What or when exactly is retirement? Every age group you ask will tell you a different answer. However, every insurance agent that talks to you about buying savings plan will always point you towards retiring at 65 years old or beyond.
The insurance agent is right. Very little of the people around you, will retire at 35/40/45/50/55. Unless they belong to the dinkwad category (dual income no kids with/wo a dog) or hit the crypto jackpot in 2020 (maybe they lost it already by now).
- CPF Board explains it simply as 3 CPF Life plans, each aiming to give you a modest amount of money enough for a basic (ie crappy) standard of living with the option to cater for inheritance or longevity. In 2019, they said $1379 is enough for most Singaporeans aged 65 and older. If you are the type who think government is always right, i would say good luck.
- The FIRE movement (Financial independence, retire early) explains it as saving, no, scrounging enough money such that you are able to live off a modest amount of investments for very long. We now all know that COVID put out that FIRE. FIRE is not sustainable. Can we expect our life to have minimal liabilities moving forward? A growing family willing to live in austerity too?
- Another similar financial trend says that by accumulating a certain amount of money, you can withdraw 4-5% of it annually as your living expenses and it would last about 30 years. This concept is more sound, but it also advises you to start withdrawing it at 65. The more your living expenses are, the harder it is to accumulate that amount of money.
The above retirement concepts emphasizes on having enough money now. The truth is all of us reading this will never have that sum of money until we are in the sunset of our careers with some luck. Since we cannot have that amount of money now, then we can only focus on what we have now in abundance, which is our mind. Or more specifically, having the correct mindset towards retirement.
Before we can start to plan our retirement, we need to cultivate the correct mindset. Lets address the common mindset failures.
- If you are thinking of leaving your job, ask yourself WHY. Are you quitting to leave a nasty boss you didn’t dare to stand up to? Or are you quitting to find a better employment set up that works for BOTH you and your employer.
- If you are thinking of going all-in into a crypto investment your friend introduced to you, ask yourself WHY. Are you investing with knowledge of the risk to get high return? Or are you just impatient to get rich.
- If you are telling yourself you don’t need to spend unnecessary money on insurance, ask yourself WHY. Do you really think you will be healthy forever? Or you are just too complacent to admit that you cannot foresee the future.
We do stupid things every day in our life, because we reacted to some emotion/ego and did not ask ourself WHY. Any of the above scenarios could easily screw up your retirement. And everyday people make these mistakes, with the excuse that they did it because they wanted to be successful, retire earlier, or knew better than others.
If your mindset is correct, retirement is a definition that is crafted by you. Not the finfluencers, not your insurance agent, and not even Cambridge Dictionary.
According to the Cambridge Dictionary, retirement is “the point at which someone stops working, esp. because of having reached a particular age or because of ill health, or the period in someone’s life after the person has stopped working”.
Wow imagine having to work until you became too unwell to work.
Now lets talk about some examples of having the correct mindset:
- You are considering to leave a job because it doesn’t pay you well enough to stop juggling driving grab and going to office.
- You left a job because you found something that promotes flexible hours, remote working so that you can care for your child even though it pays lesser.
- You invested abit of money in crypto, because it is something you can gain knowledge about with potential upside, and understand your risk tolerance better.
- You bought medical health insurance as a start because you know health fails with age, with the consideration to buy more coverage in the future if your family expands.
- You agreed to speak to a representative from an independent FA, at the risk of angering your friend who insures your whole family because you want to find out if your current financial situation can be improved.
- You foresee yourself working until 65 or beyond, because you have enough financial resources to downgrade if needed while still putting your time in something meaningful, staving off dementia and earning a humble allowance
You can walk away from perceived failures and losses in your life if you think like the above.
Talk to someone you think who can help you find out what your own definition of retirement may be.
#chooseindependent
#coachinggoals
#finallypostedthis
