MDRT - Really such a Big Deal?

It’s awards season again. I’m extremely grateful to the people who have contributed to the success – my clients, my family (both at home and at work) and my Heavenly Father. Some may be impressed with the accolades. However, although very satisfied with the results, I’m not overly excited about it. Here’s why.

For the uninitiated, membership to the Million Dollar Round Table (MDRT) is reserved for the top 5% of insurance professionals worldwide (according to some sources. Some other sources say 10% or even 1%). One achieves MDRT by selling a certain amount of insurance premiums. It is essentially a sales award – therein lies the problem. The criteria for this accolade does not take into account professionalism, sincerity nor financial expertise. It doesn’t even take into account ethics. Unfortunately I have seen too many “consultants” simply chasing the sale (sometimes to the detriment of their clients and neglect of their families).

To the credit of the MDRT organization, they do encourage adherence to a code of conduct and ethics. I also have no intention to belittle the achievements of my fellow MDRT qualifiers. It does take a certain amount of discipline and sacrifice to reach that level. To me, what is more important is not the sale itself but the process of uncovering and meeting the financial needs of the clients who trust me.

I encourage the consultants that I mentor to achieve MDRT early in their career. But how they go about it, trumps everything else. I would rather they take more time to achieve MDRT in the correct way than sell for the sake of the sale. MDRT is nothing if they do not advise clients from a heart of sincerity and a wealth of knowledge. I believe that as long as we go about our business in the correct manner, the accolades will come.

Therefore next time when someone boasts of being a member of the MDRT, let’s not be so easily impressed. Similarly, let’s not look down on consultants who have yet to achieve this accolade. Genuine desire to help clients is always more important than number of deals closed. In conclusion, is MDRT such a big deal? Yes it is – only if it is achieved by putting clients’ welfare ahead of the sale. Wouldn’t you agree?

Critical Illness coverage too Expensive? Here's an Alternative!

Most people would have at least a basic level of Critical Illness coverage. For those who don't I strongly recommend being covered for at least a bit. As a rule-of-thumb, the ideal amount of coverage one should have is 5 to 10 years worth of income. This would be sufficient to see us through being unable to work and the whole recovery process. However, to increase existing coverage to this level may not be affordable to everyone. One alternative is to focus on coverage against the no. 1 killer in Singapore - Cancer. Read on for more details.

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The unfortunate fact is that in Singapore, cancer remains the no. 1 killer. Almost 1 in 3 deaths are attributed to cancer1. Cancer cases have been rising over the years, and the number of people living with cancer continues to increase2. However, with advancements in cancer treatments, survival rates for people with cancer have greatly improved. Improvements in screening for some common cancers have also led to earlier detection and therefore more timely treatment for many.

Cancer survivors can now look forward to normal lifespans and a good quality of life due to newer and better treatment options. A comprehensive integrated-shield plan would take care of most of the treatment costs. However there are other unforeseen costs that would burden us should we not be prepared for it. Imagine having to worry about money for family expenses, when we are in no state of health to work. Increase in expenses may also come in the form of having to hire extra help, or increase transport costs when we have to frequent the hospital for treatment.

In view of these realities, it’s essential to have a plan that offers financial security and peace of mind. Having a lump sum payout can provide us with more options as well. AIA’s newly launched cancer insurance plan is one such plan. 

“AIA MultiStage Cancer Cover” offers 100% payout at early, intermediate or major stage cancer as well as affordable level premiums that don't go up with time. There’s only 3 underwriting questions and no need for any medical check-up. Moreover, should we sign up before 16 November 2020, we’ll even get 10% off the first year's premium.

This is as close to a no-frills, straightforward way to increase important critical illness coverage affordably, as one would get. Contact me for more info, or simply sign up here.

1. https://www.moh.gov.sg/resources-statistics/singapore-health-facts/principal-causes-of-death2. https://www.nccs.com.sg/patient-care/cancer-types/cancer-statistics

2. https://www.nccs.com.sg/patient-care/cancer-types/cancer-statistics

Changes in Critical Illness ahead! Don't be caught Off-guard!

We take a break from investments and Covid-19 this month. If you've not heard, a major shift is coming our way in the form of a revamp in Critical Illness definitions, in August 2020. Yes, we're only left with a month to react. The Life Insurance Association of Singapore (LIA) has decided to tighten conditions for claiming. On one hand, it clears up some ambiguity. On the other, it becomes a tad more difficult to get a successful claim. Read on for more info...

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The Life Insurance Association of Singapore (LIA) announced that the amendment of Critical Illness in life policies will take effect in August 2020. The changes take into account advances in medical treatment and technology which impact how critical illnesses can be treated, managed or mitigated.

Over 90% of all severe stage claims received by life insurers in Singapore are for the following five critical illnesses:

1. major cancer
2. heart attack of specified severity
3. stroke with permanent neurological deficit
4. coronary artery bypass surgery
5. end-stage kidney failure

Taking the change in “Major Cancer” definition for example, diagnosis based on “blood or body fluid tests with no identifiable tumour cells” will no longer be accepted. The list of excluded tumours have also been expanded (e.g. exclusion on “bone marrow malignancies” etc).

Another example is the change of “Deafness” to mean the “irreversible” loss of hearing, whereas previously, “loss of hearing” was sufficient.

The change results in the tightening of definitions, clarifying otherwise grey areas. This means that to claim successfully, one has to fulfill stricter definitions. More details on the changes can be found here (definitions came out in 2019, to take effect in Aug 2020).

Term or Group/ Company policies are likely to be affected by the change (e.g. a very popular term policy taken up by Singaporean men during their NS stints etc). On the bright side, personal private life policies, taken up before the coming change takes place in Aug, will not be impacted by the new definitions. 

Nevertheless, a study done and published in the Straits Times in April 2018 showed that Singaporeans have policies that would meet only 20% of their Critical Illness needs. Generally-speaking, it is advisable for one to have at least 5 to 10 years of annual income set aside or coverage of a similar amount, to meet Critical Illness needs.

In view of the changes, there’s been a rush by policyholders to obtain necessary critical illness coverage before the dateline. It would be wise to contact our trusted Financial Consultant for a review in this aspect.

Speak to me to find out more or to just have a chat on options available.

Don't Waste the $Opportunity$ of this Volatile Market

While we are coping with Covid-19, it is hard not to notice the extreme volatility of the stock market. A series of black swan events in early March 2020 resulted in the largest market plunge since Black Monday 1987. Yet a few weeks later, we witnessed the biggest single day gain of the Dow. Nobody can foretell the future but what is guaranteed, is that markets will remain volatile. In this issue, we explore two approaches to take advantage of market volatility. 

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How markets behave has a strong correlation with the expected Covid-19 situation. Australia, New Zealand and South Korea, have started to wind down their lockdown measures, while Europe and the USA are still in the midst of the battle. 

The global economy is now at Point 1. It is unlikely that it takes off (V) as experts are saying that the pandemic would be a long drawn out one. We can only hope that we’ll experience a U-shaped recovery instead of L. Regardless, here are two strategies that we can put in place to take advantage of the ups and dips. 

Dollar-Cost Averaging 

This entails investing the same amount on a regular basis, and not timing the market. In the above illustration, the same $8,000 invested over the same seven months, yields 4.07% when invested in regular sums of $1,000 monthly. This is one way to smooth out the ups and downs of the market. 

Regular Fund Rebalancing 

This method buys into stocks when it’s relatively cheaper and sells of stocks to buy bonds (take profit) when stocks rise. For example: Original portfolio of 30% bonds and 70% stocks. Stocks go up, we sell (sell high) to take profit and buy bonds, rebalancing back to 30% bonds 70% stocks. When the market drops, we sell bonds to buy stocks that are now relatively cheaper (buy low). In this way we buy low and sell high without having to time the market. Some instruments allow us to do this automatically. 

Of course there are numerous ways to profit from a volatile market. These are but two simple strategies. More importantly is to know your investment objective and volatility tolerance. Speak to us to find out more or to just have a chat on options available.

Don’t Kick Yourself for Not Knowing to Claim These Tax Reliefs

It’s time to file our taxes again. Unfortunately, the recent Budget did not give much in terms of tax reliefs or rebates (50% rebate capped at only $200 – applause). Nevertheless there are some often overlooked areas of tax deductions that may apply to us. We examine these in this month’s article. Hurray to saving money!

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Benjamin Franklin once said that there’s nothing more “certain than death and taxes”. Here’s some ways to make our tax season a little more palatable, if you’re an employee. 

 Life Insurance Relief 

Every year I receive queries asking whether insurance premiums can be tax deducted. Yes it can; if one’s total CPF contribution for the previous year was less than $5,000. A married man can claim on his wife’s policy if he paid the premiums on her behalf. The max that can be claimed is the lower of: 

1. The difference between the insurance premiums and $5,000 CPF contribution, or
2. Up to 7% of the insured value of our own/our wife's life or the amount of insurance premiums paid.

This means that most Singaporeans and PRs would not get to enjoy this relief. Expats, on the other hand, can enjoy this fully. Accident and Health insurance premiums are not claimable. Finally, the insurance company must have a branch in Singapore. 

Deductions for Employment Expenses 

We are able to claim if we used our own money to pay for expenses necessary to our employment such as travel expense, entertainment expense (we need to exclude our share of the expenses), and subscriptions (paid to professional bodies or society for professional updates, knowledge and networking, etc). The following conditions must be satisfied: 

1. The expense was incurred while carrying out our official duties;
2. The expense was not reimbursed by our employer; and
3. The expense was not capital (e.g. renovation costs, startup expenses etc) or private in nature.

It may be a bit of a hassle but we have to keep complete and proper records of all expenses incurred for 5 years. For example, expenses incurred in 2018 for YA 2019 must be kept and retained until 31 Dec 2023. 

Deductions for Rental Expenses 

Rental Income is taxable but the expenses incurred for producing the rental income can be deducted. Some items that can be deducted include, the interest paid on the mortgage, property tax incurred during the rental period, premiums paid for fire insurance, repairs and maintenance (e.g. painting, pest control, management corp fees, replacement of furniture/ fittings etc), costs of securing tenants (e.g. agents’ commissions), and even internet and utility charges paid on behalf of tenants. The above applies only to the property that is rented out and not left vacant. 

Course Fees Relief 

We are always encouraged to upgrade our skills and enhance employability. Fees for courses, seminars and conferences can be claimed as relief if: 

1. It leads to an approved academic and professional qualification. The skills learnt should be able to be applied in a particular vocation, and the course provider must be registered with ACRA.
2. It is relevant to our current employment, trade, business, profession or vocation; or
3. It was undergone up to two years prior to our current employment and is relevant to it.

The maximum that can be claimed is $5,500 each year regardless of the number of courses, seminars and conferences attended. 

Parenthood Tax Rebate 

Singapore tax residents who are married, divorced or widowed, may claim tax rebate up to $20,000 per child. The child may be adopted but must be a Singapore citizen within 12 months of birth or adoption. The tax rebate claimant must have registered marriage at the time of birth/ adoption or before the child reaches 6 years old. Both parents can share the PTR based on an apportionment agreed by both. If the percentage of PTR claimed does not add up to 100% or both are unable to agree on the apportionment, IRAS will apportion the PTR equally between the both parents. 

There are other rebates and reliefs that may be applicable to you. Furthermore, different profiles (such as sole proprietors, business owners etc) would have special tax concessions. Do speak to your Financial Services Consultant for more details.

How to Celebrate in a Market Crash - 3 Strategies to take advantage of a Bear Market

The end of the year draws nigh. It has been a roller-coaster year for investments. Are we at the brink of the next recession or do we still have a bit of bull to enjoy? Answers are as varied as the number of people you ask. In this issue, we explore strategies to take advantage of market volatility, regardless of which “expert” is right or wrong.

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How to Celebrate in a Market Crash – Strategies to take advantage of a bear market

  

Fix Your Psychology
It is a no-brainer that we should be investing (buying) when the price is low and selling when the price is high. However, most people do the opposite. In a market crash, we fear that our investments will depreciate further. When the price has been going up for some time, FOMO takes over and we enter at the brink of the next drop. The solution to this is to have a proven, time-tested strategy, and to stick with it regardless of how we feel. In this case, never trust your guts, use your head.
 
Think Long Term
We all know this one. However, how long is “Long Term”? Of course the experts would tell you the longer the better. Research has shown that if we are to invest in the MSCI World Index for 20-year periods since the start of the stock exchange, it is almost certain that we would profit every time. To make the most of the next two strategies, I would suggest a time frame of at least two economic cycles (two recessions and booms).
 
Regular Portfolio Rebalancing
This is one proven, time-tested strategy to make use of market volatility to buy low and sell high. We need two sets of components – one relatively stable (e.g. Deposits, Bond Fund etc); we’ll call this “the Container”, the other more volatile that would surge during a bull run (e.g. stocks, Equity funds etc); this is our “Money-maker”. We then allocate an investment mix based on our risk preference (e.g. 30% Container 70% Money-maker). We would regularly (e.g. every 3 months) sell off and/or buy components to rebalance our portfolio back to our allocated investment mix. For example, in a bear market, our Money-maker would decrease in value. We’ll sell some of our Container and buy more of Money-maker so that our portfolio is rebalanced back. This means that we are buying into Money-maker when the price is relatively low (i.e. buy low). We keep increasing units of Money-maker in our portfolio during a bear market. When the market finally turns, we now have more Money-maker in our portfolio than allocated. We now sell Money-maker (take profit; i.e. sell high) and buy Container. In this way we make use of market volatility to “buy low” and take profit (“sell high”), without having to time the market. It would be even easier if we can automate this process.
 
Conclusion
When we “Fix Our Psychology”, we won’t be tempted to buy and sell at the wrong times because of the FOMO. We understand that it takes “Time” for our investments to grow. Short term fluctuations would not worry us. Finally, we “Regularly Rebalance our Portfolio” to maximize gains and minimize losses. Thus with these three simple strategies, we can celebrate when the market crashes. We know that we're taking advantage of low prices and anticipating the return of the bull, to reap the rewards. Feel free to contact me if you’d like to implement the above steps in a structured portfolio.

Setting Ourselves Up for a Financially Better 2018!

We are at the start of a new year once again. What does our 2017 “Financial Report Card” look like? Would we have an A grade or a C? Regardless of last year’s grade, the good thing is that we can start afresh this year. In this month's issue we look at three simple tips to make 2018 the best year yet for our finances.
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The toughest resolutions are those that require consistent effort. This is no different for financial resolutions. Furthermore, time is money – the earlier we start work on our financial resolutions, the more we can gain from them. Fortunately, there are three things we can do to have a better 2018

1. Start Your Investment Journey

In Singapore, we are spoilt for choice when it comes to investment solutions. It is essential to get started as early as possible. If we are new to investing and are intimidated by the sheer number of available investment options, a regular investment plan is a good way to start.

When we invest a fixed amount every month or year, we don’t need to worry whether the market goes up or down because of a concept called dollar-cost-averaging.

AIA Pro Achiever is one low cost option that allows us to invest 100% of our money regularly from day 1. There’s no sales charges and it even gives us up to 105% premium allocation. For more info, refer to the video or brochure below.

Feel free to contact me for a more in-depth discussion on investment opportunities.

2. Watch Your Back!

It’s time to look at the blind spots in our personal Risk Management portfolio. Both medical and insurance costs are rapidly rising in Singapore. It is thus important to keep track of the relevance of our insurance to our needs.

Conducting regular portfolio reviews is important to determine if existing policies are performing up to expectations and meeting our objectives. Many people have not looked at their policies since purchasing them and have forgotten how they work. Are you one of them?

3. Lower Your Cost of Living

Most people can find some areas where expenditure can be reduced. Every time we decide to spend less on something, we are freeing up cash that can be invested for retirement or a more worthy financial goal. It pays to track our spending to find areas where we can spend less. Perhaps we can eat out less, or take the bus/MRT more instead of private hire cars. Are we willing to delay our gratification for a better future?

These are three simple suggestions to achieve a financially better 2018. Hopefully we can find the inspiration to take action to achieve our financial goals. Finally, it would beneficial to have a dedicated Financial Services Consultant to service and advise us. Always remember, I’m just a phonecall or email away!

Easy Start to Investment for Wealth Accumulation

Done constructing your Risk Management portfolio? Looking at Wealth Accumulation as the next step in your financial journey? At this stage, most people realize that they don’t know what they don’t know about investments and savings for Wealth Accumulation. Many assume the best place to start is with stocks and shares. Then they realise that they don’t have the capital for a meaningful investment. The risk may also be more than what they’re willing to bear. The next instrument that comes to mind would inevitably be investment funds. 

Investment funds have a mixed reputation. You either love them or hate them. Generally speaking, it all boils down to a few features: Allocation rate, Charges, Flexibility, Strategy, and Choice of Funds. Here’s where the latest innovation in the market comes in. AIA’s new Pro Achiever builds on its popular predecessor to meet the above-mentioned challenges.

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Who May This Option Be For?

Everyone of us have different financial goals and dreams.

Example:

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As with all products, the AIA Pro Achiever may not be for everyone. If you require protection, AIA’s Family First Series may be more suitable; or if you prefer guaranteed returns, the AIA Wealth Pro Advantage may suit you better.

Contact Your FSC before jumping into any investment or plan.

Insurance for Insurance - Planning for Increasing Premiums

Nobody disputes the importance of having hospitalization and medical insurance coverage. Almost everyone would agree that paying for medical insurance is more prudent than having to pay for the medical treatment itself, regardless of age. Moreover, medical insurance becomes even more important when we age as the probability of a claim increases. It is also a fact that medical insurance premiums increase as we age. This may result in premiums becoming unaffordable, especially in our retirement years. We will then face the problem of unaffordable coverage when we need it most. The obvious solution is to factor the future cost of medical coverage into our Retirement Planning. Here are some suggestions on how to go about it.

Set Aside Money to Pay for Premiums

Setting aside a lump sum or a regular amount during our working years may be the simplest solution. But this method comes with inherent problems. Firstly, the value of the money that is set aside decreases every year due to inflation. Secondly, it would take tonnes of discipline to save regularly for something so far down the road. There will always be the temptation to use the money. Finally, even if we have the discipline, we would bear the opportunity cost of not being able to maximize and grow this sum while it waits to be used for future insurance premiums.

Invest My Money and Use the Gains to Pay for Future Premiums

This method sounds more logical than the first. After all, we’d be maximizing the growth of our funds. The downside is that investments are not guaranteed. We may use investments as a vehicle to help in the accumulation of funds during our economically active years; but then we’ll have to park those funds in an instrument with much less risk (and much less returns) on retirement. That once again puts us in the same situation as the first method – setting aside a lump sum. Although this time the “wasted, unmaximized” years are less than the first.

Save Money in a Flexible Multi-use Plan

The third method, which is the one I advocate, is to save regularly in an instrument that allows us to grow our money while we don’t need to use it. Monetary contributions to this plan would end after a predetermined number of years or until retiremenat. The steady growth of our funds should continue even during our retirement years. This instrument would also allow us to make withdrawals on a regular basis to fund our medical insurance premiums, without jeopardizing the rest of the funds left in it. Finally, there should also be the option for a full liquidation at a profit, in our later retirement years, should we decide that we no longer need to maintain our medical insurance (e.g. age 75 and I’m still healthy; I might decide to liquidate and use the funds for a final round-the-world trip). 

One example of such a plan is the AIA Gen3. We can choose to pay premiums for 10 or 25 years. Yet coverage last till age 100. A guaranteed annual cash payout starts after 10 years. We can choose to accumulate these cash coupons for more interest and start withdrawing only when we need them (i.e. on retirement). The Gen3 comes with annual dividends which increases its surrender value year after year. Finally, it comes with death coverage. This means that should we decide to keep it to the end, we would be able to further leave a legacy. Thus this plan can benefit both us, when we need regular funds, as well as our descendants, when we’re no more. 

Of course, there are other options. Find out more from your Financial Consultant today!

Hope for the land of sugary piss - Singapore? (AIA Diabetes Care)

This month we discuss an issue that 1 in 3 Singaporeans are familiar with, yet remains below the radar - diabetes. You probably know a friend or family member with this chronic condition. You may also be aware that people with diabetes are unable to purchase much needed insurance coverage. Not anymore. AIA has recently launched a plan for diabetics. In fact, people without diabetes are unable to purchase it. Huh? A plan that healthy people can't purchase? Indeed, read on to find out more.

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Singapore - the Land of Sugary Piss. There is Hope. 

According to the Ministry of Health, diabetes is one of the biggest drains on our healthcare system. Singapore has the second-highest proportion of diabetics among developed nations. 3 in 10 Singaporeans will have diabetes before turning 40. The situation is so serious that 4 Singaporeans lose a limb or appendage dailybecause of diabetic complications. Unfortunately, people with diabetes are unable to get insurance coverage – until now.

Introducing the AIA Diabetes Care

Managing diabetes can mean big adjustments in lifestyle, such as diet, exercise, and daily monitoring of your condition. Alongside these new challenges, you may also face difficulty getting new coverage or keeping up with future treatment costs. Knowing this, AIA created AIA Diabetes Care specially for people who suffer from Type 2 diabetes, gestational diabetes and for pre-diabetics.

Key Benefits:

1) Easier Access to Protection

No medical check-up necessary. You only need to answer 5 simple questions

2) Guaranteed Coverage for 5 Key Diabetes-related Conditions

3) Guaranteed and Levelled Premiums

Unlike most other health plans, premium will not change and the plan will not get more expensive as we age.

4) Extra Special Condition Payout

20% extra coverage payout on limb amputation due to diabetic complications, giving you much needed support to adjust your lifestyle.

5) Boost Your Coverage with Cancer Cover

Upon diagnosis of early or intermediate cancer, 20% extra coverage will be paid out. A further 100% of coverage is paid out if Major cancer happens. You’ll still be left with the coverage from the basic plan.

6) Death Coverage

Should the eventual happen, your family receives a further $5,000.

AIA Diabetes Care can also be integrated with the AIA Vitality programme, giving you up to 15% discount. This programme encourages you to engage in a healthy and active lifestyle.

Contact Your FSC for more Info Today!

What's to Know About The Rising Cost of Basic Hospital Coverage?

You may be aware that the national hospital insurance, CPF Medishield has become Medishield-Life. You may have also heard that the private insurers are preparing to raise premiums. Is this justifiable? How will we be affected? In this first issue of the year we look at the upcoming changes to the "Shield" plan of the largest player in this market - AIA. This is important as the rest of the insurers would follow soon after.

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Around two-thirds of 2.5 million Singaporeans are insured by an Integrated Shield Plan (IP), with 60 per cent of them having a plan which provides coverage for private hospitals. IPs offered by appointed private insurers allows for better healthcare treatment and services above those provided by MediShield Life. MediShield Life is designed to provide only a basic level of coverage meant for ‘B2’ and ‘C’ class wards in Government/Restructured Hospitals. In addition, consumers may purchase a cash rider to the IP, in order to have full hospitalization coverage. 

According to Life Insurance Association (LIA) hospitalization claims have increased 15% annually over the past few years, with the majority from treatments and services in the private healthcare sector. This resulted in the current premiums becoming unviable for private insurers, leading to losses for 3 out of 5 insurers. Thus, IP premiums are set to go up across the board.

AIA has announced that it will raise the premiums for its IP covering private hospitals – AIA HealthShield Gold Max A by between 2 per cent and 23 per cent. This increase will take effect on policy anniversaries following 25 January 2017.

To balance out the increase in premiums, AIA has enhanced the plan. If treatment is sought with any of AIA’s Quality Healthcare Partners or Government/Restructured Hospitals:

1. the annual claim limit is increased to $2 million

2. the coverage for pre and post-hospitalization expenses is extended to 13 months 

These limits are the highest and the longest in the industry. 

3. Although the premiums will only increase upon the policy anniversary, the enhanced benefits will be effective from 25 January 2017, covering clients earlier.

AIA is also the first to set up a panel of preferred private doctors as recommended by the Health Insurance Task Force. This has the following benefits to clients:

1. It allows AIA to control and prevent unnecessary increase in premiums. 

2. AIA can ensure quality of treatment and care given to its clients. 

3. The list of preferred doctors gives clients more than enough choice of renowned specialists.

4. Being the first to make changes, AIA is able to set the bar for the rest of the insurers.

AIA has a significant market share which allows it to negotiate prices with the panel of doctors, containing cost yet maximizing quality and choice. This will create a win-win situation for clients and the insurance company going forward. 

The Integrated Shield Plan is an integral component of most people’s Risk Management portfolio. Should you have further queries regarding this topic, AIA Vitality, or any other matter concerning financial planning, please feel free to contact me. I’d be glad to answer your questions, no strings attached.

Ready to Retire or Retire Ready - Working till 67

In this issue we look at an all time "favorite" - retirement planning. But from a slightly different angle. Besides sources of income, is there something else that we can take note while planning for retirement? 

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In April this year, the Government announced that the re-employment age for older workers will be raised to 67 on 1 July 2017. Prior to this, the statutory retirement age was 62 and re-employment was up to the age of 65. A legal provision allowing wage cuts when employees turn 60 will also be removed.

There has always been talk of raising the statutory retirement age. Finally after 23 years the decision has been made. At present, one in three persons in the labour force is aged 50 and above, and this is set to rise further. 

The prevalent trend in Singapore sees most of us working well into our golden years. Rising cost of living coupled with low interest rates makes it all the more difficult to save enough for retirement. Most people would rely on one or more of these three sources for income during retirement. Are these enough and is there something else to consider?

1. Cash Savings

This remains the most popular nest egg for Singaporeans. In a recent Straits Times survey, it was found that seven out of ten people plan to rely mainly on cash savings for retirement. However, cash is the most liquid of instruments and easiest to spend. Bank deposits are at an all time low. Not to mention, interest from deposits are unable to even keep pace with inflation.

2. CPF Savings

CPF Savings continue to be a bulk component for retirement savings for most Singaporeans. However, the current CPF LIfe plan pays just $660 - $1920 per month. This is not guaranteed and is certainly not enough for retirement daily expenses.

3. Property

Most Singaporeans would have either a HDB flat or private property by the time they retire. Common methods of using property to supplement retirement income include 1) renting out a room, 2) renting out the entire house and staying with children, and 3) "right-sizing" to a smaller house. However, we might have to adjust emotionally to changes in living environment. Our children may also be inconvenienced, especially if they have their own families.

Conclusion

Working till the age of 67 is now more a reality than ever. In fact most of us might even work till we're older. It is also obvious that traditional sources of retirement income are not enough. What can we do then? Besides planning early for retirement, putting aside money in various financial instrument to grow it in our productive years, it may also be prudent to tamper our expectations of retirement. 

A recent survey showed that Singaporeans spend almost $3,000 a year on things that they have not planned on getting. Imagine spending more on stuff not planned for, during retirement. Thus an extra consideration while planning for retirement (besides income) may be to monitor our expenses such that we're used to spending within our means.

Contact your personal Financial Services Consultant for a review to find out more.

Explore the Best of Both World - SaVest!

We follow the last issue (on investments) with something for everyone. AIA has just launched a product that provides the guaranteed returns of an Endowment/ Savings plan, yet still enjoy the potential upside of an ILP investment. 

In addition, we're doing something fun with this issue. I've included a Free Personality Test based on the B.A.N.K. system. You'll be sent an email report once you've completed it. It takes less than 90sec. This will help us to better understand each other. We can further discuss more thereafter, if you'd like. Simply click on the link HERE,

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How are you preparing for your financial future?

Conventional saving methods may help you to accumulate money with minimal risk, but they fall short of the growth potential of well-managed investments. However, when it comes to investing, many people feel like they don’t have enough cash to start, or are concerned about risks.

Whatever your natural inclination, both saving and investing are equally important in building your wealth.

SAVEST - The best of both worlds? It's about time.

Savest with AIA Wealth Pro Advantage, where the advantages of saving meet the advantages of investing in one plan - the smarter way to prepare for your financial future.

AIA Wealth Pro Advantage is a unique 2-in-1 plan that offers both stable growth and potential returns powered by a thoughtfully constructed investments portfolio – Mercer’s Pro Optimiser. No medical check-up is required. Getting started is hassle-free.

Mercer is a leading global investment consultant with proven expertise in portfolio solutions for financial institutions internationally. A well-diversified portfolio to optimise your returns can be accessed via Pro Optimiser. Mercer’s annual market research and portfolio updates empower you to take control of your portfolio.

Alternatively, you are free to construct your own investment portfolio from AIA’s professionally managed suite of funds.

Flexible Options to Suit Your Needs

Contact your personal Financial Services Consultant for a review to find out more.