Using Insurance to Supplement Retirement Funding Needs

Retirement Funding Singapore

I came across an article titled “Growing Your Wealth With Insurance” in the Business Times on 3 March 2016.

Growing Your Wealth With Insurance

This article is another timely reminder for us all to ensure that we have given due attention to retirement planning. The topic of retirement planning never goes ‘out of fashion’. Why? Because, at the end of the day, the ultimate goal of financial planning is to truly be able to enjoy a comfortable retirement lifestyle.

Article: “While many Singaporeans are aware of the need to plan for their retirement, many have yet to start the process of doing so.”

#1 My comments: What is stopping people from planning for their retirement?
While the media and the government are doing their part to constantly remind Singaporeans to plan for retirement, it is interesting to note only 56% of Singaporeans have started saving specifically for retirement (source: Aviva Consumer Attitudes to Savings study conducted in November 2015). A good majority of Singaporeans worry about whether they will have sufficient money to provide for an adequate standard of living.

Is it procrastination? Is it inertia, laziness? Is it lack of money resources? Is it because they don’t trust financial planners or don’t know who to approach? Or do they think that CPF money alone can see them through retirement? With the younger working adults, instant gratification and present needs tend to take precedence over planning for the future.

Yes, having to face up to one’s finances, especially when not in good shape, is a tough thing to do. But what is worse is that without clarity and a specific goal, one would not know what direction to take!

Article: “Insurance can address the varying needs of an investor pertaining to savings and investment (wealth accumulation), legacy planning (wealth distribution and preservation) and wealth protection.

#2 My comments: It is a great idea to incorporate endowment solutions in one’s retirement planning
I have done so myself in my own planning. Endowment plans are a good supplement to CPF and other investments as part of a diversified investment portfolio for retirement planning. This is because:
Article: “It is important to safeguard against the threat of high medical cots and recuperation expenses.”

#3 My comments: Do not under estimate health care costs during your golden years

Article: Investment-linked plan would appeal to customers who wish to enjoy high flexibility, make decisions on choice of funds to invest in for potential upside from financial markets.”

#4 My comments: Be wary of ILPs! Do not mix insurance with investments.
ILPs are my pet peeve because I had suffered losses of having 3 regular premium ILPs. I never knew the ‘hidden costs’ and caveats till I became a financial planner myself.

I do not support the idea of investing in ILPs for retirement planning. Read about the dangers of ILPs here. In my entire career as a financial planner, I’ve only recommended ILPs twice and that was because the clients wanted it.

To sum it up:
Retirement planning is not a DIY project
It requires professional advice and guidance – accurate planning calculations will give you clarity on your retirement funding goal, taking into account your assets, income sources and liabilities. A qualified financial planner will also take a holistic view of your entire financial planning and advice you on your insurance needs during retirement.

Don’t leave your retirement to chance! Engage qualified help, preferably a Certified Financial Planner representing an organisation that partners with multiple life insurers and asset management companies in the market. Tied agents who represent only one single’s company’s products will not be able to give you an objective perspective of the various solutions out there in the market.

Moral of the story: Those who have a financial plan in place tend to save more and are able to retire with certainty.

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