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6 factors to consider when building your retirement portfolio

10 January 2018 | 3-mins read

6 factors to think about when building your retirement fund

A retirement portfolio allows you to pay your bills even when you are no longer drawing an income.

The process of building a retirement portfolio typically involves a combination of regular saving and long-term investments.

When should I start building my retirement fund?

Planning for your retirement journey can look different in your twenties versus your forties. But one thing is the same –it is never too early to start planning for your retirement. Even though the thought of it may sound daunting, with discipline and determination, you can be on your way to get closer to your retirement goals after years of hard work. 

How do I calculate how much I need to retire? 

The first step to retirement planning is to set a goal for your retirement funds. This requires you to determine how much retirement income you need when you have stopped working. To get an idea, use the following questions to help you:

  • At what age do you plan to retire?
  • How many years of retirement income do you need?
  • What is your desired monthly retirement income?

To calculate your desired monthly retirement income, a suggested method is to use 70% of your last-drawn salary1. If not, you can use an absolute amount you have in mind, taking into consideration the type of lifestyle you would like to lead during your retirement. Multiply this sum by twelve to determine how much you need a year.

After calculating the amount you need annually, multiply it by the number of years you plan to stay in retirement to get your overall goal for your retirement funds. For instance, if you need S$4,000 a month and plan to be in retirement for 25 years, the amount will be S$4,000 X 12 X 25 = S$1.2 million. It is also important to remember that the goal for your retirement funds set above is only an indicative amount, and does not take into account your current liabilities, assets, and inflation rate.

How do I reach my retirement goal?  

Most people think that keeping your money in a bank savings account will help you reach your retirement goal eventually. However, this might not be true as the value of your money might get eroded over time due to inflation. More importantly, you want your money to work harder for you, which would mean taking a certain amount of risk for higher potential returns. But a retirement fund needs certainty as well - you need to preserve your capital because you need it as a stable income. So how can one balance between the need for growth and the need for preservation of capital when building a retirement fund?


The following 6 factors need to be considered when building your retirement fund:


1. Risk appetite

Your risk appetite might change depending on your commitments and goals at different points of your life. Generally, the younger you are, the more risks you may afford to take. This is because you would have fewer commitments at a younger age and more time on your hands to recover possible losses should you take a higher risk with your investments.

With that said, every individual has different life trajectories, and you should assess your risk appetite depending on your lifestyle and goals. Changing priorities at certain life stages may also influence your risk appetite.

There is a variety of insurance solutions in the market that may address your financial needs and suit your risk appetite. An endowment plan provides protection coverage, and any non-guaranteed bonuses that have built up during the policy term when the policy matures. As with all investment products, you are exposed to the risk that your investment returns underperform expectations. An investment-linked plan allows someone who has a higher risk appetite to decide on which funds to invest your premiums into, depending on your risk appetite. The price of your units depends on how the investments in the fund perform.

Investment-Linked Policies

Investment-linked policies (ILPs) generate potential investment returns with protection


2. Time Horizon

Generally, if you are of aggressive risk profile, a bigger portion of your retirement portfolio may be set aside for higher-risk investments if you start younger (e.g. in your twenties). As you progress closer to the retirement years, your portfolio can increasingly focus on insurance solutions that are of lower risk and provide relatively stable potential returns.

You can consider allocating your investments into products of different time horizons (i.e. short, medium, and longer-term) depending on your risk appetite. For example, you can include some riskier assets such as single equities or investing in a fast-growing speciality fund in your portfolio. You should always keep in mind that with higher potential returns comes higher risks.

For longer-term investments, you can consider a retirement investment-linked plan to help you accumulate wealth for your retirement fund.

An example of such a plan is Manulife SmartRetire (V). It can be customised to your goals and budget– be it target retirement sum, the premium amount you can spare, as well as the option of free fund switching amongst its suite of curated funds – to help you get closer to your target retirement goal.

Be in control to plan for your desired retirement

Manulife SmartRetire (V)

Be in control to plan for your desired retirement


3. Inflation

Remember we said that if you choose to save your way to retirement by putting cash in a bank savings account, the value of your money will be eroded due to inflation?

While the average inflation rate in Singapore from 1962 until 2020 is 2.51%, it is on an increasing trend at 4.0% in January 2022, a near nine-year high2. So if you left your money idle, you will most probably lose purchasing power over time due to inflation.

To ensure that your money preserves its purchasing power during your retirement years, you need to make sure that your money is growing at a rate higher than inflation. Hence, you need to select investments that can give you potentially higher returns than the inflation rate, on the condition that you are able to accept the accompanying level of risks.


4. Balance your portfolio

Just as how you shouldn’t put all your eggs in one basket, it might be a good idea to ensure your retirement fund portfolio is balanced. 

For example, an insurance plan with a “capital guaranteed” feature will ensure that your initial investment will be preserved. Such plans can be part of a balanced retirement portfolio with a mix of higher and lower-risk plans.


5. Affordability

Building a retirement sum is a long process, and many people put it off until later - a study by Manulife shows that most Singaporeans start planning for retirement at around age 383. This may also be the reason why only two out of five Singaporeans feel confident about retiring comfortably.

By starting later, you may need to set aside larger sums to reach your retirement goal. However, there are insurance solutions available in the market that can fit your budget and help you in building up a retirement fund. You can work with a financial consultant to assess your current financial situation to make working towards your retirement goal a sustainable habit, and explore other available products if needed.

A plan for retirement, for the golden years you've always dreamed of

RetireReady Plus (III)

A plan for retirement, for the golden years you've always dreamed of


6. Payout mode

 Many people neglect the payout mode when they do their retirement planning. With investments, you may not have the liquidity you need if you need to commit your investments for a certain number of years.

Thus, you need to consider when you are likely to need cash for your commitments (for example, your children’s school fees), and whether you have quick access to the money. For example, certain endowment plans require you to lock in the amount for a fixed number of years before you may get a potential lump sum payout, whereas others may provide a yearly guaranteed payout.

Make sure you are clear as to the payout mode of the insurance plans, and select the ones that meet your needs best.


Planning for your retirement may look like a daunting process, especially when there are no hard and fast formulas on how you can build your retirement portfolio. Hopefully these 6 factors gave you some good ideas on how it works, and how you can work successfully with a financial consultant on a retirement insurance plan that works for you. Read more on what are the 6 retirement planning mistakes to avoid.

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    The insurance products 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 ILP sub-fund is not guaranteed. The value of the units in the ILP sub-fund and the accumulated income (if any) may fall or rise. This advertisement 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 web-sites ( or

    We recommend that you seek advice from a Manulife Financial Consultant or our Appointed Distributors before making a commitment to purchase a policy.






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