DOOM! Retirement without Savings – What’s Next?

As a young adult, many of us may have overlooked the phase of retirement due to the lack of urgency to plan and prioritizing other needs. However, planning and saving for retirement should begin as early as the start of your first job. According to a survey done by OCBC, it was reported that 2 in 3 Singaporeans do not have savings that can last them beyond 6 months. In another survey by DBS bank, less than half have started to plan for their retirement.

Everyone has a different perspective when it comes to retirement. Some would want to be able to travel the world, while others would simply be content relaxing at home and spending time with their loved ones. Although the picture of retirement can vary for different individuals, there is one similarity, which is that retirement requires a pool of money and savings. So, what happens when one wishes to retire without sufficient savings?

What happens when you do not have enough savings?

Your choices become limited

When an individual approaches the age of retirement without enough savings, the choices and options allowed to them are limited. Retirement usually includes the ability to not work if one does not want to. In the case that there are insufficient savings, the individual would need to continue working to maintain their current lifestyle and stay afloat. This would be especially so if you still possess liabilities such as housing or car loans.

Reduction in standard of living

Apart from that, one may have to make changes to their lifestyle. It can be in the form of budgeting and reducing expenditure which can help to make it more affordable and allow one to increase their savings. At the age of retirement, one would be expecting to enjoy greater comfort and care. Therefore, having to change and downsize one’s standard of living can be a difficult and exhausting process.

Sell off your Assets

There is also a possibility that the individual may need to sell their beloved assets. Selling your car to reduce expenditure and gain a portion of the money you paid can help one to stay afloat during difficult periods. In addition, people may even resort to selling their current house and opt for a much more affordable one to gain a sum of money to tide them through their remaining years. Retirement is about experiencing a life of comfort and having to adapt to such a major change at this age can be tough.

Turn to family members or friends for help

If the changes made are not sufficient, one may have to ask their family or friends for help. There is nothing wrong with asking for help. However, it is not easy relying on others to take care of you, especially if it is due to a lack of proper decisions and planning in your early years.

Furthermore, when it comes to money matters, it can put a strain on the relationship that one has with the person. Even if they are willing to help, it would be hard to not feel guilty over the additional financial stress placed on your loved ones.

Postponement of Dreams

Lastly, it would be daunting to know that the dreams and experiences that you aspire to achieve in your retirement may have to be put on hold for an indefinite period of time. It is important to feel fulfilled in your years in this world and leaving it with regrets would definitely be the last thing anyone would want.

What can one do?

1. Start Planning now

First of all, It is never too late to plan for your retirement. Although this plan may not be as desirable, it does not mean that one has to continue struggling till the day they die. Planning for your retirement at a later age may just mean that you would have to compromise with regards to the age of your retirement. To some people, they would still desire to continue working in their senior years as it provides purpose and satisfaction. Only by acknowledging the problem could you then start to come with solutions to it. Give yourself some time to come up with a plan that you can commit to and who knows, you might just be able to enjoy your retirement much earlier than you think.

2. Track and Budget your Spending

Secondly, it would be to increase your pool of savings through budgeting. As mentioned, this means cutting down and reducing expenses in your current lifestyle. Start tracking your finances and looking at where most of your money is spent. After which, come up with solutions that can help you reduce costs. It can be selling your car and taking the public transport or even learning to cook at home instead of eating out. Over time, you would be able to save more and even learn a couple of skills while doing so.

3. Increase your streams of income

It is also beneficial to think of ways in which you can increase your streams of income. For individuals who own a house and have extra space, you can always rent out that space to receive extra rental income. Many retirees do that as a way to ensure that they still receive money which can cover their expenditures. For early seniors, you can use any surplus money to invest in dividend stocks which allows you to receive passive income and increase your savings in the later years.

4. Get support from the Government

Fortunately, if you are a Singaporean, the government does put in measures to ensure that you have a certain amount of money to support you during your retirement. One of which would be the Central Provident Fund (CPF). In the case that you have been working over the past few decades, there is a good chance that you and your employer have contributed to your savings. These savings can be withdrawn when you reach the age of 65 (Singapore’s Retirement Age) in the form of monthly payouts.

Not only that, the government also provides financial aid to Singaporeans who do not have sufficient savings such as the Silver Support Scheme. These measures may not help you to live the retirement life that you wanted, but one can be assured that they will be able to stay afloat in their remaining years.

Conclusion

After realizing the situation we are in, we often would wish that one could turn back time. Sadly, the world does not work as such. With all that said, all hope is not lost. Knowing the problem means that you can take steps to overcoming and solving them. For individuals who are close to their retirement age, do not be afraid to make changes and adapt accordingly. For young adults who are starting their career, start planning now. Use the resources around you such as seeking help from finance professionals to review and provide advice. Learn from the people around you as you age into your later years.

Everyone’s journey is different, some may only realise their true purpose and potential in the later years of their life, but that does make it any less meaningful. When it comes to life, all we can hope to do is to keep moving forward.