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Old 02-05-2014, 10:51 AM
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haha. You forgot about the inflation. Most people forgot this.

The $10,000 he will get at age 67 is not the $10,000 today. If inflation is 3% a year, that $10,000 is worth only $5,500 when he reaches 67. Hopefully it will give a comfortable level of living, but it certainly not a lot of money.

Do you remember the Old Chunky curry puff when it was at $1 per piece? That wasnt too long ago, now one piece is selling for $1.40. A 40% increase!

Really in 20 years time, nobody would want to pick up a $5 note on the floor. Probably cant even pay for a cup of Kopi-O. scary isnt it?


Quote:
Originally Posted by Unregistered View Post
I think you are doing just fine.
Let's assume you work till 67, that's another 20 years.
By then, you would have cleared your mortgage and your condo would have gone up in value to say, $1.6m. So you have $1.6m in equity in your condo.
Since you save $40k pm, over 20 years, your additional savings will be $800k.
Your CPF, which is now $420k, would have grown since you will earn 2.5% pa on your OA and 4% on your SA and MA. Let's say it will grow to $600k.

So, at 67, your net worth will be $(1.6 + 0.8 + 0.6 + 0.1) = $3.1m.
This is sufficient for you and your wife.
You can sell your condo and downgrade to buy a 4 room HDB flat, costing say $500k, and you will have cash balance of $1.1m and plus your savings, you have $2m to invest in high dividend yield stocks, giving you 5% pa or $100k pa dividends. You will also get a CPF retirement account payout of $24k pa in total. So, you will have $124k pa or $10k pm. For an old couple, $10k pm is a lot of money to retire on, the most you would spend is $5k pm if you don't drive nor have a maid. You don't even need to depend on your children to give you both any allowances, if they do, that will be a bonus.

So, you are on your way to financial freedom at 67. Hopefully, you will still be alive to enjoy your retirement. All the best.


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