When we talk about making mistakes when saving for retirement, most people probably imagine something dramatic.Getting scammed out of your life savings. Losing money in a stock market crash. Signing up for something you did not fully understand because a salesperson dressed in a smart-looking suit told you it was "safe".But in my view, some of the biggest retirement planning mistakes usually start small and go unnoticed. I’ve seen this happen to many of my older peers whom I used to think were set for a comfortable retirement because they were earning more than me, but are now in their fifties and fretting about not having enough.
Their missteps are not uncommon. Today, many Singaporeans still make the same mistakes – starting too late, chasing unrealistic returns, neglecting their Central Provident Fund (CPF) in retirement planning, or over-relying for financial advice on someone who is selling them products.By the time the consequences show up, it may already be 10, 20 or 30 years later, when your working years are behind you and there is no way to undo your mistakes.Just last month, a commentary by Christopher Tan, the chief executive officer of wealth advisory firm Providend, struck a nerve with many people, myself included.In his May 22 commentary, he highlighted a worrying trend of Singaporeans being encouraged to meet the Basic Retirement Sum in their CPF accounts and invest the balance that could otherwise have gone towards the Full Retirement Sum into an investment-linked policy (ILP). The sales pitch was that the combination of CPF Life payouts and the ILP would ultimately provide a higher level of retirement income.As this practice came to light, the issue drew wider scrutiny after some advisers were found to be marketing ILPs as "capital guaranteed upon death".
