How much are you earning per annum?

Originally Posted by Unregistered

Here is one for the British. They are the worst prepared for retirement.

Retired Britons 'will run out of savings third way through post-work years' | Money | The Guardian

well refferred...

come to think of it. isnt it all boils down to one's cold hard cash + passive income (generated thru his Fixed asset like rental,,dividends, interests,etc)

would be interesting to start a thread , how much singaporean have on Cash + passive income.

Originally Posted by Unregistered

OMG, you dudes are thicker than I thought.

The figures are not rubbish, just pure and simple Maths.

The money you need is up to the kind of lifestyle you aspire to lead in your retirement. The case used was for the couple who were spending $5k pm.

If you aspire to a $3k pm kind of lifestyle, then use the $3k figure to compute. $3k pm = $36k pa. If they retire at 60 and live to 85, that's a good 25 yrs. With a miraculous zero inflation over 25 yrs, the amount needed is $900k.

You can factor in any inflation rate to see how much the amount needs to grow. No need to argue. It is your retirement, not mine.

i like the way you have explained in simple maths. thank you.

I earn $80k pa, wife $110 pa. Expenses $150k pa. Savings $40k pa.
Lives in a PC, fully paid up. No debt. Total net worth $2m. We are in our late 40s.
Our retirement plan is to rent out our PC when we reach 75 and live in a 3rd world country, in a village. We can plant our own food (organic) and rear our own chicken (organic). We will use our rental income for other expenses. We hope to live till 85 years old.

Originally Posted by Unregistered

i like the way you have explained in simple maths. thank you.

The reason why this looks simple is because he is doing it wrongly. He dumped in an inflation rate of 3.5% and assumed no asset/investment appreciation.

Historically over the past 35 years, the median inflation rate is 1.7%, 75th percentile is only 3.1%. 3.5% assumption is too high and he gives no rationale on how he came up with this figure. CPF and government bodies usualyl recommend 2-2.5% as a reasonable assumption for inflation. Do note that in multi-decade projection, a few basis points make one hell lot of a difference.

In terms of retirement funding, this tends to get complicated because different people have different risk profiels and investment strategies. As a rule of thumb, the following long term returns for common instruments are:

CPF - 2.5-4% p.a.
Soverign and high quality corporate bonds - 3-5% p.a.
Singapore residential property - 7% p.a. appreciation + 3-4% rental yield
Singapore stocks - 6-8% appreciation + 2-4% dividend yield

He basically assumed everyone just hide cash under mattress with no investment gains at all. Once you tone down on the unrealistic inflation rate and bring up the investment gains/ passive income, the results will definitely be much lower than the 2.5 million that was quoted.

These bombastic numbers are mostly a result of misapplication of financial calculators by insurance agents who are basically motivated to scare their clients into buying more products. Minus all that BS in this forum about all sorts of untold riches, the fact is in real life 90% of Singaporeans do not even have $1million of net worth (as quoted in many studies by BCG, Bloomberg, UBS etc.), saying you need $2.5mil is nonsensical as this would imply >95% of the population are unable to retire while maintaining a decent lifestyle. Makes no sense at all.

Curious how your expenses are so high? Some more your PC already paid up.

Any "village" you already have in mind?

What I know from friends and relatives who moved overseas was that they all longed to come back to Singapore as they got older. They somehow felt this was where they belonged. This came as a big surprise to me as some of them have stayed overseas for over 20 years. Their children being borne overseas of course do not have this longing.

Another thing to bear in mind is that when old, it is definitely better to be near medical and general amenities. Imagine the convenience of mama shops and clinics just round the corner instead of being stuck in some ulu village when you needed something.

Originally Posted by Unregistered

I earn $80k pa, wife $110 pa. Expenses $150k pa. Savings $40k pa.
Lives in a PC, fully paid up. No debt. Total net worth $2m. We are in our late 40s.
Our retirement plan is to rent out our PC when we reach 75 and live in a 3rd world country, in a village. We can plant our own food (organic) and rear our own chicken (organic). We will use our rental income for other expenses. We hope to live till 85 years old.

The guy is not wrong. He is presenting in a simple way that any person can understand.

You mentioned below the various returns that a person can generate from their holdings and in the same breadth you mention many Singaporeans would not be able to save a $1M. You should know then that the majority of Singaporeans do not have the knowledge and money to generate decent returns, some more over their retirement years so what real returns can they expect to have?

In the most likely scenario, a person with $1m would probably have a few hundred thousands in CPF, bulk of it in his property (where he is staying in) and some cash. How then can he generate reasonable returns? His property may appreciate in time, but if no cash flow, how is the retiree going to eat? No need to mention those with less.

The maths is simple enough for anyone to play around with the inflation figures and return on investment (ROI) figures. In other words, if your ROI is higher than the inflation figure, you just enter the net ROI figure into your calculation. The case with zero inflation actually means the ROI equalling rate of inflation.

I know the figures computed are not soothing, but one should take it as a signal to save and invest for the days when we stop work. Money doesnt grow on trees and nobody owes us a living.

I cannot even use the word denial here because many people are ignorant of their financial predicament. You can only be in denial if you are aware of the situation.

Originally Posted by Unregistered

The reason why this looks simple is because he is doing it wrongly. He dumped in an inflation rate of 3.5% and assumed no asset/investment appreciation.

Historically over the past 35 years, the median inflation rate is 1.7%, 75th percentile is only 3.1%. 3.5% assumption is too high and he gives no rationale on how he came up with this figure. CPF and government bodies usualyl recommend 2-2.5% as a reasonable assumption for inflation. Do note that in multi-decade projection, a few basis points make one hell lot of a difference.

In terms of retirement funding, this tends to get complicated because different people have different risk profiels and investment strategies. As a rule of thumb, the following long term returns for common instruments are:

CPF - 2.5-4% p.a.
Soverign and high quality corporate bonds - 3-5% p.a.
Singapore residential property - 7% p.a. appreciation + 3-4% rental yield
Singapore stocks - 6-8% appreciation + 2-4% dividend yield

He basically assumed everyone just hide cash under mattress with no investment gains at all. Once you tone down on the unrealistic inflation rate and bring up the investment gains/ passive income, the results will definitely be much lower than the 2.5 million that was quoted.

These bombastic numbers are mostly a result of misapplication of financial calculators by insurance agents who are basically motivated to scare their clients into buying more products. Minus all that BS in this forum about all sorts of untold riches, the fact is in real life 90% of Singaporeans do not even have $1million of net worth (as quoted in many studies by BCG, Bloomberg, UBS etc.), saying you need $2.5mil is nonsensical as this would imply >95% of the population are unable to retire while maintaining a decent lifestyle. Makes no sense at all.

We spend a lot on our parents, 3 series and holidays.
Thinking of a village in Malacca, there are a few medical facilities there.
Cost of living is much cheaper, and crime rate is much, much lower than JB and KL.
Air is fresher too.

Originally Posted by Unregistered

Curious how your expenses are so high? Some more your PC already paid up.

Any "village" you already have in mind?

What I know from friends and relatives who moved overseas was that they all longed to come back to Singapore as they got older. They somehow felt this was where they belonged. This came as a big surprise to me as some of them have stayed overseas for over 20 years. Their children being borne overseas of course do not have this longing.

Another thing to bear in mind is that when old, it is definitely better to be near medical and general amenities. Imagine the convenience of mama shops and clinics just round the corner instead of being stuck in some ulu village when you needed something.

Originally Posted by Unregistered

The guy is not wrong. He is presenting in a simple way that any person can understand.

You mentioned below the various returns that a person can generate from their holdings and in the same breadth you mention many Singaporeans would not be able to save a $1M. You should know then that the majority of Singaporeans do not have the knowledge and money to generate decent returns, some more over their retirement years so what real returns can they expect to have?

In the most likely scenario, a person with $1m would probably have a few hundred thousands in CPF, bulk of it in his property (where he is staying in) and some cash. How then can he generate reasonable returns? His property may appreciate in time, but if no cash flow, how is the retiree going to eat? No need to mention those with less.

The maths is simple enough for anyone to play around with the inflation figures and return on investment (ROI) figures. In other words, if your ROI is higher than the inflation figure, you just enter the net ROI figure into your calculation. The case with zero inflation actually means the ROI equalling rate of inflation.

I know the figures computed are not soothing, but one should take it as a signal to save and invest for the days when we stop work. Money doesnt grow on trees and nobody owes us a living.

I cannot even use the word denial here because many people are ignorant of their financial predicament. You can only be in denial if you are aware of the situation.

Simple means nothing, accuracy counts. Simplicity is not some blanket excuse to give poor advice and wrong information just because it is easier for others to understand.

First, there is no address of how the 3.5% inflation came about. Secondly, just a blanket assertion that most Singaporeans are financial illiterate and therefore do not know how to generate returns is hardly a decent rationale to assume no investment returns.

The fact that the figures are wrong and don't make sense doesn't mean it should be accepted because it happens to "send a signal to save and invest". This line of logic is no different than me lying to you that there is gold buried under your backyard and urging you to go out and dig now and then telling you later that at least it sent a signal to you to go out and get some proper exercise under the sun.

I also don't share your view that most Singaporeans are so illiterate that they totally don't know what to do with their money which you seem to be alluding to all the time. Most are definitely no investment guru, but neither are they idiots.

Is there a need for Singaporeans in general to better plan for retirement? Yes.

Is resorting to exaggeration and fear mongering through misapplication of financial models the proper way to encourage people to think more about their finances? No, it is dishonest and in some cases illegal.

$2.5mil is barely enough to live decently in sg, to continue a good quality middle class life after retirement you will need $8-10mil before 60 years old.

Originally Posted by Unregistered

$2.5mil is barely enough to live decently in sg, to continue a good quality middle class life after retirement you will need $8-10mil before 60 years old.

8-10m is too much! but i wouldn't complain if i had 8-10m.