First of all, I would like to say that the below is something that I believe in very strongly. I typed out the below video transcript based on the Seedly (many thanks to the the team) community special video (start around 48-minute mark) and Christopher Tan shared the below about retirement planning.
Christopher Tan is the CEO of Providend and Executive Director of MoneyOwl. Both firms would be familiar to many of the Singapore personal finance community. Providend is widely known as the first and perhaps only fee-only financial advisory firm in Singapore whereas MoneyOwl is a popular bionic financial advisor (robo-advisor) noted for being a social enterprise and a joint venture between NTUC Enterprise Co-operative Limited and Providend.
Nice and friendly guy, this Chrisopher 😛 I first saw him when he spoke at a MoneySense event at SMU that I was invited to. Yup, that was the spot where I sat many few years ago, SMU alumni might recognise the location. And almost immediately, I thought – damn, this is the type of advice I would have wanted to get when I was just starting my personal finance journey years ago.
OK, back to the video, In it, it was almost as if he was talking about what I did in my life, for real. *shiver* Which was the primary motivation for taking the time and effort to type out the whole transcript (in blue below) because it will help so many people. People just like me.
Retirement plans seems like a big and complex subject
If I can reduce it to the irreducible minimum, it means this – that when you retire, you must have three things.
- You must have a fully paid house.
- You must have a good medical expense insurance.
- And of course, you must have a lifelong stream of income.
At its most basic level, you must have these three things. And the good news is, our CPF takes care of all these three things, right?
- Because your CPF gives you the Medisave account that allows you and help you to buy your medical expense insurance.
- Your CPF, when you are retired, will give you that annuity for life – stream of income.
- Your CPF, if you don’t have enough cash, helps you buy the house.
And so, if you are a young working adult and you have got conflicting needs and priorities – need to buy a property, need to get married etc and if you really want to throw away retirement planning out the window and your motivation is not there, then I only ask you to do one thing.
Keep your loans for the house low
Just do that one thing. Your retirement planning is taken care of.
Yeah? Because once you keep your housing loan low, don’t overextend yourself – don’t buy .. Don’t get indebted with a one million dollar loan just when you start life – I see that condo and want to buy that condo, you know .. and all that.
Just start small, just by buying, say for example, a 4-room HDB BTO, you take a low loan, your CPF is protected and on its own, the system on its own takes care of your retirement and by the time you’re 35 or 40 years old and you say, I really need to sit down and look at my retirement, you’ll be so glad that you didn’t take up such a big loan because your CPF is actually quite healthy.
A large part of your retirement is actually done. So, just do this one thing for retirement planning – keep your housing loan low, and your retirement planning has started.
Once again, I must stress that I typed out the above video transcript based on the Seedly (many thanks to the the team) community special video (start around 48-minute mark) where Christopher from Providend shared the above about retirement planning. The content did not originate from me.
In case you’re interested, more of my HDB related posts are here. I wrote about why I took the longest possible HDB loan and why it can be a good idea, contrary to popular beliefs.
Seedly’s second “Ask Me Anything” on insurance, CPF and retirement is now live! Tune in to find out more!Comment any question you may have in the comment box below!
Posted by Seedly on Thursday, October 12, 2017
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