Planning for financial freedom in retirement is like preparing for a yachting expedition. Both require you to:
Chart a course for where you want to be (financially-wise) in retirement.
Ensure your vessel (your wealth portfolio) can make the distance.
Enlist an experienced co-captain (a relationship manager) if required.
Prepare to navigate stormy seas - or unexpected life events.
Even with wealth at your disposal, you need to think how best to use it to sustain both you and the next generation - especially as affluent individuals prefer to maintain their lifestyles even after they retire1.
- After decades of hard work, a diversified portfolio of investments and comprehensive insurance coverage will help provide and preserve the retirement you deserve.
- This holistic approach can better provide for you and your family, including the next generation.
- Government schemes provide a basic retirement, but you’ll need other income sources to supplement and enjoy an affluent lifestyle in retirement.
There’s a lot to think about. We can be your co-captain and help you navigate these elements when planning your voyage into retirement. Refine your retirement plan today.
Regular income: Make your retirement the voyage of a lifetime
How do you see yourself in retirement? Travelling the world perhaps. Immersed in your hobbies. Or maybe trying a slower-paced lifestyle such as running a beachfront bed and breakfast.
Whatever your dreams, the best way to achieve them is to develop a layered retirement strategy that protects your nest egg from inflation and provides a regular income.
This may be provided to some extent by government schemes. Singapore citizens and permanent residents will almost certainly receive a basic income from the CPF Life scheme.
However, even the most generous government schemes cannot fund the premium retirement most wealthy individuals hope to enjoy. Expats and their families are also not always eligible for state payouts of any kind. To sustain the high standard of living you’re used to, you’ll need other sources of income to bridge this gap.
This is where products such as the Manulife IncomeSecure and Signature Lifetime Rewards, come in useful. These highly flexible plans provide a monthly or annual income plus a.
Tax: Chart a course around potential hazards
Questions to consider when formulating your retirement strategy include:
- How long do you have to prepare for retirement?
- Where do you plan to spend your golden years?
- How will your retirement income be affected by tax?
- Will you benefit from a state retirement scheme?
- Do you have family or investments overseas?
The answers will determine how to manage your affairs, including your tax situation. If, for example, you have assets in another country, you need to think about how these will be taxed on your death.
Estate tax in Singapore was abolished in 2008. But if you own assets elsewhere in the world where there’s still estate or inheritance tax (IHT), your heirs may have to pay taxes to receive their inheritance.
It’s also worth maximising your gains from tax breaks offered by government schemes such as the voluntary Supplementary Retirement Scheme, which:
- Offers various tax benefits including a 50% tax concession on post-retirement withdrawals
- Is open to both Singapore citizens/permanent residents and expats working in Singapore
Health insurance: Prepare for stormy weather
People are living longer than ever before, and global life expectancies are at an all-time high2. In Singapore, people are living till 83 years of age3.
With rising healthcare costs, there’s no guarantee you won’t outlive your savings - even with a substantial nest egg. Global healthcare prices have been rising by around 10% each year, which is much faster than inflation4. The story is not much different in Asia or Singapore5.
That’s why you need to plan for stormy weather too.
Investing in comprehensive health insurance such as PRUShield Premier and Enhanced IncomeShield Preferred helps to cover hospitalisation and surgical bills.
If you’re inclined to try alternative treatments or want a restorative holiday, then consider policies that provide a lump sum upon diagnosis, such as critical illness plans or cancer insurance.
Personal Legacy: Keep future generations on an even keel
If you want to pass your wealth on to your loved ones as efficiently as possible, you need to plan beyond the horizon of your lifetime.
For instance, affluent individuals may find it hard to distribute assets equally, especially if they are illiquid assets such as real estate and family heirlooms.
Universal life insurance can help with this by providing a payout equal to the difference in value between one asset and another to the relevant beneficiary.
It can also help to avoid generational wealth erosion by shielding your estate from tax; safeguarding your hard-earned heritage and keeping future generations of your family on an even keel.
There are various types of universal life insurance available. Options include:
- Heirloom, which offers certainty in the form of minimum crediting rates
- Signature Life Series, which can be held in either SGD or USD
- Signature Indexed Universal Life Select, which has transparent returns linked to internationally recognised indices
Business legacy: Ensure your vessel is in good hands
Affluent individuals tend to be self-starters, and the idea of retiring fully is not always so appealing.
Among business owners, a common worry is who will be at the helm of the organisations they have spent their lives nurturing once they are gone.
Fortunately, there are ways to implement strategies that will safeguard your business legacy. These include:
- Investing in key man insurance to cover pivotal members of the team
- Taking out life insurance that includes a business continuity plan
Whatever your personal circumstances, DBS Treasures has investment expertise and sophisticated insurance products to make your post-work years plain sailing.
Set sail for the retirement of your dreams today - and get in touch with your DBS relationship manager for a co-captain to support you on the way.
1 Chen, Anqi and Alicia H. Munnell. 2021. "Do Retirees Want Constant, Increasing, or Decreasing Consumption?" Working Paper 2021-21. Chestnut Hill, MA: Center for Retirement Research at Boston College.
2 World Health Organization. GHE: Life expectancy and healthy life expectancy.
3 Duke-NUS Medical School. Live long and prosper? A super-aged Singapore society does not have to be a sad one. By Abhijit Visaria and Rahul Malhotra for The Straits Times.
4 WTW. 2024 Global Medical Trends Survey.
5 Ahmad Zaki, Jan 2023. Asia Insurance Review. Rising healthcare costs a challenge for insurers
This advertisement has not been reviewed by the Monetary Authority of Singapore.
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Disclaimers and Important Notices
This article is for information only and should not be relied upon as financial advice. Any views, opinions or recommendation expressed in this article does not take into account the specific investment objectives, financial situation or particular needs of any particular person. Before making any decision to buy, sell or hold any investment or insurance product, you should seek advice from a financial adviser regarding its suitability.
