Some people can’t wait for this particular day to come so that they can finally travel the world without a care. Others worry about it.
Whatever it is, retirement will come eventually to most of us, but are you prepared for its arrival? These retirement myths may colour your perspective and negatively impact you more than you thought.
Myth #1: I Will Not Spend Much Once I Retire
Many to-be retirees feel that their living cost are going to come down alot lower compared to the times where they are still working. They are thinking in terms of transportation costs, eating out and entertainment.
There’s fair sense in that, except that it is also a period where you are going to have lots of free time to do what you want when you are still healthy.
You’d probably travel more, meet up with your friends more often, take part in community events and pursue hobbies that you previously never had time for.
All these translate to spending more money!
Other than that, there could also be unforeseen spending, such as doctors’ consultation fees or paying for medication.
Myth #2: I Have A Long Time To Save For My Retirement
From cradle to the grave, money is needed in many of our lives’ milestones. We save for our marriage, our first house, emergency funds and our first child.
With so much money we’ll need to save and plan for, not many have the spare resources to save for retirement.
What’s more, retirement seems so far away…In fact, we probably spend more time thinking about our next big acquisition than our retirement!
Nobody ever thinks about putting their bonus into a retirement fund, do they?
The fact is that retirement might look far off, but if you put other things into perspective – we are starting our own families at a later time and we wait 4 years for our first flat.
There’s so much going on that it’s easy to forget about retirement up till the day you are going to retire!
With that wake-up call, you will want to start early or it might be too late for regret when the day comes.
Myth #3: I Should Invest In Very Safe Assets For Retirement
When it comes to investing for retirement, most financial experts would agree that going “aggressive” is not the right way to go.
Most people might consider “safe” investments that are principal-protected and paying out a fixed interest to be the only type of assets suitable for retirement planning.
However, we all know that most “safe” investments pay out pretty low interest, sometimes growing slower than inflation.
How can you safeguard the value of your money then?
If you are starting your retirement planning early, you’ll have enough time to adjust your asset allocation appropriately so that you have more opportunity for higher returns earlier in your life.
Myth #4: My CPF Will Be Enough
Under the current CPF Life system, your retirement sum will be used to buy a CPF LIFE annuity so that you receive monthly payouts starting at 65 years old.
Do you know that under the standard plan, you will receive only $660-$720 per month?
Looking at your lifestyle now, do you think that will be enough?
Myth #5: I Will Work As Long As I Have To/Want To
So you’ve decided that you do not want to stay at home and do nothing when retirement comes.
Yes, it is possible that you may be able to find some odd jobs to do, but not everyone can guarantee their state of health and can work as long as they want.
Even if you are healthy, work might tire you out much quicker than when you were younger. In addition, finding well-paying jobs later in life can be difficult.
So while your decision to work past retirement age is admirable, it’s probably prudent to not rely too much on this income when making your retirement plans.