Retirement Starts Today: Make it Happen in 3 Steps

Posted 22 September, 2016 by Clearly
in Educate Yourself

Hold your horses!

I mean the retirement process starts today, not the actual act of retiring.

See those ads where a cute celebrity is celebrating her retirement because she bought some insurance plan?

That isn’t reality, and retirement takes far, far more than just purchasing a plan. (There, I’ve said it. Insurance alone is not going to be enough)


No no, not enough.


Retirement takes planning, discipline, and patience. How would I know, since I have not retired myself?

It turns out I have 2 great consultants: My Dad and my Mum. They retired together back in 2003. My Mum was 52 back then, and my dad was 58. Pretty cool right?

What’s even cooler was that they didn’t own a business that made millions. They were not highly paid executives getting 6 figure salaries each month. They were humble civil servants.

He was an assistant auditor, and she was an accounts manager – with a combined income of under 8k a month. Not the poorest folks around, but certainly not rich by any stretch of the imagination. And they are still retired to this day, without a single dollar of income for 16 years and counting.


Their secret? Start today. Start Now. Regardless if you are in your 20s, 30s, 40s or beyond, it is never too early to start.

The earlier you start, the easier it gets. If you are prepared to delay a little gratification and put in a little effort, your big R may just arrive sooner than you expect.

Ready? Let’s dive right into it.


Step One: Budget your Income and Expenses


She can balance that egg, but how about the household budget?


Budgeting is no big mystery. When it comes to income vs expenses, it just becomes a battle between 2 numbers. The trick to budgeting: Make sure the right number is bigger than the other.

Hah! Easier said than done. Ok, I heard you mutter that from the back.

But I agree. It is easier said than done. And I didn’t promise the road to retirement would be easy. But totally worth it, says the 2 ex-civil servants.


Between the two, Income is far easier to measure and track. IRAS does it for you happily, each year.


Expenses is another kettle of fish, but key to the budgeting process. What are the essential expenses? (Don’t say the IPhone 7)
What are your luxury expenditures? This is where you might want to start zooming into if you find your expenses getting out of control each month.

Keeping a budget does not mean living like a hermit and walking 15 km to work each day, but it does mean the discipline to keep your expenses to an acceptable limit. And sticking to that limit, month after month, year after year.

Once you have a set number for each month’s income vs expenses, you should have some surplus each month – and this makes you officially ready for step 2 of retirement.


Step Two: Set Retirement Goals


Blind archery is actually a thing, but we don’t quite feel quite as safe setting goals that way


You know the part where someone says to “live within your means” ? That is applicable right here.

My parents retired relatively young because all their lives, they have been living within their means. (Far beyond, I can reliably attest to that)

Retirement Goals have two main markers: The Retirement Age and also the required amount (commonly called Nest Egg).


Obviously, the earlier the desired Retirement Age, the greater the Nest Egg should be. One misconception is that the Nest Egg needs to be all in cash. Not true. And also not advisable.


Any asset that can reliably provide regular streams of income can also count towards the Nest Egg. This includes dividends from stocks, rental income from property, or even a business you own that generates cash flow. Other examples are annuities, bonds and unit trusts/ETFs.


Step 2 is to work out how big the Nest Egg needs to be, in order to retire at your desired age. A sample nest egg could be:

An annuity that pays out $500 monthly
$400,000 in cash / fixed deposits
$100k in blue chip stocks that give a yearly dividend of 3-4%

Now for the last step.


Step Three: Take action with a Financial Planner (or do it yourself)


Your Advisor or Planner may not look as cute, but he might be of far more use than you think


From Step 1, you already identified what excess resources you have each month. (The Dough)
From Step 2, you already identified what is the amount of money/assets you need to retire (The Cake)


The last step in the retirement process is to use the dough to bake the cake. How much dough to dish out for insurance? How much dough to allocate for investment? Will there be enough dough to go around?


Here is where a Financial Planner will be of great help. Or if you are the strong independent type (like my parents), you can do it yourself. But I don’t really recommend it, since my parents skimped on the Insurance bit, thus putting themselves (and me) at great financial risk.


Just remember, insurance prevents you from getting poor, but it will not make you rich.
Investment is the yeast that makes the dough really rise to bake that beautiful cake (the actual goal).

At this point, you (or your planner) may discover that the dough just isn’t enough to bake that cake. What do you do then?

Repeat Step 1 to see if you can increase your dough. Repeat Step 2 to see if you really need that big of a cake. This is where a good planner is worth his weight in gold.

That, my friends, is how my parents got to have their cake and eat it too. And yes, I know I officially driven you crazy with my cake-making analogy.




Retirement isn’t really all that complicated is it? Then why exactly don’t more people retire with ease?

The steps are simple. But simple does not mean easy.

It takes perseverance and commitment to plan for retirement. To take the right financial actions and trust that time and compound interest will take care of the rest.

Do you have your own thoughts to share about retirement planning? Share them with us in the comments below! aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.

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