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When should financial advisors start talking to their clients about retirement planning?
When should financial advisors start talking to their clients about retirement planning?

Nov 09 2022

When should financial advisors start talking to their clients about retirement planning?

Here are some ideas to give advice on when to broach the topic of retirement planning with your client and how to start the conversation.

By Samuel Lee

Topics Covered

From the moment one enters the workforce, the end goal for most clients in Singapore is to have enough money saved to be financially independent and retire in comfort. Retirement would be the milestone for most clients to pursue their passions and allow them to explore their interests.  

However, not everyone would be comfortable retiring when they reach the retirement age, as shown in a survey of 1,099 respondents conducted by consumer data company Statista in May 2021 to get an opinion on whether residents will have adequate funds for retirement in Singapore. It shared that 30% of the respondents of all age groups feel that they would not have enough money for retirement. What this really means is that these respondents would be dreading the day when they have to retire more than the fact that they could retire. 

Another survey, conducted by a personal finance platform SingSaver in November 2021, shared that 63% of the participants have started building their wealth at the age of 30 and that 50% of them plan to retire before the official retirement age of 62.  

Based on this survey, the best time to broach the subject of retirement would be when your clients are in their 20s, and as shared by MDRT member Benedict Heng. “Retirement is a lifestyle, not a number,” Heng said. “How you want to live, how you want to enjoy your silver and golden years, how to maximize the fruits of your labor, and it’s something we constantly work towards with no end goal. Once we achieve a certain level of retirement, we can work on bringing it to the next. Who doesn’t want to have a better retirement lifestyle?” 

Apart from knowing when to start speaking to your client about retirement, here is some information that you can use to kick-start the conversation.  

1. Knowing the official retirement age in the country 

  • According to the Ministry of Manpower in Singapore, the minimum retirement age here is 63 
  • This is important to note this for your clients as the minimum retirement age in the country can serve as a soft cut-off age for most employees which can serve as a benchmark for retirement     

2. Average life expectancy in the country 

  • Based on a survey by Statista released in June 2022, the average life expectancy at birth in Singapore in 2021 was 83.5 years 
  • This is a great statistic to know before speaking to your clients, as this would allow clients to estimate the number of years that they will have to save up to be able to survive until the average life expectancy in their country  

3. Calculating how much your client requires for retirement  

For this, we can break the calculation down into four components.  

  • How do they foresee their retirement lifestyle? 

- Would they own a car?

- Will they be planning to travel often? 

- What type of hobbies will they look to explore or take up during retirement? 

- How much are their monthly expenses? 

- Which bills or subscriptions will they want to maintain past retirement?  

- Would they be looking to have domestic help? 

- Which loans would they have to continue paying for during retirement? And how much would remain?  

- Which insurance policies would they have to continue paying? 

- Do they have any dependents? 

- Do they foresee their children requiring financial help in the future?  

- How much do they intend to spend on their grandchildren in the future? 

- Are there other close relatives who might depend on the client?   

  • What is the average rate of inflation in their country? 

Although retirement might seem like it is decades away for some clients, it is good to remind them by starting younger, they would already be at an advantage as they have more years to achieve that goal.  

Your client’s retirement needs would change over time and evolve according to lifestyle, income and changing mindsets. Also bearing in mind that with inflation, a dollar today, would be worth less tomorrow, as MDRT member Norliza Abd Karim shares, “The cost of living has been going up. Having solid financial resources in our golden years will ensure that we can cope with inflation without having to compromise on our lifestyle, especially on the essentials for livelihood like the food we eat, the house we live in, the household appliances that we have been using, and so on.” 

Contact: MDRTeditorial@teamlewis.com