I'm on track for an early retirement. - AXA Life Insurance Singapore

“I’m on track for an early retirement.”Good news or are you deceiving yourself?Top misconceptions about retirement and retirementplanningWhen preparing for their retirement years, Singaporeans worry about:• Running out of money during retirement• Not having enough to pay for medical billsMICA (P) 286022006Fears can be healthy when they drive us to plan and work out solutions to removeuncertainties. But if we have misconceptions or myths, we could think we are wellon the way to a good retirement and we fail to see gaps in our plans. If we do notdebunk these myths, we may find ourselves trapped in our own deception whenretirement comes.Let’s examine these misconceptions and set the record straight.• Myth 1 – A million dollars will last me a long time in retirementIf you lead a frugal lifestyle, with little debtduring retirement, having a million dollars inretirement savings may last you throughyour golden years. A million dollars stashedaway may be a dream come true for many,but let’s take a step back and do our sums.If you spend $60,000 yearly, this million willbe depleted in just 17 years.If you plan to retire at age 55 just like manyworking Singaporeans*, then the milliondollars will only see you through to age 71.Based on life expectancy trends,Singaporean males are living till they are78.2^ and females till 82.9^.So, the cool million you thought could lastyou during retirement may not seem somuch after all. You could cut backexpenses but factors like inflation whichaffect purchasing power, escalatingmedical costs and long-term care couldpotentially make it hard for you to stretchyour dollars.So what would you do when yourretirement savings run out? Do you haveother sources of income to rely on?*AXA Retirement Scope 2008 survey^Source: Singapore Statistics Board as of 21 July 2008

• Myth 2 – I will not spend as much after I retireKnowing how much you need to spend andwhere you will be spending your moneyduring retirement helps. You can calculatehow much is needed for future expensesand what you can afford on life’s littleindulgences.However it’s a common mistake to thinkthat as a retiree, you will not spend asmuch as when you were working. Sure, youmay save on your daily commute to workbut giving up your car may not substantiallyease your expenses if the price of publictransport increases every other year.Even if you were to stay home most of thetime, the cost of your daily travels may bereplaced by visits to the doctor or routinecheck-ups. Have you factored in medicalbills you may incur during retirement?Medical costs have risen by 10 per centannually over the last decade † .From the AXA Retirement Scope 2008survey, six in ten Singaporeans do notthink their Medisave savings are enoughto see them through a major or long-termillness. Therefore, when planning forretirement, include medical and long-termcosts in your sums, so that you are betterprepared.• Myth 3 – If I need money, I will just sell my apartmentWhen en-bloc fever hit Singaporeans in 2007, property seemed like a sure-win moneyspinner.We heard overnight success stories of an average Joe who pocketed a windfallfrom selling his property because he was “at the right place at the right time”. Such storiesonly lend to the misconception that property is the answer to one’s financial security.An investment savvy person would also know that property is a cyclical investment wherethere are ups and downs. In the event that the property market is down when you needto beef up your retirement savings, it may not be wise to give up your asset. This is alsoassuming that this property is not the roof over your head.The graph ‡ (right) shows the fluctuationsof property prices in Singapore over a 10-year period. Clearly, it’s difficult to tellwhich way prices go. You should avoidmaking your property the bulk of yourretirement savings and depend on itsvalue to be at its prime when you run lowon funds. Furthermore, when the propertymarket sentiments are negative, you maynot be able to sell your apartment, and thiscould adversely impact your retirementfunds.† Source: Singstat, Consumer Price IndexPricesDetachedSemi-detachedTerraceApartmentCondominium1996 2007‡ Source: The illustrated graph is derived from information on Singapore residential price index by type for period 1996 – 2007 found on URAwebsite. The information is accurate as of July 2008. Website: http://www.ura.gov.sg/pr/graphics/2008/pr08-4427.pdf

• Myth 4 – My CPF savings are sufficient for my retirementThe CPF Board was established as a means for Singaporeans to save for retirement. Itallows Singaporeans to invest their CPF funds in unit trusts, investment-linked plans,stocks and gold, pay for property and their children’s education loans.Over the years, the CPF Board enhanced its policies to encourage greater retirementsaving and one of them is the introduction of CPF Life. When CPF Life kicks in by 2013,the CPF members who meet the CPF Minimum Sum of $120,000 in their RetirementAccounts * will receive monthly payouts of about $950 * starting from the age of 65, for life.Is $950* currently able to cover your monthly living expenses? With rising costs, it may bea tight stretch to live within this monthly allowance. By the time you reach 65 years old,would this amount be enough to meet your monthly needs? Also, have you consideredthe impact of inflation on your retired lifestyle?• Myth 5 – Why would I need insurance when I’m retired?One of the common mistakes a retireemakes is to surrender his insurance policiesfor its cash value.Protection needs continue to be importantduring retirement as medical expensescould drain your retirement savings. Amajor illness and the absence of acomprehensive medical plan may wipe outyour savings. Your coverage may havebeen sufficient 10 or 20 years ago but doreview the value of your current coverage,bearing in mind medical costs haveescalated as well.Do not surrender your plans duringretirement thinking you do not need thecoverage anymore - insurance can saveyou from having to pay bigger bills andprotects your health and pockets. If you areconcerned about paying for high insurancepremiums during your retirement, you maywish to consider term protection plans asthese typically offer high coverage at lowpremiums. Also some term plans offerflexible premium payment options, whichallow you to pre-pay premiums beforeretirement and yet still enjoy coverage inyour leisure days.* Source: The Central Provident Fund Board (CPF Board). The above estimated payout is based on (a) estimated LIFE premiums for afemale member who turns 55 years old in 2013, (b) entry into CPF LIFE scheme at age 55, (c) an interest rate of 4% pa for the MinimumSum, with an additional 1% pa extra interest on the first $60,000 of CPF savings and (d) without refund option.

• Myth 6 – I can invest in stocks to make quick money during retirementAs a retiree, you may have time on your hands to monitor market movements. Howeveryou may not know when markets will rise or fall, as not even the experts can. Would yoube able to accept the risk of losing your hard-earned retirement savings?Based on historical data, equities or stocks have been the asset class that hasoutperformed other asset classes. With a time horizon of 10 years and beyond, equitiescan give you potentially higher returns on your investment.There are two important principles which have worked well for investors over the years:• firstly, staying invested in the market and havingthe longer time horizon to ride out marketvolatility• secondly, not timing the market because eveninvestment experts cannot say with certaintywhen is the best time to invest.An average investor who shifted his funds in and out of the market and followed “markettiming” and investor sentiments tended to gain 3.9 percent per annum returns # versus onewho earned 11.9 percent per annum # by staying invested for the same period. One shouldstay invested even during retirement and it is important to know your risk preference, needfor liquidity and time horizon.Recognise that you may have moved into a more defensive risk appetite in your olderyears as compared to an aggressive aptitude twenty years ago. You may have wantedyour investment to generate higher growth during your wealth accumulation years butduring retirement, a regular income through dividend stocks may be better suited to yourneeds. Does your investment portfolio reflect your risk preference and needs? Perhaps it istime to review your investment portfolio with your financial planner.• Myth 7 – I don’t need a financial plannerMost people feel they are able to take care of financial matters on their own. Withretirement being a time when you can finally enjoy the fruits of your labor, you would notwant to worry about savings adequacy or whether you can afford to pursue your interests.Just as you seek a doctor’s help to manage your physical health, a financial planner canhelp you to safeguard your financial health. Having a financial planner helps in many ways– he can discuss your life goals and work out a plan to help you attain those goals. Hetakes away the guesswork and worries so that you are on track for retirement. Moreimportantly, your financial planner will review your plans and make adjustments as youmove through different life stages.It takes dedication and time to have a healthy and open discussion with your financialplanner and work out a financial plan for your life, suited to your needs. Compare this timecommitment to a lifetime of financial security – isn’t it a worthwhile investment if it means aretirement life with lesser financial stress? It is after all, supposed to be the best years ofyour life.# Dalbar: report on investor behavior 2006

Break free & head towards acomfortable retirementLet AXA help you to achieve your goalsWe can help you with your retirement goals whether you are:• Steadily building up your retirement savings• Thinking about ways to generate a regular income during retirement or• Planning towards the start of your golden years• Build your retirement savings nowGrow your nest egg by investing through AXA INSPIRE TM solutions, which can help youachieve potentially higher returns in the long-term, through a quality range of funds thatsuits your risk appetite and time horizon. You can benefit from having:• A choice of multi-manager or single manager funds, which are diversified acrossasset classes, sectors, regions or specific countries, to help you achieve a wellbalancedportfolio• Unlimited and free fund switches that let you adjust your asset holdings, according toyour lifestyle changes as you move across different life stages• The flexibility of investing either a lump sum or regular contributions, depending onyour budget and preferenceWith 12 of 15 INSPIRE TM funds recognised by the CPF Board as being top-quartileperformers in their respective global peer groups*, you can enjoy potentially good returnsand peace of mind when you invest with AXA.• Enjoy a regular stream of income during your golden years ∇How do you afford the lifestyle you desire even after you retire? Do you want to receiveregular income when your paycheck ceases? Let’s work out how you can enjoy a steadystream of income even in the absence of a paycheck.With AXA INSPIRE TM ’s automated regularwithdrawal feature, you may now enjoy aregular income stream during your goldenyears ∇ .AXA’s Retirement Income Solution givesyou the option of either full or partialwithdrawals, or an automated pay-out on aregular basis giving you easy cash accessto take care of your living expenses.Yourinvestmentsbuild upwith AXAINSPIRE TMinvestments1st Qtr2ndQtrStart to withdraw moneyStay investedReceive a regular income to sustain retirement lifestyle3rd Qtr 4th QtrRetirement Income Solution* CPF website, as of April 2008∇ Regular withdrawals are available for cash investments only and continue as long as there is a minimal balance of $2,500 in your INSPIRE TM flexi 2 investmentaccount and $5,000 in your INSPIRE TM single premium investment account after the withdrawal.

• Set a fixed retirement start date & go!If you’re planning to retire in 10 years or more, AXA’s Secure Ascent 2020 Fund may bethe solution for you. Kick-start your retirement days with Secure Ascent 2020 Fund – alifecycle fund packed with extras every investor loves:• Payout at maturity would be the highest unit price reached^ during the life of the Fund,known as the Secure Price• Unique lock-in feature protects the fund’s growthevery time as its daily unit price reaches a new high• Asset allocation that automatically rebalances tobuffer against market volatility and it moves fromriskier assets like equities to less risky assets,including fixed-income as you draw near retirementAs a balanced fund, Secure Ascent 2020 Fund offers a secure way to preserve and growyour money, so that come 2020, you can enjoy the fruits of your investment.• Choose the route to your desired retirement with AXA today!Retirement is a new beginning and it gives you opportunities to try new experiences. Freeyourself from misconceptions that could stop you from having a quality retirement life.With AXA’s quality range of retirement solutions in retirement savings, regular incomeoptions and a fund that helps you kick start your golden years, you can find a financialsolution that best meets your retirement goals.Speak to a financial planner today for quality financial advice and retirement solutions, sothat you can be sure of sunny days and be prepared for rainy days during your retirement.^ Prevailing unit price will apply for redemption before fund maturity.This material is not intended to be a formal research report and is intended for general information only. A product summary in relation toINSPIRE TM is available and may be obtained from AXA Life Insurance Singapore Pte Ltd and the participating distributors’ offices. Potentialinvestors should read the product summary before deciding whether to subscribe for units in the sub-fund. Any past performance indicated isnot necessary indicative of future performance. The value of the units in the sub-fund and the income accruing to the units, if any, may fall aswell as rise. The content of this material is not made with regards to the specific investment objectives, financial situation needs of any personand is not to be construed as offers to sell or the solicitation of offers to buy any security.Potential investors may wish to seek advice from a financial adviser. In the event an investor chooses not to seek advice from a financialadviser, the investor should consider whether the product is suitable for him. Buying a life insurance policy is a long-term commitment. Anyearly termination of the policy usually involves high costs and the surrender value may be less than total premiums paid.This materials is based on information that we consider reliable but we do not represent that it is accurate or complete, and it should be readas such. AXA Life Insurance Singapore Pte Ltd is not liable for any inaccuracies or incomplete information in this material and is not liable forany loss whether direct or indirect, relating to the use of this material.AXA Life Insurance Singapore Pte Ltd 143 Cecil Street #03-01 Singapore 069542 Reg. No. 199903512M08/2008