Retirement Planning: How it benefits your children

By Raphael Cheong, 24 November 2017 3057

The retirement age of 62 may seem like a faraway future for some, but is it ever too early to plan for retirement? A Nielsen survey commissioned by Income in 2016 found that one in three working adults surveyed had not planned for their golden years, with 40% attributing it to a lack of knowledge of options.

Retirement planning involves you identifying sources of income, estimating future expenses, adopting a savings program and managing your assets. And, believe it or not, planning early does bring your children more benefits than you might realise.

Here are some benefits to starting your retirement planning early to help secure your family’s future, and indulge in the priceless moments of your family life.
 

A longer time horizon

Starting early effectively gives you more time to grow your savings. This means that you can avoid short term price fluctuations in your investments and make full use of compound interest.

Here's an example: say you put aside $50,000 when you are 30 years old into a savings account which has an interest rate of 2% p.a. After saving for 32 years, you'll have more than $94,000 when you fully retire at the age of 62.

Now, say you wait until you are 40 to put that $50,000 and save for 22 years. This time, you'll only accumulate about $77,000. A seemingly short gap in years for accumulating savings can make a huge difference in the amount of money you get.

Yet, it's never too late to get started, because as long as you do, you'll have a pool of money waiting for you when you retire.

At best, this means you can be self-sufficient and you won't need to rely on your children for an allowance. And even if you do, the sum of money could still ease their financial load.
 

An earlier retirement

Most Singaporeans expect to work till at least age 65, but who would ever say no to being able to retire earlier? Well, you just might be able to, if you save up enough money and park it in good investments.

In another Nielsen survey, 61% of Singaporeans polled felt that their existing financial commitments will hinder them from retiring completely. Do you fall into this category too? It's time to reconsider your spending habits, and start planning for the long run.

With Income’s Gro Retire Flex plan, easily available online, which allows you to craft your desired retirement lifestyle with monthly cash payouts  (for your spending or to be accumulated with Income at an interest rate of up to 3.25% p.a.), topped up with insurance coverage for death or terminal illness. There is also extra protection in the event of accidental death (before the anniversary immediately after the insured reaches
the age of 70) or disability conditions due to accidental injury or sickness - loss of use of one limb, speech, sight of one eye or hearing. Gro Retire Flex also gives you the flexibility in deciding the most suitable duration for you to pay your premiums and duration you would like to receive your monthly cash payouts.

Planning early helps you get rid of the fear that you may miss your retirement savings goals. And with an earlier retirement, you can enjoy more time with family and help your children take care of their children. Trust us, they'll value the quality time with you too.

 
Financial assistance for the family

Retirement planning also brings financial assistance for your family.

With a retirement plan, such as Income's Gro Retire Flex, have peace of mind knowing that in the event of accidents or injuries, you will receive the aid you need.

 

30 years old

 
infographic-image Mr Tan decides to start planning for retirement today by committing to the Gro Retire Flex plan. He chooses to receive a monthly cash benefit1 of $1,000 for 20 years from age 55, when he intends to retire.

He will pay a yearly premium of $17,487 over the next 10 years.



SCENARIO 1



SCENARIO 2 

Before 55 years old

38 years old

Infographic-image

infographic-image

Mr Tan has a Gro Retire Flex plan and can enjoy his life with peace of mind.

After paying his 8th annual premium, Mr Tan meets with an unfortunate accident and loses the use of his arm.

He qualifies to claim under the Disability Care Benefit3,4. The remaining two years of premiums5 (a total of $34,974) will be waived. He also receives a lump sum benefit6 of $6,000.


55 years old


55 years old

infographic-image

infographic-image

Mr Tan retires and starts receiving $2,411 monthly. This amount consists of $1,000 cash benefit1 and a non-guaranteed cash bonus2 of $1,411.

Mr Tan retires and starts receiving $2,411 monthly. This amount consists of $1,000 cash benefit1 and a non-guaranteed cash bonus2 of $1,411.

He also receives an additional $5007 monthly from the Disability Care Benefit3,4. The additional amount7 is equal to 50% of the monthly cash benefit that will be paid on top of each monthly cash benefit during the payout period.


75 years old


75 years old

infographic-image

infographic-image

The policy matures, and Mr Tan would have received a total illustrated payout of $578,7122 over the entire policy term.

The illustrated payout consists of:

  • $240,000 of total cash benefit1
  • $338,712 of total illustrated non-guaranteed cash bonus2

The policy matures, and Mr Tan would have received a total illustrated payout of $704,7122 over the entire policy term.

The illustrated payout consist of:

  • $240,000 of total cash benefit1
  • $338,712 of total illustrated non-guaranteed cash bonus2
  • $6,000 of lump sum benefit6 from Disability Care Benefit3,4
  • $120,000 of total additional amount7 from Disability Care Benefit3,4

The figures used are for illustrative purposes only and are rounded to the nearest dollar.

The non-guaranteed figures above are based on the assumption that the Life Participating Fund earns a long-term average return of 4.25% p.a.

Should the long-term average return be 3.00% p.a., the total illustrated payout (assuming there is no payout from Disability Care Benefit3,4) would be $419,4968, and the corresponding illustrated yield at maturity would be 2.95% p.a.8.

1 If the policy has not already ended when the accumulation period ends, we will check the cash value of this policy. If the cash value is less than S$10,000 after taking into account the policy loan and interest, we will pay you the policy’s cash value and the policy will end. If the cash value is at least S$10,000 after taking into account the policy loan and interest, the payout period will begin and we will pay you a monthly cash benefit for the next 10, 20 years or till age 100, depending on the payout period you have chosen, or until the policy ends.

The monthly cash benefit is the ‘cash benefit’ amount shown in the policy schedule. If you change your regular premium amount or payout period, we will work out a new monthly cash benefit. We will pay the first monthly cash benefit on the policy anniversary immediately after the end of the accumulation period. You cannot change the payout period once we have paid the first monthly cash benefit. If this policy has not already ended, it will end when we pay the last cash benefit.

2The figures in the illustration are not guaranteed and are illustrated based on the assumption that the Life Participating Fund earns a long-term average return of 4.25% per annum in the future. Returns are illustrated based on estimated bonus rates that are not guaranteed. The actual benefit payable will vary according to the future performance of the Life Participating Fund. The calculation for the illustrated yield at maturity also assumes that all cash benefits and cash bonuses due for the entire policy term are paid out to the policyholder.

3For regular premium policy, Gro Retire Flex includes Gro Retire Flex – Protection Benefit, a non-participating rider, which includes the Accidental Death Benefit, Disability Care Benefit and Retrenchment Benefit. Please refer to the policy contract for further details.

4Disability Care Benefit will apply upon diagnosis of the insured with any one of the conditions – loss of use of one limb, loss of speech, loss of sight of one eye and loss of hearing, arising from accidental injury or sickness during the term of the Gro Retire Flex – Protection Benefit rider. The benefit will be paid according to the date of diagnosis. There are certain conditions under which no benefits will be payable. Please refer to the policy contract for the definition of each condition and the circumstances in which a claim can be made.

5Future premiums on the basic policy and Gro Retire Flex – Protection Benefit rider will be waived for the remaining premium term from the date of diagnosis, if the insured is diagnosed with any one of the covered conditions, arising from accidental injury or sickness during the accumulation period and provided that the premium term has not ended.

6Lump sum benefit equivalent to 6 times the monthly cash benefit will be paid only if the insured is diagnosed with the covered conditions during the accumulation period.

7The additional amount is equivalent to 50% of the monthly cash benefit (capped at $3,000), which will be paid on top of the monthly cash benefit during the payout period or until the Gro Retire Flex – Protection Benefit rider ends, whichever is earlier. For policies issued by Income that include Disability Care Benefit, we will pay no more than $3,000 for the additional amount for each insured, no matter how many of such policies we have issued to cover the same insured.

8The figures in the illustration are not guaranteed and are illustrated based on the assumption that the Life Participating Fund earns a long-term average return of 3.00% per annum in the future. Returns are illustrated based on estimated bonus rates that are not guaranteed. The actual benefit payable will vary according to the future performance of the Life Participating Fund. The calculation for the illustrated yield at maturity also assumes that all cash benefits and cash bonuses due for the entire policy term are paid out to the policyholder. If cash benefits and cash bonuses are accumulated with Income, the interest rate will be based on 1.75% per annum and it is not guaranteed. Prevailing interest rate at the point of deposit will be determined by Income. Any cash benefits paid under the Disability Care Benefit cannot be accumulated with Income at the prevailing interest rate.

© 2021 Income. All rights reserved.
 

Settling the planning early; alleviating the worry

As retirement planning consultant Avery Neumark puts it, "Never too early to start. Anything can happen at any time.", one of the most daunting fears of old age is the uncertainty of life. Assuring yourself with a well-constructed plan helps you live out your desired lifestyle without having financial woes.
It also allows your children to follow their passions, taking risks with their career goals and investments. They need not worry about earning more money for your retirement plans and can focus their attention on spending quality time with you. And, if something unfortunate does happen to you unexpectedly, your children’s basic needs will be secured with a legacy from you.

Does the prospect of retirement planning still seem daunting to you? Fret not – we’ve gathered resources to help parents plan their family’s finances and we're never more than a message away. When you're ready to buy, you'll find more plans now available online, making it even more easy to get the protection your family needs. 

So, don't procrastinate any further and protect yourself and your children by thinking ahead. Start planning now to enjoy the future milestones of your loved ones in comfort!


Important Notes:
This article is meant purely for informational purposes and should not be relied upon as financial advice. The precise terms, conditions and exclusions of any Income products mentioned are specified in their respective policy contracts. For customised advice to suit your specific needs, consult an Income insurance advisor.

This advertisement has not been reviewed by the Monetary Authority of Singapore. 



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