Category: Retirement Planning

It’s no big secret that we all want to live our best lives when we retire. After all, we work hard throughout our lives to provide the best to our loved ones and enjoy our retirement days with ease. However, once you retire, your monthly income would stop, and to sustain your daily expenses and live a dignified life, you will need a robust financial back-up.

This is where retirement planning comes in. Planning for your retirement is vital for having a safe, secure, and fun retirement and ensuring that you do not face any financial constraints. We recommend starting at a younger age to ensure that you and your loved ones do not face any financial burden when you are no longer earning. 

To do so, investing in retirement plans while you are young, motivated, and earning is one of the most recommended steps to take. Today, we’ll be sharing some of the key benefits of having a comprehensive retirement plan, and how you can work towards a safe and secure retirement. 

First, what is retirement planning? A retirement plan helps you plan today for a better tomorrow and ensure that you do not have to compromise on your and your family’s goals and dreams even when you retire. It is recommended to start investing for retirement as early as you can, as it can help you save more for yourself and your family. 

A sound retirement plan allows you to:

i. Cover daily living expenses post-retirement

ii. Cover your medical expenses

iii. Tackle the rising inflation.

iv. Deal with uncertainties of life

v. Meet your retirement goal sooner than anticipated

Here are 5 steps to get you started on your retirement planning journey. 

1. Start Early 

Start investing in a retirement plan as early as you can. This is especially true when you’re young and able to earn. You have several years in your hand and the power of compounding with you. Investing from an early age will help you save a lump sum amount for your retirement days. As the cost of living and inflation rates rise day by day, having a solid investment plan in place will help you accumulate enough wealth for your retirement while you are earning sufficiently and offer assured benefits to your loved ones in case of your unfortunate demise.

2. Plan Your Retirement Age

Deciding the age at which you want to retire can help you plan better and more comprehensively. While the ideal retirement age for most people is 60, modern day workers have seen this age vary. Planning ahead for your your retirement age early is important because, beyond that point, your regular income would stop, and you would be more dependent upon your savings and investments. It also ensures that you and your loved ones will not face any financial burdens and how much money you can withdraw for expenses after you retire. 

3. Calculate The Amount You’ll Need For Retirement

Planning the financial requirements & goals of your family and yourself is helpful, as it ensures that you do not have to face any financial constraints at a later stage or when your retirement is near. Your retirement fund should be the amount you would require after your retirement to sustain the same lifestyle and pursue your post-retirement goals. Having a well-planned financial portfolio for your retirement ensures that you can enjoy your retirement with your loved ones in a hassle-free and seamless way. 

 4. Calculate the Future Value of Your Current Savings

You need to find how much you are able to save each year after meeting all your expenses. Once you’ve worked out your retirement income needs, you can work out if you have adequate income sources to fund the retirement you want. You can keep aside a part of your savings towards your retirement plan. Do bear in mind that the value of money you save today will be far less ten years down the line. If you’re planning years in advance, look at your current sources of income and assets and how you predict they may be when you retire. This can include any personal savings, pensions pots, investment portfolios and home equity, while also considering factors such as the expected rate of return on your investments and inflation.

5. Have Some Contingency Plans In Place

When we plan for retirement, it can be easy to plan for the things that are guaranteed but it is equally important to create a contingency fund to ensure that unplanned expenditures don’t burn through your retirement fund. Even though you can’t predict what’s going to happen, it is important to put some money aside for unexpected expenses, such as medical emergencies or any unforeseen circumstances. 

Planning your retirement early will allow you to live a financially independent life after your retirement. A reliable retirement plan today can help you live comfortably and worry-free after retirement. You can seek the help of a professional planner to create a diversified portfolio for you. Apart from retirement plans, you can also invest in other assets to ensure all your eggs aren’t put in a single basket.

At SK i-Wealth, we offer a full financial service solution for individuals and companies, including retirement planning services. Our firm’s comprehensive wealth platform and experience supports a team of Financial Integrators with the resources they need to deliver integrated financial solutions according to your needs. 

To some people, retirement is something to think about only in the future. But there is no time like the present, and retirement planning should start now because it is a multistep process that evolves over time. For a comfortable, fun and secure retirement, you will need to start to build your financials which allow you to fund it. 

In the simplest sense, retirement planning is what one does to be prepared for life after paid work ends.

There are different stages to retirement planning, which changes according to which stage of life you’re currently at. For example, early in a person’s working life, retirement planning is about setting aside enough money for retirement. But during the middle of your career, it could evolve to also include setting specific income or asset targets and taking steps to achieve them.

So how do you start planning for your retirement? Well, it all starts with thinking about your retirement goals and how long you have to meet them. 

How much do you need for retirement? 

While this number differs from person to person, there is a benchmark in which you can follow to determine how much money you need to save in order to hit your retirement goals. 

While there is no fixed rule about how much money to save, many retirement experts offer rules of thumb such as saving about RM1 million, or 12 years of one’s pre-retirement annual income. Others recommend the 4% rule, which suggests that retirees should spend no more than 4% of their retirement savings each year in order to ensure a comfortable retirement.

However, do remember that everyone’s circumstances are different, and therefore, calculating the ideal retirement savings is very much up to your own situation. 

Here are the 4 crucial steps you should take in order to build a solid retirement plan. 

1. Understand your timeframe

Factors like your current age and expected retirement age can help to create an initial timeframe in which you can use to achieve an effective retirement strategy. 

For example, if you’re young, you can have the majority of your assets in riskier investments, such as stocks. There will be volatility, but stocks have historically outperformed other securities, such as bonds, over long time periods. The older you are, the more your investment portfolios should be focused on income and the preservation of capital, like bonds which are less volatile and provide necessary income that you can use to live on. 

Understanding your timeframe helps you plan for success better, and also helps to determine the optimal allocation strategy for your finances. 

2. Determine your retirement spending needs

 Having realistic expectations about post-retirement spending habits will help you define the required size of a retirement portfolio. Most people believe that after retirement, their annual spending will amount to only 70% to 80% of what they spent previously. However, such an assumption can be proven unrealistic, especially when the increasing cost of living is factored in. Studies have shown that the cost of living is increasing every year—especially healthcare expenses. 

To have a more accurate gauge of your retirement planning, you can specify and estimate your early retirement activities, accounting for unexpected expenses in middle retirement, and forecast what-if late-retirement medical costs.

3. Assess risk against your investments 

Whether you’re taking charge of your own portfolios or whether you have someone to manage it for you, a proper portfolio allocation that balances the concerns of risk aversion and returns objectives is arguably the most important step in retirement planning. The main question to ask is: How much risk are you willing to take to meet your objectives?

The most important thing is that you are comfortable with the risks being taken in your portfolio and know what is necessary and what is a luxury. Never attempt to micromanage your portfolios, because retirement planning is for the long run, and markets go through long cycles of up and down. 

4. Make sure your estate planning is up to date

While it is a crucially important part of managing your personal finances, not many people devote enough time to estate planning. Essentially, estate planning is deciding who will inherit your assets after you’re gone. This means that if you don’t have estate planning down, you can’t choose who gets everything that you worked so hard for.

Estate planning is another key step in a well-rounded retirement plan, and each aspect requires the expertise of different professionals, such as lawyers and accountants, in that specific field. Having a proper estate plan ensures that your assets are distributed in a manner of your choosing and that your loved ones will not experience financial hardship following your death. A carefully outlined plan also aids in avoiding an expensive and often lengthy probate process.

Conclusion

Everyone dreams of the day they can finally retire, but don’t consider the fact that doing so costs money. That’s where retirement planning comes into play. And it doesn’t matter at which point you are in your life. Setting aside money now means you’ll have less to worry about later.

Retirement planning allows you to have enough money to maintain the same lifestyle you currently have. That’s why it’s so important to have a viable plan that allows you to get the maximum amount of money when you retire.

At SK i-Wealth, we offer a full financial service solution for individuals and companies, including retirement planning services. Our firm’s comprehensive wealth platform and experience supports a team of Financial Integrators with the resources they need to deliver integrated financial solutions according to your needs.