Learn how to retire smart with Lorna Tan

If you are a regular reader of The Sunday Times, you would have come across articles by Invest Editor, Lorna Tan, an award-winning writer with more than 15 years of experience covering personal finance and investment issues. In this issue’s Hot Seat, we got her to share about her latest book, as well as her thoughts on retirement planning in Singapore.
 


 

What are some common mistakes Singaporeans make when planning for retirement?

Lorna: A common mistake is underestimating how long we will live and the impact of inflation on our retirement funds. As such, it may not be sustainable for a retiree to rely solely on their cash savings or a basket of equities. We need to understand that our retirement needs and wants should be funded by multiple sources of income. Also, some of these cash flows should be guaranteed and reliable so that you can at least fund a basic retirement lifestyle.
 

Other than depending on their CPF savings, what other steps can they take to supplement their retirement income?

Lorna: Depending on their risk appetite, they can invest in equities (blue chips, dividend-yielding stocks), bonds, exchange-traded funds, insurance (annuities and retirement-related plans), and park some savings in the Supplementary Retirement Scheme (SRS). Other investment tools include investment property, private equity and hedge funds.
 

What is the biggest misconception Singaporeans have about investing and how can it be dispelled?

Lorna: It is an often-heard misconception that investing is rocket science — hard to understand and best left untouched. It is also a fallacy that you need to accumulate substantial wealth to invest. To some, the long-term benefit of investing is clear. But they are held back by the wrong notion that they need to fork out large amounts of money to start investing.

Raising the public’s level of awareness and financial know-how can help to dispel this notion. Success stories of other Singaporeans who have taken small steps early can also provide encouragement and assurance that it is prudent to start a retirement plan as early as possible and let time work in their favour.
 

Recent enhancements to the CPF Investment Scheme (CPFIS) have made it more favourable for Singaporeans to invest their CPF savings. Do you think that more of them should do so?

Lorna: It depends on their financial knowledge, risk appetite and financial circumstances. Personally, I would do proper due diligence and be very careful about investing my CPF savings. I find the CPF interest rates very attractive and have not yet found a compelling reason to invest my CPF savings. Having said that, I’m looking forward to the launch of the CPF Lifetime Retirement Investment Scheme when it is ready.
 

A recent study revealed that 90% of parents interviewed were willing to give up their retirement savings for their children’s education needs. How can they find the right balance?

Lorna: I belong to the sandwich generation, that is, I am responsible for bringing up my 2 children and for the care of my ageing parents. I am also my parents’ retirement plan. When I set up my retirement plan in my 30s, I resolved to take care of my retirement so that I would not need to depend on my children in my golden years.

Juggling the priorities of my children’s education (both pursued their degrees in Britain) and my retirement was challenging, but I kept my long-term goal of a secure retirement (for my parents and myself) in mind.

Looking back, there were several factors that attributed to being able to fulfill both priorities — my discipline in savings, not over-indulging, a constant lookout for suitable investment vehicles, a smooth career, and regularly reviewing my retirement plan to keep everything in check.
 

Tell us about the key focus of your latest book Retire Smart.

Lorna: In Retire Smart, I have chosen to focus on retirement planning. Surveys have indicated that this is a perennial hot topic as ageing populations grapple with the prospect of longer lifespans but limited financial resources. The book helps to enlighten the man on the street on the various CPF schemes and how they can retire better by optimising their CPF savings.

CPF_Jan-2018_OnTheJob_clean_01

Lorna with a group of participants during a retirement planning lunchtime talk at NTUC Income.

What other themes does the book touch on?

Lorna: Besides retirement planning, another key theme it touches on is legacy planning. It’s important to have a will as well as a Lasting Power of Attorney. For some, a trust may be helpful too. Credit and debt planning is an area that concerns many so, my book highlights the pitfalls of falling into debt and offers tips to those who are deep in debt.
 

What is the biggest takeaway you want readers of Retire Smart to have?

Lorna: To empower them to take charge of their financial journey by understanding the importance of holistic financial and retirement planning, and to set up a plan.

 


 

Christopher-Tan-CEO-Providend
Lorna Tan is The Sunday Times’ Invest Editor and
The Straits Times’ senior correspondent. She is also the author of 3 bestselling books, Retire Smart: Financial Planning Made Easy, Talk Money, and More Talk Money.

About Retire Smart

Retire Smart: Financial Planning Made Easy, has undergone 3 reprints and sold more than 10,000 copies since hitting the bookstores in March 2018. The book has also been nominated for the Popular Readers’ Choice Awards 2018, which is now in its 7th year and aims to recognise local authors. 

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