were unable to save money in the BRS. The aforementioned data was released in the 2017 CPF Annual Report.
Indeed, Mr. Lam advises individuals that are planning for retirement to enroll in other government schemes, especially ones that offered deferred tax benefits as well as give disciplined money-handling methods. One good example would be the Supplementary Retirement Scheme.
You Have Started Your Retirement Plans Too Early
The Golden Rule of retirement planning is that; it’s never too early to start planning for retirement. It doesn’t matter if you are in your early 40s, 30s, or even 20s, planning for your retirement early is successfully securing your future.
Indeed, you might feel a little comfortable with the present lifestyle that you have, thinking that it doesn’t cost a lot to live where you are currently living.
However, when you don’t have an income, the situation can be much different.
In fact, during your retirement years, you are most likely to be living on your entire savings as well as your CPF retirement fund.
Plus one thing you’ve got to understand is that these savings are finite. At some point in time, they might end! Especially if you are spending frivolously!
That being said, planning for your retirement from the get-go not only enables you to save more money, but also to think of ways to generate income during retirement years.
Saving Diligently Is the Only Way to Have Enough for Retirement
Yep, this sounds just about right, guys?
It might pay to have millions in your bank account, but one thing you’ve got to factor in is inflation. How much might $1 million cost 20 years down the line? For all you know, it could be peanuts by then as a result of inflation or a crippling economy.
The smart way to go about this, as head of Manulife Singapore. Mr. Tan Kuan Ho advises, is to make well-informed investment decisions.
Indeed, it is important to build a diversified portfolio and make equity investments that yield steady income ten, or even 20 years down the line!
Don’t forget to do your research on a series of bonds and stocks, especially those that have low risks.
You Will Spend Relatively Less When You Retire
One of the biggest myths is that you will be more prudent with your spending once you retire. On the contrary, most retirees end up spending big as they travel the world and sample all its splendor.
Indeed, it can be quite difficult to determine how much is required as monthly expenditure after retirement.
As a gauge, most financial analysts predict that you should maintain an income of about 70% of the income that you had prior to retiring.
In fact, the belief that you can cut your expenditure significantly after retiring is hearsay.
That’s because, as a person, you are naturally inclined to a specific lifestyle. Hence, the only way you can cut your income is by downgrading your lifestyle, which is quite a difficult feat for most people especially if they have a family accustomed to it.
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