There is an increasing lack of concern amongst pre-retirees as to how they will cope financially after retirement, and this is problematic. Olivia Mitchell, Wharton professor of insurance and risk management, and chaired professor at Singapore Management University said, ‘My research shows that many workers are underestimating retirement challenges including the risk of outliving their assets, the future cost of healthcare and the erosive power of inflation in retirement’. As a result, Boomers live with a ‘false sense of security’, and may face a ‘rude awakening’ when it is too late to do much about it (http://knowledge.smu.edu.sg/article.cfm?articleid=1074).
Mitchell suggested several ways to cope with costs of living after retirement. One way is to mitigate risk by making positive lifestyle choices, such as by having a proper diet and exercising. Another way is to finance risk through savings, investing and buying insurance on the other. Mitchell also strongly supports staying in the workforce longer so that one can earn and save more.
Do you agree that the lack of concern for retirement planning is worrying? What are the possible consequences of not planning for your retirement? Besides the measures mentioned by Mitchell, how else can retirees avoid outliving their assets?
– ‘Managing Retirement Risk in an Ageing World: The Global Picture’. Knowledge@SMU. 2 July 2007. <http://knowledge.smu.edu.sg/article.cfm?articleid=1074>.
– ‘Retirement Planning: Most People Don’t Know How Nor Even Think About It’. Knowledge@SMU. 3 April 2008. <http://knowledge.smu.edu.sg/article.cfm?articleid=1129>.
– ‘CPF Retirement Planner – Interactive Journey’. Central Provident Fund Board. <http://www.cpf.gov.sg/cpf_info/elearning/cpf-journey/main-c.asp>.
– ‘MoneySENSE Worksheet to Managing Your Retirement Funds’. MoneySENSE. 31 December 2007. <http://www.moneysense.gov.sg/publications/guides_publications/managing_your_retirement_funds/manage1.html>.