6 Things You Need to Know About Retirement Planning as an Expat in Singapore

By Shane Coelho

Retirement can be the saddest or the happiest day of your life, and as the wise words of Benjamin Franklin says “failing to plan is planning to fail”.

Planning for your retirement as early has possible has numerous advantages, especially when you are an expat living in Singapore. Here’s 6 things about retirement planning that expats in Singapore should know.

 1.No or limited employer contributions

If you are an expat working in Singapore, you will find that company pensions very rarely exist here, and if they do, employer contributions are not normally enough to rely on in retirement.

It is extremely easy to forget that your employer is no longer contributing towards a separate pension pot for you like they would often do in your home country, and the responsibility now lies with you to ensure you are saving some of your income and investing for your future.

 2.Life expectancy is on the rise

It is a well-known fact that the human race is now living longer in this day and age, and from the National Institute on Ageing report there is no stopping there as the 85-and-over population is projected to increase 351% between 2010 and 2050. This all factors down to a number of reasons including better living standards, more nutritious diets, cleaner drinking water and the advancement & accessibility to medicine & treatment.

When it comes to retirement, you may now need to plan in the event you outlive the average life expectancy and put that little bit extra away for your future.

 3.Low Tax Environment

There are many reasons that people relocate to Singapore, and a low tax environment is definitely a plus, especially when you compare your Singapore income tax bill to one you would have received back home.

Besides the smile you probably have on your face, lower tax means more money in your back pocket which you can add to your nest egg and save for your future.

 4.Tax Efficient Planning

Whilst you are in an offshore environment, you have a fantastic opportunity to plan your financial affairs in a tax efficient manner. This is especially important if you are in the current stages of building your wealth, or if you are planning to make a return to your home country. Each jurisdiction comes with its own rules and the sooner you start tax planning effectively, the more chance you have of protecting your wealth of assets later on down the line.

 5.The Power of compounding Interest

This is my favorite, and once you master the power of compounding, it is ever so exciting…

Compound interest is the process of earning interest where the interest can itself earn interest. An example below from JP Morgan Asset Management demonstrates this:

Source: JP Morgan Asset Management

The illustration shows Susan, Bill and Chris all achieving the same annual return on their investment.

Susan invests $5,000 per year between ages 25 to 35

Bill invests $5,000 per year between ages 35 to 65

Chris invests $5,000 per year between ages 25 to 65

Without a doubt, Chris has ended up with the larger sum of money at age 65 as he has invested the most, but the interesting point to notice is that Susan who has saved for only 10 years has accumulated more wealth than Bill who has saved for 30 years.

Why? – because Susan started saving 10 years earlier than Bill and the interest she earned over the years has compounded and snowballed to the extent that Bill cannot catch up with her.

The earlier you start, the less you miss out on the benefits of compound interest!

 6. Singapore as a world class Financial Centre

Singapore is vibrant city-state which offers world-class financial services including banking, insurance, investments and treasury services and in the recent Global Financial Center Index, Singapore ranked globally.

Its strong insurance and banking regulation has made it a great performer among Asian markets and a global financial center. Backed with concrete monetary and fiscal policies, Singapore aims to protect both the interest of investors and its trading partners which makes it an ideal and safe place to invest for your future.

JPARA Financial Advisory is a boutique licensed financial advisory firm that represents the interests of its clients through insurance, risk products, wealth management and investment advice for both local and Expatriate markets here in Singapore. Our financial consultants have years of experience in financial planning, providing clients a world-class service.

JPARA is one of the leading financial advisory firms in Singapore for over 10 years. We are regulated and licensed by Monetary Authority of Singapore (MAS).

For more information about Retirement Planning, please contact JPARA at +65 65700058 or email enquiry@jpara.com | www.jpara.com