Are you Single?
Singles are not a homogeneous group. Some have a life partner, others do not. Some have children, most do not. We shall follow the Singapore government’s legal definition of “single”, which does not include those that are “separated/divorced”. We will also assume most singles do not have children, since they are not legally married yet.
This article will highlight some of the most important issues that singles should be aware of while doing financial planning.
Sharing of Personal Goals and Identifying Those Who Mean The Most to You
To get good advice from a financial adviser, you need to be honest about your goals and those who really mean the most to you. With this information, the adviser can give you appropriate advice.
Creating an Emergency Fund
In today’s uncertain job market, there may be times where you are in-between jobs, or taking time off to pursue a personal goal. To do this, you must have an emergency fund which can last you at least 6 to 12 months.
Accumulation of Assets for Retirement
There will come a time when you have to retire. To maintain your living standards, you must develop other income streams that you can rely on during retirement. These may include:
- CPF Life
- Supplementary Retirement Scheme
- Insurance policy payouts
- Rental income
- Capital appreciation and dividends from investments (eg. unit trusts, stocks, bonds, etc)
Protection for Self and Loved Ones
The best way to protect yourself is to ensure you have enough insurance coverage. A financial adviser can help you identify the gaps between your current coverage and what you need. Typical areas to review are:
1. Hospitalization
Affordability and coverage of a medical plan is the foundation of good financial planning. You can prevent your assets from being wiped out by unexpected expensive medical bills with a suitable plan.
2. Long Term Care
If you are unable to perform activities for daily living (eg. washing, feeding, dressing, toileting, etc), you will want to be able to afford hiring a caretaker.
3. Critical Illness Coverage
If severe illness strikes and you are unable to work for a period of time, it’s important to have critical illness coverage to pay for your treatment.
4. Disability Coverage
Disability coverage is similar to critical illness coverage, but it is often necessary to have a longer coverage. This is because total permanent disability may affect your ability to work for extended periods of time.
5. Death Coverage
Singles should not neglect death coverage. This is because it’s your opportunity to create more financial assets for someone or an organization you care about. You should ensure that your policies include a nomination so that your money go to the right person or organization.
It is also important to make preparations in case you become incapacitated through accident or illness, and is unable to make decisions for yourself. We shall cover this in our next article – Financial Planning For Singles – Part 2.
