Retirement is a milestone moment that everyone looks forward to. In order to achieve your dream post-retirement life, you need to spend and invest your money wisely and plan for the future.
Here are some of the reasons outlining why.
Cost of living rises due to inflation. To ensure that your purchasing power will not be eroded, you need to start saving early to build a significant nest egg that will see you through your retirement years should your income halt.
2) Compounding Interest
It is vital to start young so that your money has more time to grow. A person who starts saving early can end up with a significantly higher retirement fund than someone who starts later. This is the power of compounding interest at work!
3) Smaller Contributions
The longer time horizon for starting early allows you to make smaller contributions each month to reach your retirement goals as compared to someone who starts later and needs to make larger “catch up” contributions each month, which can be quite daunting.
4) Healthcare Cost
Health issues may arise with age and medical expenses can be costly. Premium for health insurance rises as you age. The biggest mistake you can make is failing to cater for healthcare expenses for your retirement years, when you may not have income.
5) Longer Life Expectancy
With better healthcare, people are living longer than before. This further highlights the need to start saving early and plan for longer life expectancy to ensure that you will not outlive your retirement funds.
6) Unforeseeable Circumstances
You may have planned how much you need to set aside to reach your retirement goals. However, circumstances like parents falling sick, pay cut and rise in household expenses are beyond your control and may deter you from your planned retirement goals. Hence, starting early may provide the buffer for any deviation that may arise so that adjustments can be made accordingly to stay on track.
7) Forced Retirement
Your intended retirement age may be at 62 or 65. But, an unexpected and sudden sickness may render you no longer employable and force you to retire early. If you are unprepared for this, you may not have sufficient funds to retire the way you want.
8) Love for Your Family
By planning early, you can be financially self-sufficient to provide for your own post retirement lifestyle, reducing the dependency on your loved ones to take care of your retirement needs. This directly frees up their resources to take care of their own financial needs. At the same time, by starting early for your retirement, you may even have surplus to leave behind for your family.
When it comes to retirement planning, it’s never too early to start saving and planning for your future.
This however does not imply you need to sacrifice today for tomorrow. With proper planning, it is possible to lead the life you want today as well as the life you want in retirement.
Ng Chun Jie is an Agency Development Manager from Kurt Ng Organisation representing AXA Insurance Pte Ltd. Believing in continuing education to further value add to his clients, Chun Jie was awarded the Chartered Financial Consultant (ChFC®/S) professional designation, whereby he is equipped with comprehensive financial planning knowledge to better assist clients with complex needs at different milestones of their life. Chun Jie is also an Associate Estate Planning Practitioner (AEPP®). As an AEPP®, he is qualified to offer advice on estate planning. Chun Jie endorses a holistic financial planning approach and works closely with his clients in areas of wealth protection, wealth accumulation and wealth distribution. Connect with Chun Jie on Facebook to find out more.