Because you should retire from work, not life.
Retirement plans. By HSBC.
Retirement will be a significant new chapter in your life.
A ‘new beginning’ that will bring new opportunities, new freedom and new discoveries.
Recent research indicates that 71% of Singaporeans want to spend more time with family and friends, while 63% aspire to travel more when they retire1. For a fulfilling retirement, you don’t want to sacrifice your family’s or your quality of life due to constrained finances. Retirement is an exciting, enriching and empowering experience… if you take the time to prepare for it properly.
In recent years, the global economy has been quite volatile.
This volatility, coupled with longer life expectancy, means that you not only have to start saving earlier for your retirement, but also to protect your funds against the effects of inflation and other economic uncertainties.
A new beginning
1Source: The 2013 HSBC “Future of Retirement” Singapore report
Managing the challenges
According to the latest research, Singapore respondents expect to spend 17 years retired, while their savings will only last 9 years 2.High living standards and long life spans indicate the amount of savings you will need to cover your living expenses during retirement; but there are several specific challenges you need to think about.
Surging inflation
From inflation of 0.9%3 ten years ago, to inflation of 4.1%4 now, the cost of living is rapidly increasing. If we wish to maintain our current lifestyle, we have to keep up with the ballooning price levels.
Rising medical costs
Total medical costs in Singapore is expected to rise at an annual rate of 6.4% to hit S$22 billion by the end of this decade5. The older you get, the more you tend to need to spend on health care.
Singapore’s aging population
More than a quarter of Singapore’s population will enter their silver years by 20306. The low birth rate and rapidly increasing inflation rate makes it imperative to start saving early for your retirement. This way, you can maintain financial freedom.
Source: The 2011 HSBC
“Future of Retirement” global report Fully Retired
Age
Semi-Retired Age
Regional average life expectancies and retirement ages
Recent research indicates that Singaporeans have the third longest life expectancy, living an average of sixteen years after retirement (illustrated in the chart below). This gives an indication of the level of savings you will need to cover your living expenses during retirement.
2Source: The 2013 HSBC “Future of Retirement” Singapore report
3Source: The Monetary Authority of Singapore, Inflation Monthly, January 2003
4Source: The Monetary Authority of Singapore, Consumer Price Developments in December 2012, Singapore, December 2012
5Source: “Be mindful of rising healthcards cost: Balakrishnan” by Alice Chia, www.todayonline.com, July 15, 2013
6Source: “Sustainable population for a dynamic Singapore”, www.straitstimes.com, August 6, 2013
To make sure you can enjoy the retirement you want, you need to start making plans now.
Take a few moments to give clarity on YOUR RETIREMENT NUMBERS:
Set your goals and take proper steps in planning your retirement
Note:
Please note that your savings returns may go down as well as up. The diagram and information shown are hypothetical and for illustration only.
The earlier you start, the closer you are to meeting your retirement needs.
Target retirement savings
• What is your desired age for retirement?
• What is your preferred retirement lifestyle?
After setting your desired retirement age and projected monthly living expenses, your Relationship Manager can help work out your required monthly savings.
1 Retirement savings period
This is the number of years you have to plan for retirement. If your current age is 30 and you want to retire at 65 years old, then you have 35 years to save for retirement.
2 Protection
This is the protection amount for your family e.g.
• How much do you need to support your family? And for how long?
Would this amount be different if you are not around to support them?
• How much are your unpaid debts e.g. Mortgage balance?
• What is the estimated reserve for your children’s education?
3 Post retirement living expenses
• If you plan to live in your own property after you retire, then you have to reserve enough for basic overheads such as utility costs and management fee.
• Medical expenses may vary depending on how healthy your lifestyle is.
• Other living expenses such as food, leisure, transportation and clothing will largely depend on your desired lifestyle.
4
Retirement savings period Retirement income period Retirement Planning
Age AssetNet
Target retirement savings
Start early Start late
25-40 40-55 65
Protection 3
Retirement savings period
2 4 Post retirement living expenses
1
The diagram and information shown are hypothetical and for illustration only.
Delay can be expensive
For example, let’s say you are 30 and your goal is to retire when you are 65 and maintain a monthly income for living expenses equivalent to S$5,000 today.
Delaying the start of your savings plan by, say, 10 years (from age 30 to 40) means you would have to save S$600 more per month to reach the same target.
So the earlier you start saving for your retirement, the less you will need to contribute monthly. Your wealth will also continue to grow with compound interest over the long-run.
Waiting too long to start your retirement savings plan can have a huge impact on your savings effort. A delay of just a few years may increase your monthly savings by thousands of dollars as the following table shows.
Monthly savings required at your current age to maintain a post retirement living standard of S$5,000 until age 857.
7Source: According to HSBC’s 2013 “Future of Retirement” Singapore report, respondents say they will need an average household income of S$60,400 per year (S$5,000 per month), for a comfortable retirement.
8Source: The illustrative value is based on an average annual growth rate of 8.60% (gross) and the assumed inflation rate is 2.00%. All data shown are in today’s value. The “Required Monthly Savings (SGD)” amounts are rounded up to the nearest hundred.
Note: All numbers shown are hypothetical and for illustration only.
Desired Retirement Age Current
Age 55 60 65 70
Required Monthly Savings (SGD)8
20 600 400 300 200
30 1,300 800 500 300
40 3,000 1,800 1,100 600
50 11,800 4,900 2,500 1,400
60 N.A. N.A. 10,000 3,700
9Subject to product features and applicable terms and conditions. Please note that withdrawal of revisionary bonus is subject to penalty and the amount that you get is less than the revisionary bonus amount. Withdrawal of revisionary bonus will also reduce level of savings in your policy.
Note:
Investment involves risks. The income (if any) from investment choices may go down as well as up. In the worst case scenario, the value of the investment choices may be worth substantially less than the original amount you have invested.
Please refer to the last page for important notes.
Your needs in retirement planning
Benefits of using
insurance plans as retirement planning tools
The products that may help meet your retirement needs
Insurance
Your needs in retirement planning
Investment
Benefits of using wealth products as retirement planning tools
Secured retirement income – You will want your savings to have guaranteed returns and provide a regular income flow throughout your retirement years.
Regular income flow – Many annuity products in the market can offer a regular stream of monthly annuity payments while offering guaranteed returns and revisionary bonus9.
Lump sum withdrawal – At the point you start your retirement, you may need the flexibility to withdraw a lump sum to get a comfortable start to your retirement.
Lump sum payment – Target saving insurance plans offer lump sum payment at maturity to help achieve wealth accumulation target at the time of retirement.
Enhance potential returns – You will want your money to work harder for you to counter the low-interest rate environment.
Enjoy growth potential – Investment- linked life insurance plans combine
investment with insurance cover and provide the flexibility to manage the portfolio with a range of investment choices.
Extra protection – You will want your plan to provide extra protection to keep your family secure.
Extra cover – Many insurance plans offer additional coverage against major illnesses, hospital cash, accidental death, terminal illness and unemployment to give extra financial support to your family.
Provide capital preservation – You will want to choose low-risk annuity products which allow you to preserve your capital.
Capital protected – Choose life protection products that offer guaranteed payment periods and returns to protect your retirement savings.
Flexibility – You will want flexible payment
terms to meet your needs at different times. Flexible choices – Insurance plans can provide various choices of payment terms and accumulation period to suit your needs.
Potential returns – You will want income source to fulfill your desired retirement lifestyle.
Income source – Certain wealth products deliver stable and predictable coupons/
dividends as a stream of income and repayment principal at maturity.
Diversification – You can also build a portfolio with suitable asset allocation tailored to your target return to help provide capital appreciation and/or a regular income source upon retirement.
Possible products – Bonds, Unit Trusts.
Secured wealth – You will want to preserve your cumulated wealth to keep your family secured.
Predictability – Certain wealth products offer payment principal at maturity and exhibit low correlation to other asset classes, bringing relative stability to a portfolio. Some structured products can provide you with the opportunity to earn higher potential yield.
Possible products – Bonds, Structured Products (Structured Notes, Structured Deposit, Dual Currency Plus).
The key to success lies in action
In your journey through life, you will encounter many challenges and many opportunities. We hope this guide will prove to be an opportunity that will set the path to developing the plans you need to achieve your personal goals.
We encourage you to take the first important steps in your financial journey as soon as possible. The easiest and most productive step is to contact your HSBC Relationship Manager, who will take you through HSBC Goal Planner – a financial planning tool designed to help your investment portfolio effectively meet your needs.
The key features and benefits of HSBC Goal Planner:
Comprehensive financial needs analysis
Know your needs, goals and investment preferences with our fact finder.
Risk profiling
This tool assesses your risk tolerance.
Tailored wealth solutions
Every solution is designed to fit your risk profile and specific needs.
Financial planning reports
At the end of your Goal Planning session, you will receive a report, giving you an overview of your financial standing. It can be used for future reference as and when you need.
Call 1800-HSBC NOW (4722 669)
Click www.hsbc.com.sg/wealth-management Visit any HSBC branch
Important notes
1. This document has been prepared for information only. Information contained in this document is obtained from sources believed to be reliable; however The Hongkong and Shanghai Banking Corporation Limited (the “Bank”) does not guarantee its completeness or accuracy.
2. This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment or securities nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. The specific investment objectives, personal situation and particular needs of any person have not been taken in consideration. You should therefore not rely on it as investment advice.
3. Opinions and estimates expressed are subject to change without notice and the Bank expressly disclaims any and all liability for representations and warranties, express or implied, contained herein, or for omissions. All charts and graphs are from publicly available sources or proprietary data.
4. The mention of any security should not be construed as representing recommendation to buy or sell that security, nor does it represent a forecast on future performance of the security. The information herein is not to be construed as an offer or solicitation for the subscription, purchase or sale of any investment and insurance product.
The mention of any investment and insurance product should not be construed as representing a recommendation to buy or sell that product, nor does it represent a forecast on future performance of the product.
5. Any information herein is given on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. The Bank shall not be held liable for any loss or damage arising out of any person’s reliance upon this information. Each customer should make his/her buy and sell decision based on his/her own view and seek his/her own independent legal or financial advice. Past performance is not indicative of future performance.
6. A structured deposit is not a traditional deposit and is essentially a combination of a deposit and an investment product, where the return is dependent on the movement of some underlying financial instrument. Structured deposits are not insured within the Singapore Deposit Insurance and Policy Owners’ Protection Schemes Act 2011 of Singapore.
7. Buying a life insurance policy is a long-term commitment. An early termination of the policy usually incurs high cost and the surrender value payable may be less than the total premiums paid
Issued by The Hongkong and Shanghai Banking Corporation Limited, which is incorporated in the Hong Kong SAR with limited liability.
Printed on environmentally friendly paper.
