Being a millionaire today is different from being a millionaire 30 or even 20 years ago. This is simply because a million dollars is worth less now due to inflation in the cost of goods and services. These days, even a HDB flat could cost a million dollars!
I cannot remember the person's name but in the latest issue of The Sunday Times an interviewee (a millionaire) says that he does not want to think of retiring when asked for his retirement plan. Why? People who have plans for retirement, he says, will not be as driven or gung-ho.
Conventional wisdom says that we start planning for retirement as soon as possible. Even a very good fisherman should plan for the day when he can no longer do any fishing.
Today, I received a newsletter with a few interesting facts:
1. Singaporean males live an average of 79 years and women live an average of 84 years. Living longer means we need more money.
2. Due primarily to inflation, current savings will be worth less in future. 30 years later, something that costs $3 today could cost as much as $13.70 with inflation at 5.2% per year.
3. Although 91% of Singaporeans find CPF a reliable tool for retirement planning, according to a retirement study in 2011, each year, fewer members meet CPF's Minimum Sum requirement.
4. Escalating medical costs are a big concern.
The newsletter is a sales tool for an insurance company but these four points which I have extracted are pertinent to us all. If we have not started planning for our old age, we should if we could.
Apart from working to make money and being financially prudent, we invest and grow our wealth, creating streams of passive income along the way. Our investment returns, year after year, should be higher than the inflation rate. This is only part of the equation, however.
I am a strong believer in having adequate insurance coverage for medical costs which are bound to be incurred as we age. Our financial health could take a severe hit if we do not have medical insurance as money meant for living expenses could be depleted by medical bills.
Many might have heard the sardonic remark that being sick is worse than being dead. This could indeed be the case especially if one did not have sufficient insurance coverage of the right kind.
Planning for retirement is definitely more than just having enough passive income to replace our earned income.
Being able to retire is much more than working because we want to and not because we have to.
Knowing how to make money and building wealth is the first step. Knowing how to protect our wealth is the necessary second.
Protecting our wealth will cost us some money but not protecting our wealth could cost us even more.
In case you are wondering, I am not an insurance agent and this is not an advertorial. If this blog post has alerted some who have yet to plan for retirement to put on their thinking caps, it would have achieved its purpose.
1. Young working Singaporeans, you are OK.
2. To protect our wealth, we have to take risk.
3. Roads to wealth creation in the stock market.
4. Wage slaves should be fearful.
5. CPF is a cornestone in retirement.