We all know retirement by definition, but what does it really mean?

For some, retirement means travelling the world and exploring new sights and sounds. For others, it involves spending time with grandchildren and playing mahjong with friends.

As you can already tell, retirement means vastly different things for different people. But one thing’s for sure: retirement is more than just about slogging it out for decades and spending the remaining few years of your life using up the neat sum of money in your bank account.

According to MoneyOwl’s Head of Solutions Ms. Lena Teng, the youth and even pre-retirees are increasingly redefining what retirement means. “Instead of stopping economic activities permanently, it’s about taking a step back to try out new activities, pursue a second career, or transform a hobby or interest into a business,” she says.

And while you might be wondering, “I’m only in my 20s. Isn’t it a little too early to be planning so far ahead?”, that couldn’t be further from the truth — the earlier you plan for your retirement, the better!

It might feel like it isn’t worth setting aside money for something so far along in your future, but sometimes it’s simply about changing your mindset. After all, little goes a long way in the world of financial planning!

The ABCs Of Retirement

Retirement isn’t as simple as quitting your job on your 63rd birthday and living the good life for the rest of your golden years. To help you figure out your retirement roadmap, here are some questions to keep in mind:

#1 How much emergency funds do you wish to set aside?

You’re probably already familiar with the concept of saving for a rainy day. But as you grow older, it’s more important than ever to have a sizeable amount of savings set aside for the unexpected — which is where your emergency funds come in. These funds are meant to be readily available in case of unexpected illness, job loss, or any other financial emergencies.

The rule of thumb is to have enough funds to cover 3 to 6 months’ worth of expenses, but in the context of retirement, you may wish to adjust this amount accordingly.

#2 Can you pay off all your loans before retirement?

While growing older means experiencing greater financial freedom, it also entails more financial responsibilities. From housing to car loans, it’s important to ensure that you’re able to pay off all outstanding debt before you retire. Otherwise, you’ll end up spending the bulk of your savings servicing loans — definitely not what your dream retirement should look like!

#3 What is a ‘comfortable’ retirement lifestyle for you?

As we’ve established earlier, there is no right way to spend your retirement. This is why it’s important to tailor your savings plan according to the lifestyle you want to lead.

Thinking of travelling the world or pursuing other life goals? Then you’d likely have to set aside a little more each month to help Future You meet those needs. However, if you think that you’d be content spending on just the bare necessities when you’re older, then you can afford to squirrel away small amounts of money each month to hit that goal.

#4 Who and what will you be caring for?

Saving up for your future might seem like a simple enough task, but the road to retirement is paved with responsibilities too! A good way to figure out if you’d be able to retire comfortably at your desired age is to work backwards and factor in the various milestones and responsibilities you might have.

For instance, do you plan on getting married and raising children? Will you be the sole caregiver for your parents? Are you planning to upgrade your house and car regularly? Find the average amount of money these responsibilities will cost you, and you’ll have a rough sense of how much extra money you’d have to set aside on top of your retirement funds!

Learn How to Save Smart

With bank interest rates barely keeping up with the rising inflation, simply saving isn’t sufficient. Thankfully, learning how to save smart isn’t difficult, especially with the wealth of tools and resources at our disposal.

There are plenty of ways to make your money work harder than if it were just sitting in your bank account. Depending on your risk appetite, you can opt for a variety of financial products, from creating a humble endowment plan to investing in stocks, options, and ETFs.

There isn’t a one-size-fits-all approach to financial planning, but if you need a little help getting started, there are plenty of financial advisors in the market you can choose from, depending on your needs. MoneyOwl, for example, is a great platform for newbies looking to learn more about managing their finances. As their team of client advisers is fully salaried, they do not earn on commission — which means there is no conflict of interest to worry about! For a fuss-free, no-strings-attached consultation, you may check out their website here.

The road to retirement may not be as straightforward as it seems, but it remains manageable with early planning. By making small lifestyle and mindset changes, and buffing up your financial literacy early on in your life, you’d be well-primed to take on retirement like a boss!

About MoneyOwl
MoneyOwl is an NTUC social enterprise that provides Comprehensive Financial Planning to Singaporeans from all walks of life. MoneyOwl’s team of qualified advisers are all fully salaried (they do not earn on commission), so you can have peace of mind you are receiving advice that has your best interest at heart.

Even better, all NTUC Union Members get 75% OFF Comprehensive Financial Planning (U.P. $99)! This holistic service includes tools on how to protect your assets and income, improve your cash flow, fund your children’s education, grow your wealth and optimise CPF for retirement, and plan your legacy. To find out more, click here and watch this video.

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