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LFO RESEARCH INSIGHTS: Here are key lessons from the document, “Optimal Decumulation Strategies for Retirement Solutions,” by Amundi on optimal decumulation strategies for retirement solutions: 1. Understanding Decumulation Strategies Decumulation strategies involve converting retirement savings into a steady income for retirees, focusing on managing longevity, market, and inflation risks effectively. These strategies are becoming crucial due to shifts from defined benefit (DB) schemes to defined contribution (DC) plans, which do not guarantee lifetime income. 2. Key Decumulation Approaches Traditional Method: Uses a fixed 4% inflation-adjusted withdrawal rate and maintains a constant asset mix throughout retirement. This method aims for simplicity and a steady income but may lead to funds depleting prematurely if not adjusted according to changing market conditions. Utility Optimiser: Tailors withdrawals and asset allocation based on a utility function that aims to optimize lifetime consumption. This method dynamically adjusts to market conditions and personal consumption preferences but may lead to lower incomes during market downturns. Success Rate Optimiser: Prioritizes the longevity of the portfolio by dynamically adjusting the asset mix and consumption based on current portfolio value and market conditions. This approach is designed to increase the probability of sustaining income throughout retirement. 3. Managing Retirement Risks Longevity Risk: Addressed through strategies that account for the risk of outliving savings. Purchasing life annuities is suggested as a method to insure against longevity risk, albeit at a cost. Market Risk (Sequencing Risk): Managed by adjusting the asset allocation throughout retirement to mitigate significant losses early in retirement, which could disproportionately affect the portfolio’s longevity. Inflation Risk: Tackled by incorporating investments that appreciate or generate income that keeps up with or exceeds inflation, thus preserving purchasing power. 4. Customization and Flexibility The document emphasizes the importance of customizing decumulation strategies to individual needs, which involves adjusting withdrawal rates, asset allocations, and consumption patterns based on personal risk tolerance, financial goals, and market conditions. 5. Implementation Challenges Implementing these strategies requires a high degree of personalization and continuous adjustment. Financial advisors and retirees must work closely to select and adjust strategies that align with individual retirement goals, financial situations, and risk preferences.

Did you know? EPF has just launched a new Basic Savings Table, set to take effect in 2026. With this update, it’s clear that EPF is shifting the expected retirement age from 55 to 60. As a result, the basic savings benchmarks have been increased as well. Currently, the Basic Savings benchmark for retirement is RM240k at age 55,under the new structure, the target will rise to RM294k at age 55. By age 60, the Basic Savings benchmark will be set at RM390k. In addition to the Basic Savings Table, EPF has introduced the Adequate Savings Table and the Enhanced Savings Table to guide us toward more sufficient retirement funds. For example: At age 55, the Adequate Savings target is RM476k, and the Enhanced Savings target is RM935k. These amounts are designed to ensure a comfortable retirement, tailored to different lifestyle needs. Another change that EPF has made is the withdrawal policy. Currently, we can withdraw savings above RM1 million from our EPF account at any time. However, with the new changes, starting in 2026, you’ll need to have at least RM1.3 million in your account before you can access the excess savings. This means that if you want to withdraw more, you’ll need to build up your EPF balance beyond RM1.3 million. Looking at these new changes, it’s clear that planning for retirement has become more critical than ever. So, ask yourself, Are you on track to meet these benchmarks? If not, what steps are you taking today to secure your future?

In my previous post, I mentioned the three retirement sums, Basic Retirement Sum (BRS), Full Retirement Sum (FRS), and Enhanced Retirement Sum (ERS). So what are these retirement sums and how would they determine our monthly payouts under CPF Life? At age 55, our Retirement Account (RA) will be created which will replace our Special Account in 2025, funded by our SA and Ordinary Account (OA) up to Full Retirement Sum (FRS). The three retirement sums, serves as a reference on how much you need to save to meet your desired retirement monthly payouts. These reference sums will increase yearly, at about 3% each year, to catch out with inflation and expenditure growth. Basic Retirement Sum (BRS) BRS considers your property as part of your retirement income. Currently in 2024, those who turn 55, their BRS is $102,900, which means that their lifelong monthly payout will be about $900, when you turn 65. As BRS accounts for our property, if we decide not to sell our property, we will have to adapt to a less comfortable lifestyle. Full Retirement Sum (FRS) = BRS x 2 FRS is currently about twice as much as BRS, this is the limit that is automatically put into RA, when you turn 55. Currently, the FRS is $205,800, which means that the lifelong monthly payout will be $1,670, when you turn 65. Enhanced Retirement Sum (ERS) = BRS x 3 ERS is slightly different to BRS and FRS, as it represents the upper limit of how much we can top up our RA after age 55. Currently, ERS is set at three times more than BRS, it will be increasing to four times more in 2025. There are plus points of meeting the ERS, which is that you will be able to get higher monthly payouts of $2,450 when you turn 65, and for those who meet the new ERS in 2025, will have an estimate of $3,330 of monthly payouts when you turn 65. Do you think these monthly payouts are sufficient for your desired retirement lifestyle? Share with me your thoughts on how you can achieve your desired retirement! https://lnkd.in/ggjYT7-q

Mastering South Africa's Two-Pot Retirement System: Key Strategies to Combat Inflation As of September 1st, South Africa has introduced a new two-pot retirement system designed to offer greater flexibility and security in retirement planning. This system divides your retirement savings into two distinct pots: a pension pot for long-term retirement and a savings pot for more immediate financial needs. With inflation recently above 5%, it's crucial to understand how to effectively manage this system to safeguard your future. Here are five key tips to help you navigate this new framework: Understand the Two-Pot System: The new retirement system aims to balance immediate financial needs with long-term savings. The pension pot is intended for your retirement years, while the savings pot can be accessed for emergencies or short-term goals. Familiarize yourself with how these pots work to make informed decisions about how to allocate your savings effectively. Regularly Review Your Contributions: Given the current inflation rate, it's essential to periodically review and adjust your retirement contributions. Inflation erodes purchasing power, which means that increasing your contributions over time can help ensure your retirement savings remain robust and resilient against rising costs. Optimize Your Investment Strategy: Your investment approach should be aligned with the dual nature of the two-pot system and the impact of inflation. Diversify your investments to include assets that have the potential to outpace inflation, ensuring that both your pension and savings pots grow effectively over time. Plan for Inflation: Integrate inflation-protected investments into your retirement strategy. Assets like real estate or inflation-linked bonds can help preserve your savings’ purchasing power and provide a buffer against inflation's effects, ensuring that your retirement funds maintain their value. Consult a Financial Advisor: The complexity of the new retirement system and the impact of inflation make it beneficial to seek expert advice. A financial advisor can offer personalized strategies and insights, helping you navigate the two-pot system and adjust your retirement planning to better align with current economic conditions. By following these tips, you can more effectively manage the new two-pot retirement system and protect your savings from the erosive effects of inflation, ensuring a more secure financial future.

Am I ready for retirement? Having spoken to so many over the course of my career, I’ve come to notice an interesting trend; a lot of us Singaporeans don’t seem to know what the difference is between the FRS and BRS, or that these components of our nationalized retirement plan even exist at all. So, I thought I’d take it upon myself to write this short post about it! Allow me to elaborate, but first, some context. Here in Singapore, retirement (at least in the eyes of the powers that be) comprise 2 key components:       -        Having a roof over your head, and   - Having a steady stream of income in your retirement years. The FRS or the Full Retirement Sum is an estimate of how much one might need to fulfill both criteria in our twilight years. Funds from our Special Account (SA) and then from the Ordinary Account (OA) will be funneled into a newly opened account called the Retirement Account (RA) when we’re 55. The amount in the RA will be capped at the prevailing FRS amount for that year, with the remaining money made available for withdrawal. As of the 1st of January 2025, the SA will then be closed, and all extra funds will go to the OA, and then the MA instead. I’ve posted below a table of current FRS rates for your reference. Sounds pretty straightforward so far, so what about the BRS? The BRS or Basic Retirement Sum is always half of the prevailing FRS. You could make an appointment with your local CPF Services Centre to opt for this instead if you own a house in Singapore with a lease that will last at least until you’re 95, thereby fulfilling the first retirement component as previously mentioned. Essentially you’re using the property to fulfill half of the FRS, and making an agreement that if you ever sell that property in the future, that that half of the FRS will go back into your RA. To give an example, let’s say you pledge your house, and your BRS is $100K. It means that when you sell the house in the future, you give back $100K to your own RA, keeping the rest. But then, why? If you opt for the BRS instead, it could mean that you avail more funds from your CPF for withdrawal. Now, the prudent thing to do would be to leave it in CPF to accrue that guaranteed interest if you have no need for the money, but my point is that you give yourself the option to do it. Sounds good? The question then becomes this: After all that’s said and done, is what I have enough for my ideal retirement lifestyle?   Can I actually buy that dream property in New Zealand? Can I treat my grandchildren to a life I never had? Can I go on that luxury cruise to celebrate the end of me working, ever? Well, as someone who helps my clients work out the kinks and smoothen the knots for their retirement planning, it’d be my pleasure to shoulder that problem for you. Let’s get you, dear reader, ready for retirement!

An IPP is a valuable retirement savings tool for Canadian business owners and incorporated professionals that can allow them to increase their retirement savings and income.

While the Canada Pension Plan is a cornerstone of retirement planning in Canada, it's not a complete solution on its own. 😮 To truly thrive in retirement, integrating CPP with strategic investments can amplify your financial security. Here's how to make the most out of your CPP: ➡️Delay Taking Benefits: Did you know that delaying your CPP benefits past the standard age of 65 can significantly increase your retirement income? For every year you wait, you can boost your CPP payment by 8.4%. Over five years, this results in a 42% increase in your annual pension. Patience really does pay off!!! ➡️Create a Powerful Income Duo: Pairing your CPP with well-managed investments can create a dynamic financial duo. This strategy leverages the reliable income from CPP with the growth potential from other investments, providing you with a more robust and diversified income stream in retirement. ➡️Leverage CPP as a Safety Net: The guaranteed nature of CPP payments provides a foundational layer of financial security. This allows you to potentially take calculated risks with other parts of your investment portfolio, which could lead to higher returns. Knowing you have a steady CPP income can give you the confidence to explore opportunities that have higher growth potentials. Remember, while CPP is a significant part of your retirement plan, it's most effective when integrated with a broader financial strategy. If you're looking to maximize your retirement income and ensure a stable financial future, consider how your CPP can work in concert with other investments.⭐️ Interested in crafting a comprehensive retirement strategy that includes CPP and more? Reach out today, and let's create a plan that fits YOUR unique retirement needs and goals.💬✨💼

Retirement Planning: How NPS Surpasses PPF and EPF in Returns and Why It’s Essential for people of Age Group 35 ~ 45 Yrs. For many people, the Public Provident Fund (PPF) and Employee Provident Fund (EPF) are the primary, and often the only, sources of retirement savings. These funds have stood the test of time and proven their value over the years. The National Pension Scheme (NPS), now in its 15th year, has also evolved significantly, with numerous improvements making it a viable option for retail investors. All three—PPF, EPF, and NPS—are structured as retirement-focused options. An insightful analysis by Value Research sheds light on the performance and returns of NPS over recent years, particularly when compared to EPF and PPF. NPS consistently outperforms both PPF and EPF by a substantial margin. NPS Tier 1, in particular, was assessed with varying equity exposure levels: 25%, 50%, and 75%. Even at the lowest level of equity exposure, NPS returns surpassed those of PPF and EPF. While EPF contributions are mandatory for salaried individuals, PPF remains optional. Shifting a significant portion of savings to NPS, especially for those between the age group of 35 and 45 years, who are within 10 to 15 years of retirement, could be a prudent move. *********** Visit my Website [ Part of Profile on detailed analysis of NPS ] *****

Charting the Course for Retirement: NPS vs PPF vs EPF 🧭 . . . NPS: The New Kid on the Block 👶 ====================== Launched in 2009 for all, NPS stands out with its ₹50,000 tax deduction and equity component, promising a heftier retirement fund. Breaking Traditions 🛠️ =============== NPS breaks the PPF and EPF’s long-standing hold on retirement planning, boasting a 35 lakh subscriber base thanks to its equity investments. The Equity Edge 📈 ============ With up to 75% equity allocation, NPS has outperformed PPF and EPF over longer term, proving the power of strategic equity in long-term growth. NPS’s Winning Streak Explained 🏆 ======================= Its superior performance is credited to its equity exposure, which amplifies corpus growth over time, making it ideal for diverse retirement planners. Tax Perks & Auto-Rebalancing 💰⚖️ ======================== NPS offers additional tax benefits and a unique tax-free automatic rebalancing feature, enhancing its appeal as a retirement investment. Conclusion: Expert Guidance is Key 👩💼🔑 ========================== While NPS has its merits, it’s crucial to consult financial advisors for a personalized risk assessment and to understand the importance of long-term equity investments. They can help navigate the complexities of retirement planning and ensure your investments align with your financial goals and risk tolerance. Remember, expert advice from financial advisors is invaluable in crafting a retirement strategy that secures your future with well-informed decisions. 🌟🤝

Superannuation Strategies for Retirement Planning in Australia Understanding superannuation or ‘super’ is essential for effective retirement planning in Australia. To maximise the benefits of superannuation, individuals should consider employing strategic planning. One common strategy is salary sacrificing, where individuals choose to contribute a portion of their pre-tax income into their super fund, potentially reducing their taxable income while boosting their retirement savings. Additionally, consolidating multiple super accounts into a single fund can streamline management and reduce fees, ultimately optimising returns over the long term. Understanding the various investment options within super funds, such as diversified portfolios or ethical investments, allows individuals to tailor their strategy to align with their financial goals and risk tolerance. Furthermore, staying informed about changes in superannuation regulations and policies is crucial for effective planning. For instance, understanding the impact of government initiatives like the Superannuation Guarantee rate increases or changes to contribution caps empowers individuals to adapt their strategies accordingly. Seeking professional financial advice can also provide personalised insights and guidance tailored to individual circumstances, ensuring that retirement goals are within reach. By proactively engaging with superannuation and implementing strategic planning strategies, you can work to secure a comfortable and financially stable retirement. If you are feeling in need of a ‘health check’ on your super, we would love to assist. Our team of advisors can assist to ensure you are making the most of this valuable asset.