What if you can't save enough for retirement? | Money Talks podcast

Summary

In this episode of 'Money Talks,' Andrea Hing and Tan Sui from OCBC Wealth Management discuss the importance of early retirement planning and the anxiety many millennials face regarding their financial future. They explore the challenges of balancing current expenses, like supporting children and elderly parents, with the need to save for retirement. Tan Sui emphasizes the power of compounding and the benefits of starting small, even with modest contributions. The conversation provides actionable advice on managing retirement savings, prioritizing financial goals, and seeking professional guidance to ensure a secure retirement.

Takeaways

• 😀 It's important to start planning for retirement early, even if it’s with small contributions like $100 per month.
• 😀 Retirement anxiety is real, and many people underestimate how much they need for retirement.
• 😀 Compounding power strengthens over time, so the earlier you start saving, the more it works for you.
• 😀 Millennials, despite challenges like the high cost of living, have better job prospects than previous generations, making it possible to start saving for retirement.
• 😀 Inflation is a critical factor in retirement planning, as your savings may not cover future expenses due to the rising cost of living.
• 😀 Saving for retirement shouldn’t take a back seat, even when you have other financial obligations like children’s education or caring for elderly parents.
• 😀 People often delay retirement planning because they prioritize other expenses, but it's crucial to balance saving with living in the present.
• 😀 Singaporeans typically make the mistake of thinking they can catch up on retirement savings later, but starting early is key to achieving a secure future.
• 😀 There are three basic retirement lifestyles in Singapore, with costs ranging from $2,725 to $6,150 per month, depending on your preferred lifestyle.
• 😀 Life changes like having children, switching careers, or caring for elderly parents should prompt you to review and adjust your retirement savings plan regularly.
• 😀 Financial tools and professional advisors can help recalibrate your retirement plans to account for life events and ensure you're on track.

Q & A

Why is it important to start retirement planning early?

Starting retirement planning early allows you to take advantage of the power of compounding. The earlier you start, the more time your investments have to grow, resulting in a larger retirement fund over time.

What are the consequences of delaying retirement savings until later in life?

Delaying retirement savings means you'll have a shorter period for your money to grow. This can result in needing to save a larger amount later, as you don't have as much time for compounding to work in your favor.

How does inflation affect retirement savings plans?

Inflation increases the cost of living over time. Therefore, your future retirement lifestyle will cost more than it does today, which is why it’s crucial to factor inflation into your retirement savings plan.

What is the recommended approach for Millennials in managing their retirement savings?

Millennials should start saving for retirement as early as possible, even with small amounts. By starting early, they can make use of the compounding effect and adjust their savings plans as their life circumstances change.

How can Millennials balance retirement savings with other financial priorities like caring for aging parents or children's education?

Millennials can balance these priorities by making small adjustments in their lifestyle, such as reducing discretionary spending, and allocating some savings towards retirement. Financial planning doesn’t require choosing one priority over another, but finding a sustainable balance.

What are the different lifestyle options when planning for retirement in Singapore?

In Singapore, there are various retirement lifestyle options, ranging from basic to luxurious. For example, a basic retirement lifestyle could cost $2,725 per month, while a mid-range lifestyle might cost around $3,430, and a high-end lifestyle could cost $6,150 per month.

Is relying solely on CPF for retirement savings sufficient?

Relying solely on CPF may not be enough to cover all of your retirement needs, especially if you plan to maintain a higher standard of living. It’s important to supplement CPF with other savings and investment plans to ensure a comfortable retirement.

How should someone recalibrate their retirement savings if life circumstances change, such as having children or switching careers?

It’s important to review and update your retirement savings plan regularly, especially after significant life events. Consulting with a financial advisor can help you adjust your savings goals and risk profile to better align with your current situation.

What role do financial advisors play in retirement planning?

Financial advisors can help you assess your retirement goals, suggest strategies to achieve them, and adjust your plan as your circumstances evolve. They use tools to help recalibrate portfolios and ensure that your investments are on track for your retirement objectives.

What common mistakes do people make when planning for retirement in Singapore, and how can they be corrected?

One common mistake is prioritizing other financial needs over retirement savings, leading to delayed planning. The solution is to spread funds across various priorities, like savings, insurance, children’s education, and retirement, without sacrificing one for the other.