We did our company health screening a few months ago.
I was not expecting the screening results to be any different from the previous results two years ago.
To my surprise, my blood glucose level and HBA1c (Haemoglobin A1c is a blood test that gives an indication of your average blood glucose levels over the past 3 months) got to an unacceptable range.
My BMI was always in a good range, but I would keep myself active by going on hikes and runs very often.
As a 51-year-old, there can be two reactions upon seeing such a result. I could accept that age is catching up on me and just do what the doctor suggested.
Or I could treat the result as a red alert and see whether there is any way to reverse its course.
I choose to do the latter.
In Singapore, about 8.6% of the population and 19,000 people each year are diagnosed with diabetes. This is a growing healthcare problem that may eventually become a social problem.
I started researching on how to lower my blood glucose level and consulted a General Practitioner (GP) at the polyclinic. I was also directed to consult a dietician and did diabetic retinopathy (eye) and foot screening. An out-of-control blood glucose level can cause serious health problems for many major organs, including our heart, blood vessels, nerves, eyes and kidneys.
The good news is that these set of screening results turned out to be normal.
After my research, I decided to make some lifestyle changes:
- Reduce my carbohydrates intake
- Practice intermittent fasting
- Increase my physical activity
- Have a better sleep habit following the circadian rhythms
These lifestyle changes require some discipline at first but after a while, it became easier as it transits into daily habits.
At the recent follow-up consultation, I have managed to reduce my HBA1c by 30% after 2 months (Hooray!). Although it is still not within the normal range, I am making good progress with the help of the doctor and dietician.
Through this health screening, I was able to get an early detection, followed by treatment and good control of the condition to lower the risk of serious complications.
We Often Overestimate Our Financial Health to Give Us What We Want In the Future
As I reflected over my health condition, it reminded me of the similarity in taking care of our financial health.
As someone with an active lifestyle, I was confident that I would not be susceptible to lifestyle ills such as pre-diabetes.
Many times, we are on an auto-cruise mode thinking our financial situation is in a great shape as well. Afterall, our cash flow is currently strong, we manage to pay all our bills and there are no symptoms or signs of things going wrong.
The many years of planning lead me to realise how many prospects, clients and my friends underestimate how life, and they themselves could change.
Just like an annual health screening, a review of our financial health is to take a snapshot of our currently financial life and if things do not change, can we still achieve the life goals we set?
If our life shifts, we should shift our financial plan accordingly.
In no particular order, here are some of the curveballs thrown at my clients:
- There can be changes to their life philosophy and values that affect their retirement expectation and thus the retirement sum they need.
- A change of their child’s education saving from local to overseas can affect their house upgrading decision.
- A shift in career aspiration and health status may also affect their saving plan.
- Changing economic climates, interest rates and inflation can affect their investment portfolio performance.
- There are also certain life stage changes that will affect their insurance and estate planning.
If there are some financial misalignments, we re-align them. Through regular financial reviews, there might also be positive financial surprises that reflect positive lifestyle paths that were not present a few years ago.
How We Handle Changes in Our Life or Financial Situations
At Providend, we make sure to have regular progress meeting with our clients to review any major changes in their personal or financial situation at least on an annual basis.
If needed, we will adjust the wealth plan after reviewing their overall progress toward the longer-term financial goals.
Often, the progress meetings do not have any surprises and clients are on-track towards their financial goals. With an up-to-date understanding of the client’s situation, most of the time, the review is to tweak the client’s resources to ensure they are allocated efficiently.
Of course, there will also be situations that can affect the family cash flow such as a property purchase, car purchase, taking a sabbatical leave, the birth of a baby or transiting from dual income to single income.
By identifying those changes early, we can make adjustments to their financial goals, start a sinking fund for the purchases or allocate their existing assets for a more optimal outcome.
After all these years, some of the progress meetings have been very satisfying as my earlier clients manage to achieve their accumulation goals and are looking forward to their retirement. We would then help them to transit into RetireWell planning, which is a retirement income strategy to create a reliable stream of income for their next life stage. Very often, our clients would also request for us to speak to their adult children as they have a positive wealth planning experience with us. The partnership with our clients in their wealth management can sometimes be multigenerational.
If you are not already doing a periodic review, as a start, you can consider using the checklist below to do a reality check on your overall financial health.
- Is your investment strategy on track?
Revisit each of your life and financial goals to align your investing strategies to them. If your situation has changed, make adjustments where necessary. Check your target asset allocation (e.g., stocks, bonds, cash, etc.) to ensure that it continues to reflect your time frame, risk tolerance, needs and goals. Perform any rebalancing that might be necessary. It is also important to ensure that your portfolios have the necessary diversification to lower the volatility so that you can hold on to the investment for the return needed.
- Is your accumulation tax-efficient?
Investing tax-efficiently does not have to be complicated, but it does need some planning. In Singapore, we are given tax relief for contributing to the Supplementary Retirement Scheme (SRS) and CPF Retirement Sum Topping-Up Scheme. We can then use the SRS contribution to invest towards our retirement need. CPF SA currently earns at least 4% p.a., which can compound to a very decent amount by the time you reach 55. Always check the IRAS website if there are applicable tax reliefs depending on your family circumstances.
While taxes should never be the primary driver of an investment strategy, better tax awareness does have the potential to reduce your tax expense.
- Is there more you can do with CPF?
If you are below 55, there are 2 CPF accounts – MA & SA that earn 4% p.a. You are allowed to do voluntary contribution subjected to MA Basic Healthcare Sum (BHS) and SA Full Retirement Sum (FRS) limits. The savings can act as part of your overall retirement plan. If you are near age 55, you may want to consider doing SA Shielding, before the CPF Board automatically transfers the monies in your SA to your RA. Read “10 Important Aspects About Your CPF Retirement Account (RA)” written by our Senior Solutions Specialist, Kyith Ng here.
If you already have a RA, consider topping it up to the Enhanced Retirement Sum (ERS) using cash instead of monies in your OA. RA enjoy the same 4% p.a. as MA and SA. This will allow you to have a higher monthly pay-out from CPF LIFE.
- Are you protecting your income and your family?
Evaluate your family’s total insurance needs annually to make sure you have the right amount and type of insurance to cover unforeseen circumstances that can derail your wealth plan. If you have done a comprehensive review in the last few years, there should not be any major changes required. If your family is growing, you might want to increase the amount of your insurance coverage to protect your loved ones.
The types of insurances to consider include critical illness and disability insurance for income replacement, health, and long-term care insurance. Health insurance premium increases with age, so as you age, consider a sinking fund to help you better prepare for future health care expenses. Do a quick check of your insurance beneficiary designations to see whether they are up to date. Alternatively, remove the beneficiary and use your Will as the distribution tool.
- Is your estate plan up to date?
Make sure you have an estate plan, and that it continues to reflect your family status and financial situation. Is the executor or guardian named in your Will and CPF nomination still relevant? If your children are above age 21, are they able to be your executors? If necessary, update your Will and asset listing. Consider doing a Lasting Power of Attorney (LPA), a useful documentation in the event that you become incapacitated. It allows you to name someone to help with your financial affairs and health care decisions on your behalf when you are unable to manage them yourself.
The annual review can be scheduled at any point throughout the year. It can help you better understand the “big picture” of your overall wealth planning efforts. However, there is no need to micromanage the process.
As William Bruce Cameron (not Albert Einstein) said: “Not everything that can be counted counts, and not everything that counts can be counted.”
Sometimes the most important things cannot be measured, it is about your own preference, value, philosophies, and personality. If the whole process sound like a lot of ground to cover, consider partnering a trusted adviser along this journey.
At Providend, we conduct regular progress meeting with our clients, and it has been a great value to them. Learn about one of our client’s experience with us here.
This is an original article written by Lee Chee Kian, Senior Client Adviser of Providend, Singapore’s First Fee-Only Wealth Advisory Firm.
For more related resources, check out:
1. Are You Getting the Best Value from Your Wealth Adviser?
2. My Realisations of What Wealth Planning Is Really About
3. Elements Of Wealth And How It Is Built
We do not charge a fee at the first consultation meeting. If you would like an honest second opinion on your current estate plan, investment portfolio, financial and/or retirement plan, make an appointment with us today.