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Show YOU How To Fire Your Boss and Hire YOURSELF In The Next 90-Days!

Show YOU How To Fire Your Boss and Hire YOURSELF In The Next 90-Days!

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Published by Kernel Tsang
Show YOU How To Fire Your Boss and Hire YOURSELF In The Next 90-Days!
Show YOU How To Fire Your Boss and Hire YOURSELF In The Next 90-Days!

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Published by: Kernel Tsang on Jan 10, 2012
Copyright:Attribution Non-commercial


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 ==== ====Show YOU How To Fire Your Boss and Hire YOURSELF In The Next 90-Days!www.startsmartprovenplan.com ==== ====Advances in medical science have resulted in people living longer. This increase in life expectancymakes retirement planning even more crucial. Furthermore, with better affluence, there is also anincrease in demand for a better lifestyle during retirement. The objective of retirement planning varies depending on circumstances, and normally includes: - Maintaining a self sufficient pre-retirement standard of living- Coping with increasing health care cost- Protection of property and against personal liability- Providing for dependents- Estate planning The process for retirement planning: Step 1: Overcome ObstaclesStep 2: Determine GoalsStep 3: MeasurementStep 4: Reference PointStep 5: Overall Plan Overcoming The Road Blocks There is only a limited period of accumulation and a continuous period of consumption. The firststep is to overcome the many obstacles hindering retirement planning. These include spendingbeyond means, unprepared for unexpected expenses (like repairs), inadequate insurance (likeproperty loss, medical bills), tapping into retirement funds for other purposes (like upgradinghouse, holidays), etc. (1) Aim to save at least 10% of income and gradually increase it to 20% when it is nearer toretirement. This accumulates towards the retirement funds and helps to accustom to a retirementlifestyle within financial means. (2) Establish an emergency fund of at least 6 months of income that is separate from theretirement planning fund. The will be used for risk retention, covering for unexpected expenseswithout drawing on the retirement funds. (3) Have sufficient insurance. A major crisis will be a huge drain on all of the savings, it is best totransfer this risk by being adequately covered. 
(4) Saving for other specific purposes should be saved for separately. It will derail the retirementplans due to the shortfall. Determine Retirement Goals Depending on the circumstances, the goals will vary from individual to individual. Some commonareas to consider: (1) Lifestyle.- Housing: Same house, mortgage remaining, upgrade, downgrade, migrate.- Leisure: Pursuit of hobbies like golf, yoga, charity or religious activities.- Travel: Overseas holidays, car ownership. (2) Age of retirement.- The last day to have to work or the last day to want to work.- Early retirement due to corporate issues, health, care giving concerns, etc. (3) Health.- Coping with increasing health care cost.- Health screening.- Dental care. (4) Estate planning.- Passing on the wealth eventually. (5) Caring for dependents.- Physical or medical care for elderly parents.- Providing for children not yet independent or siblings requiring aid. Measuring The Finance Required From the above goals, the required amount needs to be quantified. (1) Lifestyle and dependent expenses. An estimate is about 60% of pre-retirement income.(2) Project the retirement age. The statutory retirement age is 62 years old.(3) Health expenses. Total up the amount of insurance premiums and health screening cost. In addition, some assumptions need to be made: (1) Inflation rate. The average historical inflation rate in Singapore is about 1.5%.(2) Investment returns. Depending on the choice of investment, this varies significantly.(3) Life expectancy. A reference will be the natural death ages of great-grandparents,grandparents or parents. The average age is 78 for males and 82 for females, and this average isincreasing. Reference Point The current position needs to be analyzed so as to determine the strategies to achieve the goals.
 (1) Current age. Number of years to accumulate funds before retirement.(2) Current health. Deteriorating health will be more of an immediate concern.(3) Financial position. Amount of savings, assets, liabilities, current income, expenses.(4) Existing plans. CPF, SRS, insurance and investments already in place. Overall Plan Depending on which stage on the retirement plan, the approach to adopt will be different. (1) Accumulation PeriodThe period when one starts to save for retirement until about 10 years prior to retirement. Thefocus will be on the shortfall of funds required for retirement form the current reference point. Themain strategy will be on saving to invest. Investment will be covered in a later topic. (2) Transition PeriodThe period about 10 years just prior to retirement. As retirement draws nearer, the goals becomeclearer. It is important to review if the desired lifestyle can be achieved with the funds or if moresavings is required. The funds accumulated earlier will also need to be gradually repositioned intoless risky investments. (3) Retirement PeriodThis continues throughout since retirement. The funds will be used to generate current income.Some considerations during this period:- Purchase of Annuities (CPF Life)To provide a guaranteed income for life. Recommended to purchase to cover for the minimummonthly living expenses required.- Maximize use of propertyReverse mortgage, downgrading, renting out spare rooms can be considered for additionalincome.- WorkTo perhaps work on a part time basis, as a consultant or run a business. As with all plans, it will need to be continuously reviewed when personal circumstances change(like a newborn or divorce), external market conditions affecting investments, or introduction ofnew policies (like change of statutory retirement age or CPF rules). Use of the Present Value and Future Value calculations covered earlier will need to be used togive a better estimate of the amount needed. A simple example: John Doe in good health, age 40, intends to retire at age 60, current income is $60,000 annually. Assumptions: Projected expenses at retirement is 60% of pre-retirement income, income willincrease 3% annually, inflation is 2%, investment returns is 7%, life span will be till age 80, willcarry on to stay at current residence.CPF contributions mainly used for housing and repayment ofloan and has not started any retirement plans. PV = 60,000, 1/Y = 3%, N = 60 - 40 = 20; FV = 108,367.

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