Thai people are now more interested in “Financial planning for retirement” because they realize that it’s not harder than their effort. Many people start saving money when they’re young so they have financial freedom early.

For working-age at about 30, you’ll have 30 years to save your money until the retirement age at 60. Suppose you can live up to 80 years (20 years after retirement), how much savings you need to live happily after retirement.

First of all, consider daily expenses during retirement. If you want to spend 20,000 baht per month (667 baht a day) until you are at 80. It means you’ll need money for another 20 years that is 20 years x 365 days or to live 7,300 days and your savings must be 4,869,100 baht when you reach 60 and spend 667 baht a day (667 x 7,300).

If you’re now 30 years old, how will you save your money for another 30 years?

The calculation is 4,869,100 baht, divide by 30 years, then you must save 162,303 baht per year or 13,525 baht per month.

For the investment channel, you should arrange an investment portfolio in accordance with your age and acceptable risk level. Young people may invest in high-risk Equity Fund like Super Savings Fund (SSF), Retirement Mutual Fund (RMF) that offer investment policy in stocks, stock mutual funds, foreign stocks, and gold, etc.

When older (about 40 years), you’re settled down with family, wedding, and have burdens like house and car installment. You’ll face the risk that is hard to accept, therefore, you may reduce investment proportion in a high-risk equity fund and increase investment in low to medium-risk equity funds such as Mixed Fund, Fixed Income Fund, etc.
 

When you nearly reach retirement age (50 years), you may focus on managing an investment portfolio in low-risk equity funds like savings deposits and Government Bond. Anyway, you may invest in some high-risk equity fund by investing 10% of the money in Stock Mutual Fund to gain higher profit. 
 

As examples previously mentioned, you should start setting a financial plan for retirement when you’re at 30 by managing an investment portfolio in line with your style. Suppose you get an average of 5% profit per year, you’ll gain 4,869,100 baht at the age of 48.v
 

Be disciplined, start saving your money when you’re young to allow a longer period of saving; otherwise, your savings may not be enough for the future. Always save a higher amount of money than your target goal as the inflation rate is getting higher every year. 

Investment channel after retirement

People at retirement age need to find investment channels to keep the principle stable and find ways to increase profits as income for retirement. Thus, the investment must be carefully chosen.

1.Investment in an equity fund with no risk

There’re many types of investment risks such as Price risk, Default risk. At retirement age, investment in a low-risk equity fund is recommended such as Government Issued Debt with no payment or interest return, or deposit your savings at commercial banks (coverage not exceeding 5 million baht until August 10, 2021, and coverage not exceeding 1 million baht effective from August 11, 2021, onwards).

2.Don’t invest in an equity fund with term conditions

Investment relates to terms and conditions. For example, you can’t withdraw money for 2 year-fixed savings before term (otherwise you’ll lose interest). Or, investing in Government Bond for 5 years, if you sell the Bond before term, there’s the risk for trading in the secondary market. Debenture that has longer life will be more at risk in price fluctuation as well. So, people at retirement age should invest in the equity fund that can be traded all the time such as the general Mutual Fund.

3.High-risk investment

Stock Mutual Funds are another choice for people at retirement age but must be in good proportion because they generate good profit for long-term investment. Anyway, choose a safe Mutual Fund with consistent performance.

The calculation is taking all income such as interest, investment profit, and dividend, and then divide by 12. The outcome is monthly income. If your monthly spending doesn’t exceed income, your principal won’t be reduced. For example, you receive a total of interest, investment profit, and dividend of 240,000 baht per year. When dividing by 12, it’s qual to 20,000 baht. If your monthly spending doesn’t exceed 20,000 baht, it won’t affect the principle.

Investment during retirement is different from before retirement that is to focus on the principle so you need to be considerate and consider the equity fund carefully.

However, profit return should be equal to or more than inflation to protect you from losing buying power. If you can do that, you’ll certainly have enough savings to live throughout your retirement.