Being able to have a relaxing overseas trip without having to rush back to work or pursuing new hobbies that you never had the chance to or spending time with your grandchildren while enjoying a cup of nice coffee and watching them play around, is that how you vision your retirement to be?

Retirement is the ultimate life goal for each one of us. The moment we start earning our first pay-check to getting married, having a house and setting up our own family, eventually we will reach a stage where we think of the mentioned activities when it comes to retirement and of course, everyone’s retirement needs will be different.

To understand how much you need for your retirement, it is important to find out your ideal retirement lifestyle. You can look at your current monthly budget and imagine how it will look like when you are in retirement. If it is too difficult to vision your retirement lifestyle, experts have mentioned that one typically need 60% to 80% of your current income during retirement. In addition, expected retirement age as well as life expectancy will also have an impact on your retirement funding. The earlier you are looking at retiring, the more you will have to set aside, likewise for life expectancy. Current life expectancy is 83 years for men and 88 for women, which will translate to 18 and 23 years respectively in retirement, assuming retirement age is 65-years-old. What happens if you live beyond that?

Spending on health will also increase, which may be due to increased frailty, a sudden medical event or decline in cognitive functioning. Whatever the reason, spending on health will increase and more the reason for you to keep your medical insurance policies, which the premium would have increased significantly over the years.

Rome was not built in a day, just like retirement planning. Each small step that you take today, contributes to your retirement funding that will support your retirement lifestyle. There is no best time to start saving for your retirement, the best time is to start as early as possible. It is a known fact that the later you start saving, the more money you will have to save to reach your desired retirement amount, however with effects of compounding interest, the difference becomes quite significant.

Imagine this, Mr. Li saves CNY200 per month for 10 years at a high interest savings account of 5%, he will end up with CNY30,186.94 with CNY24,000 being his capital. And now we have Mr. Wang who starts saving 5 years later, but saves double the amount that Adam does, CNY400 per month for 5 years with the same interest, he will end up with CNY26,523.03, with CNY24,000 being his capital. Although both have put in the same amount, at the end of the day, with effects of compounding interest, the difference becomes amplified.

There are several options available that can assist you in reaching your retirement goals such as, annuity insurance plan as well as investments options and there is no one perfect solution that is able to suit your retirement needs. Therefore, it is important to understand how they can fit into your retirement planning and with proper advice and guidance, you are on your way to have your retirement secured before it comes.

Disclaimer: The information is brought to you by Aon Hewitt Consulting (Shanghai) Co. Ltd. registration number 310000400102466. The information does not take into account the specific investment objectives, financial situation or particular needs of any particular person who may be in receipt of the materials. Accordingly, it should not be relied on or treated as a substitute for specific advice concerning individual situations. Please seek advice from a financial adviser regarding the suitability of any investment product taking into account your specific investment objectives, financial situation or particular needs before you make a commitment to purchase an investment product. You are also recommended to obtain such other professional advice where appropriate. The information is provided in good faith and believed to be accurate as of the time of compilation. We do not undertake an obligation to update the materials or to correct any inaccuracy that may become apparent at a later time. You should always consult primary or more accurate or more up-to-date sources of information.