๐ฏ ๐ฟ๐ฒ๐๐ถ๐ฟ๐ฒ๐บ๐ฒ๐ป๐ ๐๐ฝ๐ฒ๐ป๐ฑ๐ถ๐ป๐ด ๐๐๐ฟ๐ฝ๐ฟ๐ถ๐๐ฒ๐ ๐ณ๐ผ๐๐ป๐ฑ ๐ฏ๐ ๐๐ฃ ๐ ๐ผ๐ฟ๐ด๐ฎ๐ป ๐ฎ๐ณ๐๐ฒ๐ฟ ๐ฎ๐ป๐ฎ๐น๐๐๐ถ๐ป๐ด ๐บ๐ผ๐ฟ๐ฒ ๐๐ต๐ฎ๐ป ๐ฑ๐ ๐ต๐ผ๐๐๐ฒ๐ต๐ผ๐น๐ฑ๐ ๐ถ๐ป ๐๐บ๐ฒ๐ฟ๐ถ๐ฐ๐ฎ.
While this may not directly translate to Singaporeans, but I do think that meaningful lessons can still be learnt.
Here are the 3 surprises found:
๐น ๐ญ. ๐ง๐ต๐ฒ๐ฟ๐ฒ ๐ถ๐ ๐ฎ ๐น๐ถ๐ณ๐ฒ๐๐ถ๐บ๐ฒ ๐๐ฝ๐ฒ๐ป๐ฑ๐ถ๐ป๐ด ๐๐ฟ๐ฒ๐ป๐ฑ.
The study found that there is a general trend on where we spend our monies across different sectors like healthcare, education, dining, etc. This trend can help us better estimate future expenses especially when we take into account inflation, which varies across different sectors.
The conclusion is that we tend to over-estimate inflation in future years as areas where inflation tends to be higher like education, housing and travel, we tend to spend less in them later on. The only outlier is healthcare, where we expect to spend more in later years and inflation is high on this sector.
โก 2. ๐ง๐ต๐ฒ๐ฟ๐ฒ ๐ถ๐ ๐ฎ ๐๐ฝ๐ฒ๐ป๐ฑ๐ถ๐ป๐ด ๐๐๐ฟ๐ด๐ฒ.
The trend found that our spending tends to peak at around 55-60, where we are typically at the intersection of maximum wealth and good enough health to enjoy it. Thus if we plan based on a constant required income throughout retirement, we may end up over-saving and delaying our retirement longer than necessary.
๐ช ๐ฏ. ๐ง๐ต๐ฒ๐ฟ๐ฒ ๐ถ๐ ๐๐ถ๐ด๐ป๐ถ๐ณ๐ถ๐ฐ๐ฎ๐ป๐ ๐๐ฎ๐ฟ๐ถ๐ฎ๐ฏ๐ถ๐น๐ถ๐๐ ๐ถ๐ป ๐๐ฝ๐ฒ๐ป๐ฑ๐ถ๐ป๐ด ๐ฝ๐ฎ๐๐๐ฒ๐ฟ๐ป๐ ๐ฎ๐ฐ๐ฟ๐ผ๐๐ ๐ต๐ผ๐๐๐ฒ๐ต๐ผ๐น๐ฑ๐.
Almost 80% of households experience substantial changes in their spending just before and after retirement. Every household is different and while these trends maybe useful for us to estimate future needs, we should all factor in the the fact that it is hard to accurately guess what my spending might be. And so we should all be prepared to adapt our investments and spending accordingly when the time comes.
Having an understanding of these findings, I can then have a meaningful conversation with my clients on retirement planning. The single retirement income goal of say $5k/m may need to be tweaked and adjusted to more accurately reflect real world applications when we retire.
You can download the study here: https://lnkd.in/gTdb3Xt4
About the Author: James Lim
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