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Guides On Managing Retirement Money

Every time when we talk about retirement, it is important that we touch on Guides On Managing Retirement Money.

First of all, we need to prepare and save well in our early working life, If we want to have  a healthy and sustainable retirement, otherwise, we will face a lot of money issues in our retirement.

The main challenge in managing retirement money is:

How do we manage our retirement money when we retire?

What happen if we are ill prepared?

  • If we have not prepared well in our earlier working life,
  • Not investing well our money, and
  • Did not set aside enough for our retirement,
  • We will face question of whether we have enough in our bank to last for our retirement,

Assuming we are retiring at the age of 60 and the average life expectancy is 85. which mean we will have to make sure we have enough savings to last 25 years of retirement life.

1. To Determine and Allocate How Much Is Required For Retirement.

As you can see, with the life expectancy of 85 years, furthermore with at least 25 years to live in retirement, obviously we have to plan for this next phase of life.

what is needed by a retiree?
  • to assess if how much he and his life partner spend in their normal daily life and
  • how much they expect to spend in the retiring years ahead.

If we can maintain a record of our daily spending and summarize monthly expenses, naturally this will help in our planning for our retirement.

2. Ensure Flexibility In Our Planning. 

A financial plan must be able to adjust in accordance with the situation,  and the need when necessary.

In general,  if  we do not have a flexible financial plan, we will encounter difficulty subsequently, and frustration later on, especially when we are faced with some situation and realize the plan does not work.

Accordingly some of us may just give up.

To put it simply, if we have ensured we can adjust the plan accordingly, obviously we will be able to move on and continue our enjoyment of retirement.

The main reason to have a flexible financial planning is to adjust the daily spending in retirement, and the cash requirement as time go on in our retirement.

3. Must Have Some Cash Surplus Or Cushion for managing retirement money

Since we are not able to control the return on our investment for the cash we have had for our retirement.

It could be  due to the volatile market condition.

Supposing we invest our retirement fund in certain market, and hope for good return, even the best portfolio manager may not be able to generate the kind of returns we desire.

Therefore, we must have a cash surplus to cushion our expenses for at least 5 to 8 years of our living expenses, managing our daily expenses.

At the same time ensuring the return on investment, which is pretty much depending on how much risk we are willing to take.

Once we establish the level of cash surplus cushion we are comfortable with, we can plan accordingly

  • in term of our investment and
  • adjust the portfolio accordingly.

4. Allocation Of Cash Reserve in managing retirement money.

Guides On Managing Retirement Money.

When we retire, we must allocate our cash reserve into three main categories, mainly:

  1. Short term requirement.
  2. Medium term requirement.
  3. Long term requirement.
A. Short Term Requirement.

The short term planning requires us:

  • to set aside the cash, which we need in our immediate and short term use,
  • hence the amount of liquid cash we place to generate return will be very competitive, and
  • we need to shop around for a good return.
B. Medium Term Requirement.

The medium term requirement is:

  • to set aside our cash requirement within the 6th year to 10 years and
  • we must plan for the return for this cash
  • to ensure it generates enough return for our use from 6ht year onward
C. Long Term Requirement.

Since this is the long term cash requirement, which we will set aside beyond the 10th years, which we only touch the reserve on the 11th year.

Since it is a long term requirement, we can take a more moderate investment risk on this cash.

5. Investment Portfolio Mix : Income vs Risk.

Normally for people who have low investment risk, they will prefer to just put the money in the bank as fixed deposit and collect fixed deposit income, this may be a good money management if the bank interest rate is high as in the early 1980s.

In this low bank interest environment, it is not a very good way to manage the fund for retirement, as the interest generated may not be enough for our retirement needs.

We may have to consider investment:

  • in government bond, which offer a better rate than the bank deposit interest, and
  • also allocate our portfolio and investment mix in accordance with our planning.

Assets allocation for retirement involves a very detailed study, and we may have to engage a professional to discuss and plan with them, on the needs and how best to allocate the funds for investment,  ultimately we can generate the type of returns we are looking for.

6. Shall We Invest In Stocks?

The fund which we are not going to dip into for a number of years, can be considered as a mix of equity and fixed income investment.

The fixed income portion is to act as the cushion, and some sort of safety nest in the volatile equity market.

If we can engage a good fund manager to help to invest our long term fund with high quality, dividend paying equity and some other high quality instrument in the financial and capital market, this will be quite an ideal situation.

7. Consolidate our investment and income streams.

When we have done all our three steps of cash allocation, and investment based on our risk adverse profile.

We have to take stock of our income, and thereafter, to determine how to shift and re balance our investment portfolio.

As I mentioned earlier, we need to have a flexible plan above all,  this is one of the method to ensure all our investment's income are able to generate the returns we are aiming for eventually.

What are we aiming for ?

We have to ensure

  • a reasonable growth of our investment, and
  • do not try to outperform and
  • aim for some unrealistic investment goal and
  • ended up taking unnecessary risk on our investment.

Once we are comfortable with the rate of returns we are achieving for our three investment funds, generally speaking we should be able to live out our retirement in a worried free and sustainable life style we are looking for finally.

For those who are eager to learn more about how to manage retirement money, and if you do not want to engage a professional, perhaps you may like to find some books to read up, these books are readily available at Amazon.

If you have any questions or suggestion, please feel free to leave your comments and suggestion below.

I will be more than happy to answer and help out whatever way I can.

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16 thoughts on “Guides On Managing Retirement Money

  1. Steve Fischer

    I really liked your main headline photo. its bright and simple. You also included photos in appropriated locations. Your topics were good and to the point. Hope my site is as excellent as yours. I was a financial advisor and I think you did a nice job. Easy to read and to the point.

  2. Shyla

    Great advice on how to manage your money. I really need to pay attention to this kind of advice early on so my future is not so difficult. Thank you for sharing!

  3. Rob

    It's so important to save for retirement and plan for it. Not all of us do. And for people like me, I am relying on my new plan of Wealthy Affiliate. So my plan is to make up for not having enough money to live on in retirement.
    Social security is no way enough money to live on. Wealthy Affiliate is going to be the retirement I failed to plan for. I hope others follow the same path 🙂
    It can be life changing!

  4. Rachael

    I've just started thinking about my retirement plan (I'm almost 30), and was wondering about investing some extra savings. What do you think is the best way to start investing? I'm interested in stocks, but not sure how to go about learning how to invest properly. Will you be writing more on this? Great article!

  5. Luke

    It is rather obvious that you are knowledgeable in this field, especially when you broke down the different bullet points to a more specific sub-points which further integrated into a well thought out advice for the readers. It was a joy to read your strategies, and I would love to hear more from you.

  6. S.Zhen

    Very useful and meaningful post! Thanks for such informative post regarding the retirement plan. We should have it in order to have a better life after retired. Thanks for sharing! 😀

    1. Chee Shi Teo

      If one really wants to have a good retirement, it is important to plan and manage the retirement money carefully to enable sustainable income during retirement


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