The Tanner Hill - Smart Decisions

Having discussed the ways to build your retirement income in my previous article, let's move on to comprehensive medical protection and prudent estate planning.

Medical Protection

As you retire, you'll cease to be protected by the medical protection scheme offered by your previous employer. To ensure a worry-free retirement, it's important to plan your personal medical protection scheme in advance.

A medical protection scheme usually covers hospitalisation and surgery fees, as well as additional items such as hospital cash insurance and comprehensive outpatient plan. In fact, most medical insurance comes in different packages to accommodate different needs. When deciding on the package to insure in, the tip is to pick something that matches your personal preference, and something that your finance can afford.

Also, whether a medical insurance poses an age limit or not is another criterion to consider – will you be permanently insured or insured only until aged 65? – and, be mindful that all medical insurance policies do not cover the medical expenses for pre-existing conditions. To make the best of your medical insurance, it's wise to be insured when you're still healthy.

Estate Planning

Making a will is a must in your retirement years, and your focus should be on the planning of your estate, instead of the related tax issues. Despite the abolition of estate duty in Hong Kong, it's important to make a will as it ensures your allocation of assets at your own will, and your own appointment of estate administrator.

The will enables you to appoint a trusted relative or any other beneficiaries (individuals or organisations) as the inheritor of your estate. For your will to be legally effective, you must follow the Wills Ordinance, Cap. 30 of the Laws of Hong Kong, and prepare your will under the guidance of a registered lawyer. The fees charged to prepare a will are fairly reasonable, making it all the more worthwhile to make a will in exchange of peace of mind.

Another option is to set up a trust, which provides even greater flexibility. With a trust, you can arrange for distribution of your wealth to your offspring in installments, not only to help them better utilise the inheritance but also to spare the inheritance from marital disputes, should that ever happen. While once an arrangement only affordable by the well-heeled, the fees involved for setting up a trust nowadays are relatively reasonable. Some professional trustees charge only tens of thousands of Hong Kong dollars for the establishment and annual management of trust, which would be quite affordable for the middle-class and higher-net-wealth individuals.

Author:
Steve Lo
Certified Financial PlannerCM
Senior Vice President of ING Financial Planning

Steve Lo has more than 18 years of experience as an investment consultant and financial planning advisor, and his advice on investment and financial management has been shared via numerous media interviews, as well as investment symposiums where he was speaker. Steve has penned over 200 articles on personal investment and financial planning for Hong Kong Economic Journal between 1998 and 2008. Some of the articles were edited into two books ("Mutual Fund Investment: A Practitioner's Perspective" and "Financial Planning: A Practitioner's Perspective") offering invaluable advice on fund investment and financial planning.

Steve has also served as instructor for the various Continuing Professional Development courses of the Hong Kong Securities Institute and Institute for Financial Planners of Hong Kong between 2001 and 2010. In addition, Steve sat as one of the judges for the SCMP/IFPHK Financial Planner Awards and Benchmark Wealth Management Awards between 2005 and 2012.

Continuous reading:
Need to Know – Financial Planning for Retirement (Part 1)