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Financial Planning at Retirement

Mar 13, 2024Citi Singapore
Financial Planning

Key Takeaways:

  • 1. Retirement is a significant milestone, and proper financial planning will ensure you have enough capital to last throughout your golden years.
  • 2. First, chart out your expenses in detail throughout your retirement period. Take into careful consideration your healthcare costs including that of long-term care.
  • 3. Convert your cash together with medium to high-risk investment portfolios into a low-risk retirement portfolio.
  • 4. Right-size your property and re-invest the proceeds into low-risk portfolios.
  • 5. Be extra careful of taking risks during retirement as you no longer have a fall back on a regular income.


Financial planning at retirement

Retirement is a significant milestone in your life. Proper financial planning will ensure that you will have enough capital to last throughout your retirement years, as well as leave behind a meaningful legacy for your descendants.

There are many things to consider for retirement, the first of which may be to project the cost of living during retirement in concrete numbers.

Chart out your expenses into multiple scenarios

One of the first things to do when planning for your retirement is to project your expenses. A non-exhaustive list of potential expense items follows:

Items that may be easier to estimate:

  • 1. Monthly Expenses: These are expenses related to transport, food, clothing, utilities, repairs etc.
  • 2. Home and Car Insurance: Basic insurance to cover theft, damages etc.
  • 3. Entertainment and Trips: Project these costs if you see yourself travelling or pursuing a hobby.


Items that may be harder to estimate:

  • 1. Mortgage or Rent: Do you currently pay for a mortgage or rent? Do you prefer to move to a different location?
  • 2. Debt: Do you have any outstanding debt?
  • 3. Health insurance: Check with your insurance provider to see how your health insurance premiums change as you grow older.
  • 4. Other insurance policies that are still in effect: Do you have any life insurance or critical illness insurance premiums you still need to pay for annually?
  • 5. Special Health Needs: If you have any special healthcare expenses, such as insulin injections or dialysis.
  • 6. Long-term Care: This may include modifications to your home, home-based care, costs of a nursing home, etc. These may be frequently overlooked.

After completing this exercise, you may find it easier to see how you can balance your retirement income against projected expenses.

Retirement income sources

It may be difficult to recover from losses resulting from poor finance decisions during your retirement as you may no longer have income to replace the lost capital. To reduce the risk of total capital losses, you may want to adopt a conservative approach in managing your retirement income.

Another important idea to keep in mind is that of the liquidity and availability of your funds. For example, you may have an investment portfolio which fluctuates in value over time. However, if a downturn in your portfolio value coincided with a major health condition that requires you to liquidate the portfolio to pay for healthcare bills, you may have to sell down parts of the portfolio at a loss. Although the market might recover one day, you may not have the power to hold on to the investment.

Based on the overall goals above, here are some tips on how to plan and manage diverse sources of income.

Retirement income sources: cash in bank

If you have been keeping your cash in a generic savings account that earns very little interest, it may erode over the years as the rate of inflation may be higher than the rate of the interest you receive in the deposit account. This may be a good time to convert your cash into a retirement portfolio or financial product that might be able to pay out a fixed annuity over your retirement years. However, such a portfolio or financial product may have a lock-in period. It would be prudent to leave aside the necessary amount needed (in cash) for health insurance and long-term care.

Retirement income sources: existing investment portfolio

This is a difficult subject to broach and depends on the investment products or portfolio you have accumulated. If it is possible, begin rebalancing your portfolio’s risk levels way ahead of your retirement. This is because your exact age of retirement might coincide with a market down cycle. With sufficient buffering time, you can better manage risks. Speak to a trusted financial advisor about when a good time would be to re-think your investment portfolio.

Plan your retirement income sources early

The sooner you plan for retirement income, the greater the financial reward you will receive when it comes time to enjoying your golden years.

While it is possible to plan when you are older, it may be harder to build up the retirement income you need to enjoy your current lifestyle.

Speak to a Citi Insurance Specialist or Relationship Manager to explore insurance options to safeguard your wealth.


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