What about
CPF? My wife and I (who are pretty ordinary graduate stat board employees our whole lives) have worked 30 years+ and each of us will have $1m in
CPF balances (including investments and housing contributions) when we reach 55, which is pretty soon. We generally invested in blue chip stocks (never sold any unless they were acquired by other companies) and used for housing at various points in time.
We have always transferred our Ordinary account savings to the Special account to the minimum sum max to get the full 4% ever since they allowed it. In fact, the yearly interest alone tops up our special accounts whenever the minimum sum moves up. Both my wife and I have about $150K in our special accounts and $39.5K in our Medisave (we never use Medisave for medical expenses and always pay cash because its very hard to get 4% interest rate). Hence both of us have about $380K in our special and medisave accounts, which earns more than $15K per year! at 4%.
Of, the remaining $1.7M or so we have in our Ordinary accounts, only $200K is used for housing (we fully paid up more than 10 years ago). The remaining $1.5M of Ordinary account savings most is in a variety of high cash yielding unit trusts, blue chip stocks, REITs with a balance of $200K actually still with
CPF. I calculated the yield on the $1.3M we have in our investment accounts at around 5% on current prices and about 10% on prices we paid for them (We bought many [like AREIT at $1] a long time ago), so I get about $65,000 pa on my
CPF investment portfolio. The remaining $200K in my ordinary account earns $6K at 2.5% (+1% for the first $60K of both our accounts).
So if you add it up. I get $15K from Medisave interest, $6K from Ordinary Account interest and $65K from my investment portfolio. That is $86K in a steady stream from our
CPF or $7.2K per month.
We also have been contributing to SRS at the maximum and have been buying high yield blue chip stocks. Have never sold. There was a point during 2009 when our SRS portfolio dropped in value by 40%, but its recovered nicely. Both my wife and I have a total of $300K in both our SRS. That generates about 5% dividends also, which gives us another $6K.
In total our retirement funds are $2.3M (
CPF + SRS) and they increase at $92K per year. When we reach 55 soon, we intend to leave everything at the
CPF and take out only when we need it. I think our case proves that if you are a graduate, and have a steady, non-spectacular job for a long time and don't do anything stupid with your
CPF or SRS, you can retire quite easily and be comfortable at 55 just on your
CPF and SRS alone. The thing to remember when you buy stocks or unit trusts with your retirement money, is to buy high yield blue chips and
never sell. The stock market goes up and down, but as long as you hold blue chips for 10 years or more, they are up and have paid you a fortune in dividends. Take AREIT. I bought most of my holdings when they IPOed at under $1. I've participated fully in every fund raising. They pay 13c dividend a year now, so I'm getting 13% yield on my original investment. In fact, when I calculate back, the dividends have covered my entire initial cost, so the shares are free now!