Wealth Distribution 

At the end of it all, there will come a time when you finally take a long break from work or business. Retirement is a little scary for anyone who is used to the daily grind at work. That is a destination we all must share, unless you aim to work for the rest of your life. And there is the other kind of retirement that we all must face: retirement from life. Rich or poor, famous or not, that is our common ground.

Assuming that you have already reached the peak, what would you do with the money that you have accumulated this far? It doesn’t take a philosopher to realise that sooner or later you will be forced to think about the question, “What now?”

Should you spend the excess money for donation to the causes you support? Would you like to leave a legacy to your children and the next generation? Or should you just spend it all by travelling the world?

This is the stage where you begin to answer such questions and you address through:

Retirement Planning

*source: https://www.investopedia.com/articles/retirement/11/5-steps-to-retirement-plan.asp

Retirement planning refers to the financial strategies of saving, investment, and ultimately distribution of money meant to sustain oneself during retirement.

Planning for your retirement is incredibly important, seeing as how planning ahead allows for the individual to better enjoy your retirement. Starting early also helps to give you more time to reap the benefits of compounding interest. 

Retirement is also about being able to choose whether to work, and that you would be in a better place to make that decision if you start planning retirement early.

Some indicators that state that you are ready for retirement is when you:

1. Have a roof over your head (that is fully paid for and not mortgaged)
   
2. Are free of debt obligations
3. Have adequate health insurance cover for medical expenses
4. Have enough savings or passive income to pay for your retirement lifestyle. 

In order to build a retirement plan, you would have to:

DRAWDOWN PROCESS

*source: https://www.investopedia.com/terms/d/drawdown.asp#:~:text=The%20term%20loan%20drawdown%20refers,loan%20used%20to%20purchase%20property.

Adjusted expense Method

With this method, the individual will be able to examine their spending habits. Certain habits may increase, some will decrease, while others will vary as the individual grows older. Therefore, it is important to review the person’s expenses before as well as during retirement

CAPITAL PRESERVATION PROCESS

*source:

1. https://www.financestrategists.com/wealth-management/capital-preservation/

2. https://www.thebalancemoney.com/what-is-capital-preservation-357163

The capital preservation process basically uses the same two methods, Income Replacement Ratio Method and Adjusted expense Method to calculate as well. However, the difference is that you will only be spending the interest return that you get from your investment. While, you will hold and reserve a capital which you would not touch.

So, instead of the drawdown process where you keep spending with the funds decreasing every time, the capital preservation process allows you to keep a lump sum of money aside, while you  spend interest returns you get from the investment. 

Estate Planning

*source: 

1. https://www.manulife.com.sg/en/insights/a-complete-guide-to-estate-planning.html

2. https://karentang.sg/estate-planning/the-importance-of-estate-planning-5-consequences-you-cannot-ignore/

Your family can lose money through these ways

1. Forced liquidation of assets

Assets like houses and properties need to be sold before proceeds can be split up among the beneficiaries. They could be sold at unfavorable prices due to bad timing or a rushed timeframe. 

2. Heirs can’t manage your portfolio

Without a structured plan from you, your heirs may not know what to do with your investment portfolio or what you wish to achieve from it. 

3. Family not knowing about assets 

If you don’t do up a full inventory of the assets you hold, your family members might not be aware of all the existing assets you have. 

4. Family has to pay your debts 

If your family members are co-signers on your loans and credit cards, they will be responsible for the debts you leave behind. 

Gifting

*source: https://www.ballardspahr.com/insights/alerts-and-articles/2024/02/gifting-a-powerful-tool-for-an-effective-estate-planning-strategy

Gifting is an estate planning technique, where many families routinely give their assets to heirs whereas some plan to leave their assets to heirs above the amount that the government allows to pass free of gift or real estate.

Some gifting ideas to consider would be 

1. Making Annual Exclusion Gifts 
2. Give the gift of compounding – for college 
3. Give the gift of compounding – for retirement 
4. Stuff their stocking 
5. Spread the wealth 
6. Paying Education And Medical Expenses For the Benefit Of Loved Ones 

There are three different methods to reduce your taxable estate using gifting.