Retirement Planning: How it benefits your children

By Raphael Cheong, 24 November 2017 3532

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 Ease plan, easily available online, feel free to choose the retirement age of your dreams. It allows you to craft your desired retirement lifestyle with monthly cash benefits (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 and even specified disabilities. Gro Retire Ease 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 benefits.

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 Ease, have peace of mind knowing that in the event of accidents or injuries, you will receive the aid you need.

 

40 years old

 
infographic-image Ms Tan chooses a guaranteed monthly cash benefit of $1,000 to commence when she retires at age 60. She has selected a payout period of 20 years. She intends to use the monthly cash benefit and cash bonuses for her living expenses1. She has chosen to pay a premium of $26,102 on a yearly mode, over the next 5 years (total premiums paid would be $130,512).



SCENARIO 1



SCENARIO 2 

Before 60 years old

42 years old

infographic-image

infographic-image

Ms Tan has a Gro Retire Ease plan. She now has the peace of mind to enjoy life without worrying about her retirement.

After paying her 3rd annual premium, Ms Tan meets with an unfortunate accident and loses the use of her arm. She qualifies to claim under the Disability Care Benefit3. This waives her remaining 2 years of premiums4 (a total of $52,205) and provides a lump sum benefit5 of $6,000.


60 years old


60 years old

infographic-image

infographic-image

When Ms Tan retires at age 60, she will start to receive $1,730 monthly (consists of $1,000 guaranteed cash benefit and $730 non-guaranteed cash bonus2) until age 80.

When Ms Tan retires at age 60, she will start to receive $1,730 monthly (consists of $1,000 guaranteed cash benefit and $730 non-guaranteed cash bonus2) until age 80. She will also receive an additional stream of monthly cash benefit6 of $1,000 from the Disability Care Benefit. This is on top of the guaranteed monthly cash benefit.


80 years old


80 years old

infographic-image

infographic-image

The policy matures and Ms Tan would have received a total illustrated payout of $415,1522 over the entire policy term.

  • The illustrated payout includes:

    • $240,000 of total guaranteed cash benefit, and

    • $175,152 of total illustrated non-guaranteed cash bonus2.

The policy matures and Ms Tan would have received a total illustrated payout of $661,1522 over the entire policy term.

  • The illustrated payout includes:

    • $240,000 of total guaranteed cash benefit,

    • $175,152 of total illustrated non-guaranteed cash bonus2,

    • $6,000 of lump sum benefit5 from Disability Care Benefit, and

    • $240,000 of total additional stream of monthly cash benefit6 from Disability Care Benefit.

The above figures 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 4.75% per annum.
Should the long-term average return be 3.25% per annum, the total illustrated payout, assuming there is no payout from Disability Care Benefit would be $292,5367.

1 If the insured is still alive and the policy has not ended, the first monthly cash benefit is paid on the policy anniversary immediately after the end of the accumulation period, provided that the policy's cash value is at least $10,000 after taking into account any policy loan and interest.

2 The figures are used for illustration purposes only. The 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 4.75% 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 total illustrated payout assumes that all cash benefits and cash bonuses due for the entire policy term are paid out to the policyholder.

3Disability 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 policy. 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.

4Future premiums on the basic policy 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.

5Lump 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.

6The additional stream of monthly cash benefit refers to the additional one month of cash benefit (capped at $3,000) that is paid on top of the monthly cash benefit during the payout period or until the policy ends, whichever is earlier.

7The figures are used for illustration purposes only. The 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 3.25% 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 total illustrated payout assumes that all cash benefits and cash bonuses due for the entire policy term are paid out to the policyholder.

© 2017 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're here to help. With Advisor Connect, we're never more than a message away. Or you can consult our digital advisor, Sage, for advice on what plans suit you 24/7, or check out Financial Planning for Savvy Parents for more info on better financial planning for your family. 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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