10 THINGS YOU NEED FOR RETIREMENT IN SINGAPORE | Financial Independence Retire Early | Summary and Q&A

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December 20, 2023
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Josh Tan - TheAstuteParent
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10 THINGS YOU NEED FOR RETIREMENT IN SINGAPORE | Financial Independence Retire Early

TL;DR

Retirees in Singapore should understand their CPF accounts, plan for their CPF life payouts, create a will and CPF nomination, set up a lasting power of attorney, manage their insurance, secure their valuables, have a joint bank account, simplify their finances, lock up savings, and have a decumulation plan.

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Key Insights

  • 🏦 CPF account structure: Retirees in Singapore should be familiar with the structure of their CPF accounts, including the Ordinary Account (OA), Special Account (SA), and Medisave Account (MA). At age 55, a Retirement Account (RA) is created to provide passive income in retirement.
  • 💰 Mortgage payments: Retirees relying on their CPF OA to pay for their mortgage should be aware that OA and SA contributions will start to decrease over the years. It's important to know how much more mortgage is left and how much cash may need to be set aside.
  • 🔍 Check Medisave account: As retirees grow older, integrated Shield plan premiums may increase. It's crucial to ensure that there is enough in the Medisave account to cover insurance premiums and future medical needs.
  • 💲 CPF Life payouts: Retirees should understand how much CPF Life payouts they will receive from age 65 onwards. By contributing more to the RA and aiming towards the enhanced retirement sum, one can receive higher payouts.
  • 📜 Wills and CPF nomination: CPF savings cannot be included in a will, as they do not form part of the estate. It is recommended to create a will and do a CPF nomination to ensure proper distribution of assets and avoid falling under the Interstate Succession Act.
  • 💼 Lasting Power of Attorney (LPA): LPA allows a trusted person to make financial decisions on behalf of an individual who is mentally incapable. It's important to complete an LPA to ensure that someone can take care of one's finances in the event of incapacitation.
  • ⚕️ Advanced Medical Directive (AMD) and Advanced Care Planning (ACP): AMD and ACP are tools to indicate preferences for medical care in the event one is unable to make decisions. While ACP is not a legal document, AMD is an official one. LPA may be more valuable as it grants decision-making power on finances.
  • 🏥 Manage insurance coverage: In retirement, insurance coverage should focus on medical insurance rather than death coverage or income protection. It's essential to understand the coverage and benefits of one's medical insurance plans, including integrated Shield plans and accident insurance.
  • 🔒 Secure valuables and important documents: Retirees should consider having a safe at home to store valuables, including jewelry and important documents like wills. It's also crucial to inform a trusted individual of the safe's PIN.
  • 👪 Joint bank account: Establishing a joint bank account with a child or surviving spouse allows for easy access to funds and payments in case the retiree is unable to handle day-to-day financial matters.
  • 💼 Simplify finances and close unnecessary accounts: Retirees should consolidate multiple bank accounts into a few key accounts to make management easier and avoid potential problems upon passing away. Clearing loans and margin accounts is also recommended.
  • 🔐 Lock up savings: Consider using security features offered by banks to limit access to savings. This can protect against scams and ensure that savings are not easily spent or withdrawn without careful consideration.
  • 📝 Decumulation plan: Planning the use of accumulated savings in retirement is crucial to avoid underconsumption and ensure a comfortable retirement. Seeking fee-based retirement planning advice can help retirees navigate this phase effectively.

Transcript

10 things you need to do as a retiree in Singapore take out your notes CH down what is important rewatch this a few times because I'll be going quite fast today and it starts with this first point know how much you have in your cpf inside cpf all these years you realize you have your cpf ordinary account special account and Med safe account when yo... Read More

Questions & Answers

Q: Why is it important for retirees in Singapore to understand their CPF accounts?

It is crucial for retirees to understand their CPF accounts in order to plan for their retirement income and ensure they have enough savings for their needs during retirement. By knowing the details of their CPF accounts, retirees can make informed decisions about their financial situation and plan for their future.

Q: What is the significance of creating a will and CPF nomination for retirees?

Creating a will and CPF nomination allows retirees to ensure that their assets are distributed according to their wishes after their passing. Without these documents, their assets may be subject to the interstate succession act, which could lead to complications and disputes among their heirs. By creating a will and CPF nomination, retirees can have peace of mind knowing that their assets will be distributed as they intend.

Q: What is the purpose of a lasting power of attorney (LPA) for retirees?

A lasting power of attorney (LPA) is important for retirees as it allows trusted individuals to make financial and property decisions on their behalf if they become mentally incapacitated. This ensures that their financial matters are taken care of and their assets are managed properly even if they are unable to make decisions themselves.

Q: How can retirees effectively manage their insurance in retirement?

Retirees should review their medical insurance coverage and understand the benefits it provides. Integrated Shield plans, in particular, may require regular checks to ensure sufficient coverage as premiums increase with age. Additionally, accident insurance can be beneficial for covering unexpected expenses related to falls and injuries that are more common in elderly age.

Q: Why is it important for retirees to secure their valuables and have a joint bank account?

Securing valuables and having a joint bank account is essential for easy access to funds and protecting assets. Retirees should have a safe for storing valuable items and should inform a trusted individual of the safe's PIN to ensure access in the event of their passing. A joint bank account can also allow a trusted individual to help manage finances and make payments on their behalf.

Q: Why is it advisable for retirees to simplify their finances and consolidate bank accounts?

Simplifying finances and consolidating bank accounts can prevent confusion and ensure that all accounts are properly managed. Retirees may have accumulated multiple bank accounts over the years, and managing them can become challenging as memory declines with age. Consolidating accounts and having a clear overview of finances can also prevent any accounts from being overlooked or forgotten, which could cause complications for the executor of the estate in the future.

Summary & Key Takeaways

  • Retirees should know the details of their CPF accounts, including the CPF Ordinary Account (OA), Special Account (SA), and Medisave Account (MA), as well as the Retirement Account (RA) for passive income during retirement.

  • Understanding CPF life payouts is crucial, as contributing more to the RA can lead to higher payouts. It is important to consider topping up retirement accounts for enhanced retirement sums.

  • Creating a will and CPF nomination are essential to ensure that assets are distributed according to one's wishes and to avoid complications under the interstate succession act.

  • Setting up a lasting power of attorney (LPA) gives trusted individuals the authority to make financial and property decisions if the retiree becomes mentally incapacitated.

  • Properly managing insurance, including medical insurance and accident plans, is important in retirement to cover healthcare needs.

  • Retirees should have a safe for storing valuables and a joint account with a trusted individual for easy access to funds.

  • Simplifying finances by closing unnecessary bank accounts and consolidating funds can help manage finances more effectively.

  • Locking up savings in a main savings account with limited access can provide security and protect against scams.

  • Having a decumulation plan is crucial to effectively use retirement savings and prevent under-consumption.

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