4 Ways to Build a Millennial Retirement Plan (Because It’s Never Too Early to Fool-Proof Your Future)

When you were a kid, you probably dreamt of growing and becoming an adult instantly to acquire freedom and independence. However, adulthood is more than just not skipping your morning ritual of coffee and contemplation. Adulting 101 is indeed glamorous and exciting but as you age, you have a lot of things that you need to prioritise.

Embracing adulthood is about having a professional job, setting work-life harmony, and preparing for your future. This is when retirement planning becomes important. In the 2020 OCBC Financial Wellness Index (FWI) for Singapore, 93% of millennials (aged 21 to 39 years old) said they were saving for retirement funds amidst the decline of economic activity brought by the COVID-19 pandemic. The study also said most Singaporeans improved their regular saving habits for contingency planning and crisis management. 

According to the Retirement and Re-employment Act (RRA) of the Ministry of Manpower, the minimum retirement age in Singapore is 62 years old. Retirement planning in your early 20s may be daunting and stressful to some but is actually a good idea while you’re still healthy and physically mobile.

Well, you’re in luck because DBS Bank financial planning services in Singapore is here to help millennials outline an ideal retirement plan using four strategies.

1. Use the “Pay Yourself First” Strategy

This is a personal finance strategy of having sufficient savings and an emergency fund for at least three to six months. Setting a realistic budget is also a component to execute this approach.

To consistently increase your savings, check your contributions to your Central Provident Fund (CPF) accounts from employers. There are various CPF schemes you can maximise and leverage interest rates to fund your millennial retirement plan.

2. Assess Your Insurance Needs

With all sorts of risks around us, having adequate insurance is a must but it doesn’t need to derail your financial goals. To achieve your millennial retirement plan, review your insurance needs annually and ask yourself these questions:

• What are you worried about? – It could be death, medical bills, home loan, car, travel, or pet.
• What type of insurance do you need? – You can choose between life, health, or mortgage insurance among others.
• How does this insurance help your family, hospitalisation expenses, home repair, etc?

3. Find a Passive Income Flow

A passive income strategy is about generating revenue without consuming much time and effort. It could be something like investing in stocks, joining a brand’s affiliate program, creating your own YouTube channel, and many more.

Choosing your passive income depends on your expertise, resources, and personal objectives.

4. Have an Insurance Plan That Will Boost Your Income

You can increase your income and build a millennial retirement plan at the same time by choosing the right insurance plan. DBS Singapore offers four types of insurance plans that could help increase your retirement savings.

• Traditional Annuity – An annuity that provides monthly or annual payouts as long as the account holder is alive.
• Retirement Income Cover- This is a flexible financial product that allows the insurance holder to adjust the income payout period, retirement income rate, and desired retirement age.
• Whole Life Insurance – It is a lifetime insurance that provides protection as well as income based on your preferred maturity date.
• Endowment Policy – A combination of protection, savings, and retirement account that provides a guaranteed capital upon maturity or in case of death.