By Lorna Tan, Senior Correspondent

Japan, the world's most aged society, is preparing for a surge in retirees in 2012, when its first batch of official baby boomers turns 65.

Singapore, like many other advanced nations, is facing similar challenges.

The Republic is expected to approach 'aged society' status, according to a United Nations benchmark, at the end of this decade. Singapore is currently considered an 'ageing' society as more than 7 per cent of its population are 65 or older.

A society becomes 'aged', according to the UN, when the number of people 65 and over tops 14 per cent. Japan has already been accorded 'super aged' status, with over 20 per cent who are 65 and over.

Nearly 23 per cent of Japan's 126 million people will reportedly be 65 and older this year, the highest proportion in the world.

In a recent interview, Mr Satoshi Nojiri, US fund manager Fidelity International's director of Fidelity Investor Education Institute in Japan, said Singapore will soon encounter the same retirement issues facing Japan now.

For instance, Fidelity's latest survey of 10,000 Japan workers indicated that the majority recognised that health-care costs are the largest expense in retirement. About 44 per cent of respondents had not started saving for retirement and those who had, had saved only one-sixth of the retirement income needed.

Mr Roy Varghese, foundation adviser and director at Ipac Financial Planning Singapore, said that unless one is flush with cash, one should delay retirement for as long as possible.

Retirees should also be mentally prepared to return to the workforce if the need arises and to consider downgrading or selling their homes to raise funds.

We highlight some retirement risks worth considering.