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3 reasons why you need to plan for your retirement early

When we think about retirement, it is often filled with images of a carefree life, travelling with our spouses, spending happy times with our family and friends, being in the pink of health and staying active. But the reality might be a little further than what we imagine.

There are many reasons to push back the need to save for retirement - having more immediate needs, saving for other things (house, wedding, child's education), using the money to invest, wanting to travel more when you are young. This happens to everyone, but there are compelling reasons for us to start planning for retirement now.

1. We are living longer

According to statistics, Singaporean’s life expectancy at birth is 83.51 and is ranked fourth2 in the world.  

That said, it also means that we need more retirement income to last us through our golden years. With our official retirement age set at 63 years3, it means that we need our retirement income to last us for about 20 years.

2. Rising cost of living 

With Singapore headline inflation at 5.6% in May 20224, up from 5.4% in April 20224, the consumer price index (CPI) reading is at its highest since late 20114. Hence if you would like to preserve your current standard of living (or improve it) during your retirement years, you would need to make more provisions when calculating your desired retirement fund. 

3. Inflation will affect your savings 

Many of us who are saving money would most likely keep it in a savings account in a bank. However, there may be detrimental effects of inflation that may decrease the value of our money sitting in a savings account.

Therefore, not only do you need to start saving, you need to do it smartly and identify ways to preserve the value of your money as well.

One way to do this is to choose savings accounts with higher interest rates. Alternatively, you can also consider investment-linked policies (ILPs) which combines life insurance and investment components.

For example, InvestReady (III) is a whole-life regular-premium investment-linked plan that offers access to a diversified suite of funds – including dividend-paying funds for potential income.

Diversify your portfolio with access to over 100 funds

Manulife InvestReady (III)

Diversify your portfolio with access to over 100 funds

How to get started on my retirement planning?

The good news is, with proper planning, you are still on your way to living the retirement life you have always dreamed of. Read our guide on retirement planning for young adults here and find out what are the 5 tips to know when planning for your retirement here

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    Footnotes:

    1. https://www.singstat.gov.sg/find-data/search-by-theme/population/death-and-life-expectancy/latest-data
    2. https://www.worldlifeexpectancy.com/singapore-life-expectancy
    3. https://www.mom.gov.sg/employment-practices/retirement
    4. https://www.businesstimes.com.sg/government-economy/singapore-headline-inflation-hits-56-in-may-on-broad-based-increase-in-consumer

     

    Important Notes

    Manulife lnvestReady (Ill) and its supplementary benefits are underwritten by Manulife (Singapore) Pte. Ltd. (Reg. No. 198002116D). This advertisement has not been reviewed by the Monetary Authority of Singapore. Buying a life insurance policy is a long-term commitment. There may be high costs involved if you terminate the policy early, and your policy's surrender value (if any) may be zero or less than the total premiums paid.

    Your investments are subject to investment risks, and you may lose the principal amount invested. The performance of the lnvestReady Fund(s) is not guaranteed. The unit prices and any income accruing to it may fall as well as rise. The Fund Managers shall have the absolute discretion to determine whether a distribution is to be made in respect of the lnvestReady Fund(s) as well as the rate and frequency of distributions to be made. The intention of the Fund Managers to make the distribution and the distribution yield for the lnvestReady Fund(s) is not guaranteed, and the Fund Managers may review the distribution policy depending on prevailing market conditions. Distributions may be made out of income, net capital gains and/or capital. Past distribution yields and payments are not necessarily indicative of future distribution yields and payments. Any payment of distributions by the lnvestReady Fund(s) may result in an immediate decrease in the net asset value per unit. You should read the prospectus and the product highlights sheet and seek financial advice before deciding whether to purchase units in the lnvestReady Fund(s). A copy of the prospectus and the product highlights sheet can be obtained from a Manulife Financial Consultant or our Appointed Distributors.

    This article is for your information only and does not consider your specific investment objectives, financial situation or needs. It is not a contract of insurance and is not intended as an offer or recommendation to purchase the plan. You can find the full terms and conditions, details, and exclusions for the mentioned insurance product(s) in the policy contract.

    This policy is protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact us or visit the LIA or SDIC websites (www.lia.org.sg or www.sdic.org.sg).

    We recommend that you seek advice from a Manulife Financial Consultant or our Appointed Distributors, or visit any DBS/POSB Branch before making a commitment to purchase a policy.

    Information is correct as at 26 September 2022.

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