A Retirement Gap analysis investigates an individual expected retirement income streams, such as:
It also reviews what you expect to spend during retirement for example;
A retirement gap is identified when a shortfall is predicted between income and expenses. This will lead to the next step in the analysis which is to determine how to bridge the gap by looking at how big the difference is and identifying what steps can be taken on both the income and expense sides to lessen the gap, if possible.
With the analysis shown a negative gap between incomes and expenses, you might want to spend less in your working years and save more.
Money saved can be put into investments with higher return base on individual risk appetite. Likewise, you may want to revise your expectation of retirement and reduce your retirement income, so that the capital sum will not be so huge as to be unattainable. Or you may want to retire at a later age.
A positive gap means that you have a better financial health and have better cash flow. You may want to continue that way and perhaps look into some investment products and diversify some of your portfolio so as to achieve your retirement goal earlier.
Our Personal Financial Planners can guide you by taking an in-depth look at income, expenses, cost of living and the goals of your retirement lifestyle and interprets the data to make recommendations that are appropriate to you.
It is never too late to begin a retirement gap analysis. Spend more time planning for your retirement and take a look at your financial plan annually to make sure you are in a comfortable position.
Illustration of Retirement Gap Analysis
Client Mr. A would like to have an estimate amount of $130,000 when he reaches his retirement age of 60 years old. He would like to spend some of the savings on holiday and also to pass on for his children in the future.
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