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I don’t know about you, but growing up, I thought the only way to live was the conventional 3-stage life — study till my 20s, work till 65, retire.
How anyone could deviate from this preconceived norm, I couldn’t fathom. Unless they were born with a silver spoon, how could people afford to take a long break from work to study or travel the world and still feed their family?
In addition, more people in Singapore are living to 100 years old. According to this Ready for 100 whitepaper, “in 1950 just 50 people were 100, but in 2015 it was 1,100, and this rate continues to rise”. This means that after retirement, we have at least 30 years to go…
Then I realised, with the right financial planning, our lives needn’t be a chore but a series of adventures!
With increasing longevity, we could instead be living “multi-stage lives” — multiple careers perhaps, a second (or third) wind, career breaks to do something we’ve always wanted to, the chance to be there for our family’s growing years, and even attaining financial freedom earlier to pursue our passions.
Just look at Marie Wee, who wore various hats as a writer/editor, real estate agent, public relations professional, mum and now, company owner. There’s also Darren Ho, founder of AUGUSTMAN magazine who decided to take time off to reassess his life, travel and pick up a new skill. Read on for their stories.
Could us, too, experience fruitful multi-stage lives without worry? How can we plan and save for our many milestones? Here are some tips and common scenarios to help kick start your journey:
Fiscal discipline is key
In all of the scenarios below, our characters all have 1 thing in common — discipline when it comes to money matters. Here are some general tips:
- Set up savings goals that you can work towards
Do all of your sums beforehand and set up a savings goal with quarterly targets to hit, on a fixed schedule. For example, you can put aside a small sum of money each month to fund your goal. Those with more commitments can consider setting aside smaller amounts of money, over a longer time horizon.
- Work out ways to reduce monthly expenses
Log your expenses and look into ways to reduce fixed costs such as mortgage, by refinancing with a bank that offers a lower interest rate. You can also prepare more healthy home-cooked meals instead of eating out, or switch to cheaper alternatives. More savings tips here.
- Reduce debt
Don’t take up more loans if you don’t need to (i.e. car loan if you don’t need one to get around), and it’s best not to rack up a large credit card bill as the interest rate on money owed can be very high.
Scenario 1: Planning for a much-needed breather
Jane, 35, has been planning to take a 6-month sabbatical to travel the world (the trip was supposed to happen this year, but due to Covid-19, it’s a no-go). Nevertheless, she remains positive and wants to put the break to good use — serving the community by participating in volunteer work while taking up courses to enhance her work credentials.
Jane is single, so she only needs to provide for herself, cover her room rental, insurance, and other household costs. She and her other siblings give $500 a month to their parents. Her net monthly income (pre-sabbatical) is $4,000.
| Here’s how much Jane has set aside for her 6-month sabbatical:
Living expenses needed — $800 (rent) + $300 (insurance) + $500 (money for parents) + $1,000 (own living expenses, bills and transport) = $2,600 x 6 = $15,600 Estimated travel/misc expenses needed — $25,000 Total amount needed — $40,600
Jane parked her extra cash in an insurance savings plan with growth potential and capital guaranteed at maturity. A plan such as PRUActive Saver II ticks these boxes, and offers the option of customising the number of years you save for and even the maturity date. Jane had been diligently contributing to her insurance savings plan since she joined the workforce, and plans to use the lump-sum maturity payout once the plan matures for her sabbatical.
Alternatively, Jane could have converted her 6-month sabbatical into a mini sabbatical every 1 or 2 years. With an insurance savings plan such as PRUFlexi Cash, she receives life protection against death, terminal illness and total permanent disability. She also has the flexibility to use her yearly cash benefit for a much-needed break or to accumulate it to earn annual interest. Jane also has an existing integrated shield plan, PRUShield for her hospitalisation coverage (includes overseas medical treatment coverage too).
Scenario 2: Taking time to nurture the little onesCaitlyn, 28, is thinking about quitting her job to be a stay-at-home mum (SAHM) for about 3 years. Her 2 kids are aged 3 and 6 months. Research shows that maternal, home-based care is beneficial for little ones. Older children could benefit too. According to the Labour Force in Singapore 2019 report, 51,600 female residents (aged 15 and above) are not in the workforce as they are caring for their own children aged 12 and below. Though her husband is supportive and working in a well-paying job, she doesn’t want to stress him financially as his elderly parents aren’t doing too well and need support for their medical bills. As such, she has been planning for this since they got married 5 years ago. Once their children are more independent, she aims to return to the workforce. Caitlyn is currently drawing a gross salary of $3,500 a month. She is currently living in a 4-room HDB flat and paying a monthly mortgage (via CPF) of about $1,000.
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