Do you have a friend who spends beyond their means, splashing their salaries on the latest gadgets or luxury handbags without a care for their financial future?

Or perhaps you know someone who scrimps and saves, aiming to build a sizeable nest egg but denying themselves every small pleasure in the meantime?

There’s no need to go to either extreme, as there is a sweet spot between living in the moment and living for tomorrow, says former educator Chung Yin Wah, author of RETIRE HAPPPY!, a book on retirement planning.

Ms Chung, who retired in 2019, is a speaker at the Central Provident Fund (CPF) Board’s upcoming Ready for Life Digital Festival, where she will share about how people can build financial security to support their passions in their golden years. 

She explains that leading a fulfilling life, both before and during retirement, involves more than just having financial peace of mind. “Having a sense of purpose throughout our life is key: It gives our life meaning.”

“I admire the fact that more people are spending time and money to do things they love. Doing so can lead us to understand our passions and, with reflection, identify our values and purpose,” she says. 

Since retiring, she has done more volunteer work, taken new classes and is preparing to travel extensively, in addition to sharing what she has learnt about retirement planning with her book.

Only when you know what you want to do in retirement can you even plan for it financially, she adds. “For many of us, work gives us our sense of identity. Retirees need a new sense of purpose or we may flail around feeling meaningless after the initial excitement of limitless free time fades.”

Understanding what matters to you

Planning ahead will also make the transition to retirement smoother, says Mr Christopher Tan, chief executive of wealth advisory firm Providend, who is also a speaker at the festival.

He explains: “Some of the activities we want to do in retirement cannot happen overnight. We need to prepare ourselves ahead of time or go for training. As an example, even if you want to give back to society by providing counselling in your retirement years, it cannot happen overnight if you are unprepared and have not equipped yourself for it.”

At the same time, prudent planning and spending can help to protect against life’s curveballs, especially in retirement. These include having an annuity plan, such as CPF LIFE, that provides lifelong payouts, investing in financial instruments that will beat inflation, purchasing suitable medical insurance coverage and setting aside cash for emergencies. 

Like Ms Chung, Mr Tan does not believe that YOLO or FIRE – acronyms for You Only Live Once, and Financial Independence, Retire Early – are good philosophies for life. 

“The YOLO believer lives like there’s no tomorrow, while the FIRE follower, who is very frugal today to retire early, lives like there will always be a tomorrow. But if the Covid-19 pandemic has taught us anything, it is that life is uncertain,” he says.

“I am a firm believer in making life decisions before financial decisions. A good place to start would be to think about what we want our life to stand for going forward and align our financial plans accordingly. Asking ourselves what we want to do both now and in the future gives us clarity on how we can live each day to the fullest. This way, if life takes us away suddenly, we leave with no regrets. If life is kind and we get to live into our retirement years, the financial plans we made ahead of time will give us sufficient funds to live the meaningful life we want.”