Though financial experts repeatedly suggest that we plan financially for retirement, not many Thais do, or indeed set any savings goals.

A recent study by the Finance Ministry found that current retirement savings were not adequate and could lead to a crisis in the next two decades. Not only is the amount of savings insufficient, but Thais do not understand the essence of saving and many do not invest their money appropriately at proper stages of their lives.

Although everyone has their own lifestyle, most go through the same stages of life. The following are some guidelines that may help you identify them and plan accordingly.

Graduation from university is the first time you are on your own financially. However, your first month's salary may not be adequate to fulfil the needs you dreamt about when you were younger, and your expenses will tend to exceed your savings.

At this period, many still live with their parents but want to invest in their own car, new clothes, trips etc. Once they get their own salary, graduates tend to be easily convinced by the aggressive promotions of credit-card issuers or personal-loan providers.

At this period of life it is best to avoid getting too far into debt by easy credit.

Although you have many years before retirement, you must start saving now. In an emergency, some cash will be most welcome, and the younger you start, the larger the returns from your savings.

Then in mid-career you earn a bigger salary as you progress. You are probably also married and have young children.

Your expenditure rises significantly: you may need to get a housing loan when you marry, and you must think about your children's education.

As some may have to support not only their own family but also elderly parents, it is essential to go for health and life insurance. From now on a larger emergency fund is needed. A rough estimate is six times your monthly salary to tide you over an accident or job loss.

The emergency fund should be easy to access, as you will not want to wait.

You may have to make long-term plans for your children's education, especially if you wish to send them abroad to study. This involves long-term saving. Think about an investment that generates a higher return than a bank deposit.

In middle age many people are at the peak of their career in terms of earnings as well as position, with many years of experience.

Children have grown up and are in higher education or have their first job, but you may have to finance them. If you have planned earlier, this will come from savings, not earnings.

As you age, your health- and life-insurance premiums will become higher.

You may now be less keen about risky investments such as equities. Try to calculate the return on your total investment portfolio, which is much larger now, to meet just your retirement needs, so that you will be able to shift investment from stocks to more reliable assets such as bonds.

When you retire, most of your big commitments, such as mortgage and children's education, are behind you, but spending on healthcare will increase.

Few people are big earners when they are old. If you have financial support from your children, you may not need to draw on your own investments, but otherwise your portfolio will shrink.

Principal guarantee now looms large, though equity may sound too risky. Still, if you have planned for your retirement, the returns will cover your needs.

Jiwamol Kanoksilp

The Nation