| Retirement,
whether you are an employee or your own boss,
is a prospect that we all have to deal with,
like it or not. Will you be able to retire
or will you outlive your savings?
What Does It All Mean To You?
During retirement, you may have to live
on about 30% of your last drawn income.
This sharp drop in cash flow may come as
a shock to you. You may have enough for
your living expenses. But you are unlikely
to be able to maintain your pre-retirement
lifestyle. Under such circumstances, you
may then have to consider these options:
| ~ |
Lower
your expectations for your retirement
lifestyle |
| ~ |
Work longer
in your current job or take up a retirement
job |
| ~ |
Invest differently |
| ~ |
Relocate to a
lower-cost country |
| ~ |
Sell your current
property |
Different Strokes to Different Folks
What does retirement mean to you?
| ~ |
Is there a suitable successor to the
business? |
| ~ |
Have I saved
enough money for my family and me? |
Owner-operator
Age, is but a number, when it comes to retirement.
The biggest worry next to cash for a soon-to-retire
sole-proprietor is the question, "When
can I retire?" The time you decide
to retire is not dependent on working till
you are 55 or 62 years old. Rather, it's
dependent on the following factors: -
Employees
While employees work towards a fixed retirement
age, they have a different set of challenges
when it comes to financial planning. Employment
uncertainty aside, most employees do not
have a proper savings-investment framework
in place. Most are not equipped and do not
have the time to properly plan their finances,
let alone plan for retirement.
Challenges Of Retirement Planning
| ~ |
You
are likely to live longer after retirement
than you parents |
| ~ |
Inflation erodes
purchasing power |
| ~ |
Volatility of
investment markets |
When Should You Start Planning
For Retirement?
Getting started is probably the hardest
part of a retirement plan. However, sooner
you start, more you can reap from the power
of compounding.
Here is an example to illustrate the power
of compounding and the ‘cost’
of waiting:
|
Year
1 |
Year
2 |
Year
5 |
Year
10 |
| Start Balance - million |
HK$1,000,000 |
HK$1,000,000 |
HK$1,000,000 |
HK$1,000,000 |
| Balance* |
HK$3,869,684 |
HK$3,616,528 |
HK$2,952,164 |
HK$2,104,852 |
| Cost of Waiting |
0 |
HK$253,157 |
HK$917,521 |
HK$1,764,833 |
|
To harness the power of compounding, the
best time to start retirement planning is
now.
* expected rate of return, 7%
Seek Professional Advice
What is does financial planning mean to
the financial planner? Let's break it down
into steps.
| ~ |
You define
your dream |
| ~ |
Together with you,
the financial planner quantifies that
dream, putting a dollar figure to it |
| ~ |
The financial planner
puts together a framework to help you
achieve that dream. He/She articulates
the solution and the trade-offs |
| ~ |
The financial planner
helps you get from here to there |
Start planning early in partnership with
your financial adviser, your retirement
could include some of the best years of
your life. Click HERE to arrange a complimentary
meeting with an ipac adviser in Hong Kong.
|
