2018 seemed to pass in a blink of an eye.

And right now, we are already approaching the end of Jan 2019. 

I remember this parenting quote – “The days are long but the years are short.”

Before we know it, the long days of caring for young children suddenly disappear when our kids start growing up. 

Similarly, we approach our mid-30s then suddenly we find ourselves approaching 40 years old. 

For the men, we get our NS completion letter. (A few more years to go for me)

Mindef Reserves (MR Loh!)

We get our Eldershield letter – reminding us we are approaching another milestone. 

Eldershield will be replaced by Careshield in 2020

All these are little gentle reminders – we are getting older and we need to start planning for retirement. 

Some observations from the enquiries I received

In 2017, I was contacted by about 150+ people through my writings.

In 2018, I was also contacted by another 150+ people. 

(There is another 1000+ subscribers in my mailing list who have yet to contact me.)

Based on some of these enquiries which turned into face-to-face meetings, here are what I observed regarding their financial milestones and behaviour.

Age 30-40: Wealth Accumulation

Between the age of 30-40 years old, this is the wealth accumulation stage. 

This is the age where we are the most economically active and start to grow our financial assets. 

Those who are earning more might have the disposable cash to spend on holidays and cars. 

You really have ALL the freedom to do what you want. 

They are able to choose the job and not let the job choose them. 

For some people who have children, they will look for convenience and consider upgrading to bigger flats.

They see their existing flats as being too small. Compared to private property, these flats are so much cheaper. 

(There is a reason why these flats are cheaper.)

There will also be another group of people. They do NOT exchange their HDB flat for another flat.

Instead, they decide to upgrade to a better performing property – a property that has a greater chance to appreciate. 

They select what they can afford and decide to stretch their comfort zone. 

But I also see some people who “enjoy” too much here – and end up having to play catch-up when they grow older. 

Age 40-50: Wealth Growth

Between the age of 40-50, they are really focused on paying down their monthly installments. 

Some have enough in their CPF contributions – so they don’t have to pay the rest by cash.

Some have to top up a little bit with cash.

There is some discomfort as they are essentially parking and saving more and more money… into their property.

But discomfort is best experienced earlier – rather than later. 

Those who already have a $1 million property will have a greater appreciation of their property compared to someone else who has a $300K property.

This is because inflation is measured in terms of percentage.

A $300k property appreciating by 10% = $30,000

A $1 million property appreciating by 10% = $100,000

At this age, they have more experience in work and in life.

Their network also increases. They encounter people who have achieved some financial results from their investments.  Some good, some bad.

Is active management of investments a good thing? Or should one just let their investments grow passively?

They start to hear stories about people doing well in investment – who are able to secure their future retirement. 

No matter what, the most important thing is that they are putting in a lot of their hard work monies upfront.

Those monies are being put to work NOW rather than later. 

Age 50-60: Wealth Preservation

At this age, most people will start to slow down. 

Their worries are much lesser. For most of them – they have already built up their savings earlier. 

As they have went through the earlier discomfort of saving and focusing on their future, there is a lesser need to scrimp and save in their 50s and 60s. 

Their retirement is pretty much guaranteed – unless something really catastrophic happens. 

However for some HDB owners if they choose to sell their flat at 55 years old, they run into a real risk of negative HDB cash sales. 

They will also need to consider that some of the proceeds from the sale will be locked into their Retirement Account to meet the Minimum Sum. 

Here is when your “report card” on your finances will really show up and have its impact on you. 

Age 60-70: Wealth Distribution

At this age, your property should be fully paid off. Exit strategies can be considered. 

If you have a private property, you can sell it and downgrade to a cheaper HDB flat. 

You do not care if VERS will happen to your HDB flat. Because you will already have a nice comfortable cash savings – proceeds from selling off your private property. 

For some people, they might have to consider renting out a room to earn extra income.

If VERS does not happen, the other alternative is the Lease Buyback Scheme. 

Age 70-80: Wealth Distribution II

Approaching this age band is actually very likely! The average life expectancy in Singapore is about 85 years old. 

Of course we pray that we are still mobile, independent and in good health.

If we are not mobile & independent… well, those Eldershield premiums might finally come into good use here. 

Nevertheless, being able to approach this age – it should be a blessing and not a burden. 

Let’s plan for such possibilities. 

The Effects of Starting Late 

Have you heard of the Rule of 72? 

It is often associated to calculate how long it will take for your investments to double.

Let’s apply it to inflation.

It can be used to calculate how long the true value of your investments will be reduced by 50%. 

Assuming a 4% inflation rate, your investments will be lose half its value in 18 years.

Eg If you have $100,000 in the year 2010 – you would have LOST $50,000 by the year 2028. 

Because you did NOTHING with your assets to offset the compounding negative effects of inflation. 

Conclusion

Assuming you are going to retire at 65 years old and live until 85 years old – there is about 20 years of living to go.

That is about 240 months. Assuming you need $2500 per month (for 2 person) to live comfortably, you will need $600K in CASH. 

This is on top of the property you are living in.

What does all this mean? It means it is good to start planning for your future retirement NOW.

Procrastination is merely fear disguised as “waiting”. 

The trick to overcome procrastination is just by simply getting started. 

What are the actions you can take to have more financial security when your earning ability decreases?

The people I’ve met – whether they continued to work with me or not – have at least taken steps to getting clarity about their finances with regards to their property.

If you are at a stage where you are thinking about taking action regarding your existing home or property portfolio – I invite you to contact me for a complimentary detailed financial assessment. 

We live only once – so it is time to plan for our one and only life.