How much are you earning per annum?

What you painted is a rather optimistic scenario. In your late 40s, your expenses are not at its peak. True, your work income may also not be at its peak. While I cant comment on the income part, which only you would know whether there is any more upside, I can certainly attest to the fact that expenses will only grow further -- especially when your children reach university age. If they cannot cut it for the local uni, the expenses will balloon if you need to send them overseas! As of today's cost, it would set you back $50k per year to send your children either to Aussie, UK and US unis. Even local uni fees are rising year on year.

I am in my 50s and I just bought a new car to replace my 10 yr old car. This is another big expense that you would still be having. I upgraded to a condo in my late 40s and fully paid for it, but the expenses are not decreasing. If you have 2 or more children, you will have to set aside their education expenses till you are in your late 50s or early 60s. In the meantime, you find you are already out of the promotion race, so your salary is likely to stagnate or worse you might not be able to work in your present job anymore! The gahmen said to work till 65, but is your company guaranteeing you a job and good salary up to that age? I already seen a few of my colleagues aged 55 and above dropped out to retire or join other companies for much much lower pay because they cannot compete nor cope with the pace of work.

And do not project your expenses based on your children marrying off. Statistics have shown that people are marrying later and later if not at all. Many would still be staying with their parents well into their 30s or 40s before they get their own homes.

I see a lot of people said that they will have $1,700 or so from the CPF life when they reached 65, but do you know that by that time, the $1700 is actually worth only $600 - $800 due to inflation of just 3% pa?

Where you can, you should work towards other sources of income for retirement sustenance and not fully depend on CPF payout.

Originally Posted by Unregistered

Your experience is not unique. Most of your peers in the same age group are facing the same thing. Only a few extraordinary successful few would have their condo and car fully paid up. Most are still servicing their condo mortgage and car loans. There also many of your age group who just upgraded from their HDB flat to a condo when they are in their 40s. So, you are definitely not alone.

You don't really need to worry about your retirement. Your current high spendings will start to decline in the next few years. You are now at a point in your life cycle where your expenses are the highest due to the responsibilities of raising a family as well as taking care of your aging parents. As time pass by, your kids will grow up, start to work, marry and move out. So your expenses for your kids will drop significantly. Your parents on both side will eventually pass on and your expenses on parents allowance will drop a lot too. Your kids may start giving you a small allowance (don't expect from them though, if they give it will be a bonus). So your savings can possibly increase.

When you reach 65, your mortgage would have been cleared. Your savings could increase gradually and you could have saved another extra $1m. You may no longer need a car nor do you need a maid. So your expenses will drop a lot. Your passive income will come from your CPF Life and dividends. Let's say you choose the enhanced option, you would get $1.75k pm for each person or $3.5k pm (or $42k pa) as a couple. You could get 5% dividend yield from your $1m investment or $50k pa. So your total passive income will be $92k pa. This amount is a big amount for an old retired couple. You could enjoy going short holidays during non peak seasons. How wonderful!

It is important to know the lifestyle you want to lead in retirement. The below is considered decent but simple lifestyle. Dont forget to add angpows for dinners. Now going rates are $150 and above for 1 person.

But one important thing I need to highlight is the effect of inflation. The $1800 estimated is at today's value. Factor in an inflation of 3% per year over the next 10 to 30 years, to maintain the same purchasing power, you will need to spend:

Today's estimated expense per month: $1,800

To maintain same purchasing power
10 years later : $2419
15 years : $2804
20 years : $3251
25 years : $3769

Remember your CPF life payout is fixed. If you are 55 now, it will only be $1100 pm. If you're 55 next year, and you take on the enhanced option ($241K), your payout is $1750 pm (10 years down the road). You can see that you better have other sources of income!

Originally Posted by Unregistered

How much does a 65 year old retired couple today need?

Assuming no more mortgage and debt free, no car and no maid,

1. Food - $500
2. Utilities - $100
3. Public transport and taxi - $100
4. Holidays (pro rated) - $300
5. Helping the poor/donation - $50
7. Healthcare and insurance - $550
6. Miscellaneous - $200

Total - $1800

As you can see, a retired couple who lead a healthy, good life don't really need much.

You are missing the point. As we grow older, our kids will grow and they will be working so you don't have to take care of their expenses as they are already working. Of course while they are still growing up and studying, you will have to provide for them. As far as possible, encourage them to study hard to qualify for the local uni. Foreign uni degrees is no guarantee of future employment. Your parents will eventually go and so you have no more parents allowance to worry about (btw how much do you give your parents every month?).

Earning passive income is definitely important and that is why investing your savings in blue chips to enjoy dividends is the way to go.

You mentioned you are now in your 50s. When do you intend to retire? How much passive income do you need every month during your retirement?

Originally Posted by Unregistered

What you painted is a rather optimistic scenario. In your late 40s, your expenses are not at its peak. True, your work income may also not be at its peak. While I cant comment on the income part, which only you would know whether there is any more upside, I can certainly attest to the fact that expenses will only grow further -- especially when your children reach university age. If they cannot cut it for the local uni, the expenses will balloon if you need to send them overseas! As of today's cost, it would set you back $50k per year to send your children either to Aussie, UK and US unis. Even local uni fees are rising year on year.

I am in my 50s and I just bought a new car to replace my 10 yr old car. This is another big expense that you would still be having. I upgraded to a condo in my late 40s and fully paid for it, but the expenses are not decreasing. If you have 2 or more children, you will have to set aside their education expenses till you are in your late 50s or early 60s. In the meantime, you find you are already out of the promotion race, so your salary is likely to stagnate or worse you might not be able to work in your present job anymore! The gahmen said to work till 65, but is your company guaranteeing you a job and good salary up to that age? I already seen a few of my colleagues aged 55 and above dropped out to retire or join other companies for much much lower pay because they cannot compete nor cope with the pace of work.

And do not project your expenses based on your children marrying off. Statistics have shown that people are marrying later and later if not at all. Many would still be staying with their parents well into their 30s or 40s before they get their own homes.

I see a lot of people said that they will have $1,700 or so from the CPF life when they reached 65, but do you know that by that time, the $1700 is actually worth only $600 - $800 due to inflation of just 3% pa?

Where you can, you should work towards other sources of income for retirement sustenance and not fully depend on CPF payout.

Originally Posted by Unregistered

How much does a 65 year old retired couple today need?

Assuming no more mortgage and debt free, no car and no maid,

1. Food - $500
2. Utilities - $100
3. Public transport and taxi - $100
4. Holidays (pro rated) - $300
5. Helping the poor/donation - $50
7. Healthcare and insurance - $550
6. Miscellaneous - $200

Total - $1800

As you can see, a retired couple who lead a healthy, good life don't really need much.

Are you plan just to survive another day? This type of life style is good for those who earn not more than 2600 per month (with 70% replacement income, take into consideration 3% inflation for next 20 years).

Are you earning 2600 per month right now (and if you are already 65 years old) ?
If not, don't mislead those are planning for retirement.

Rule of thumb is if your last draw salary is 5k a month, you should have 600k net liquid asset excluding your HDB unit and to remain debt free. Then you will be able to spend 3k a month plus 1.2k from CPF Life.

It is always better to rely on yourself rather than waiting for handout.

Based on your numbers, one person need $4.2k pm for retirement. So a retired couple needs $8.4k pm? You are misleading people. A retired couple don't need $8.4k pm. Crazy. Eat at restaurant everyday is it? LOL.

Originally Posted by Unregistered

Are you plan just to survive another day? This type of life style is good for those who earn not more than 2600 per month (with 70% replacement income, take into consideration 3% inflation for next 20 years).

Are you earning 2600 per month right now (and if you are already 65 years old) ?
If not, don't mislead those are planning for retirement.

Rule of thumb is if your last draw salary is 5k a month, you should have 600k net liquid asset excluding your HDB unit and to remain debt free. Then you will be able to spend 3k a month plus 1.2k from CPF Life.

It is always better to rely on yourself rather than waiting for handout.

Originally Posted by Unregistered

What you painted is a rather optimistic scenario. In your late 40s, your expenses are not at its peak. True, your work income may also not be at its peak. While I cant comment on the income part, which only you would know whether there is any more upside, I can certainly attest to the fact that expenses will only grow further -- especially when your children reach university age. If they cannot cut it for the local uni, the expenses will balloon if you need to send them overseas! As of today's cost, it would set you back $50k per year to send your children either to Aussie, UK and US unis. Even local uni fees are rising year on year.

I am in my 50s and I just bought a new car to replace my 10 yr old car. This is another big expense that you would still be having. I upgraded to a condo in my late 40s and fully paid for it, but the expenses are not decreasing. If you have 2 or more children, you will have to set aside their education expenses till you are in your late 50s or early 60s. In the meantime, you find you are already out of the promotion race, so your salary is likely to stagnate or worse you might not be able to work in your present job anymore! The gahmen said to work till 65, but is your company guaranteeing you a job and good salary up to that age? I already seen a few of my colleagues aged 55 and above dropped out to retire or join other companies for much much lower pay because they cannot compete nor cope with the pace of work.

And do not project your expenses based on your children marrying off. Statistics have shown that people are marrying later and later if not at all. Many would still be staying with their parents well into their 30s or 40s before they get their own homes.

I see a lot of people said that they will have $1,700 or so from the CPF life when they reached 65, but do you know that by that time, the $1700 is actually worth only $600 - $800 due to inflation of just 3% pa?

Where you can, you should work towards other sources of income for retirement sustenance and not fully depend on CPF payout.

Yes. For those who are at their late 50's or early 60's, please do your retirement planning carefully. You have a choice of financing your children's education overseas at the expense of your retirement nest eggs, or make good what is available locally including the education opportunity in Iskandar, JB.

For those who are about to retire or newly retired, work out a plan in Excel on :-
1. Your opening balance.
2. What are your sources of predictable income (CPF Life, Pension, Dividends from REITs, Rental, FD interest, Children's contribution etc etc)
3. What is your projected expenses.
4. What is the balance income over expenses.
5. Prepare a table for next 25 years.

6. Prepare 3 set of data
6.1 Actual monthly expenses - in greater detail
6.2 Actual yearly income/expenses - sum up every month and fill-up for next 25 years
6.3 Projected yearly income/expenses - to guild you if actual income/expenses deviate from your planning and to make adjustment quickly.

7. You may want to plan for big ticket item like car, or budget your holidays overseas.

8. Always remember, fail to plan is plan to fail. Do you want to fail in your golden years ??? So do a proper planning now!!!

Gentle reminder to those who plan to change to a new car. Secure your GUARANTEED COE. Prices will go up. COE expected to rise further tomorrow. All rushing to buy NOW in view of the expected changes in CEV in July. All the best.

My prediction at tomorrow closing:

Cat A COE $70k - $72k
Cat B COE $85k - $88k

Just take note: Cat A COE ever reach $90k in 2013, so current COE price is still cheap.

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Huge backlog of orders means COE likely to stay high: Analysts

By Xue Jianyue, TODAY
17 Apr 2015 07:18
URL: ://w w w.channelnewsasia.com/news/singapore/huge-backlog-of-orders/1789898.html

TODAY reports: Any drop in premiums is likely to be marginal in future bidding exercises, analysts and motor dealers say.

SINGAPORE: Despite the sharp rise in the COE quota for the next three months, those holding out for a reprieve from rising COE premiums are likely to be disappointed.

Any drop in premiums is likely to be marginal in future bidding exercises, analysts and motor dealers told TODAY.

A huge backlog of orders — many from owners of deregistered cars waiting for COE premiums to fall — will keep premiums high, said motor dealers, pointing to the large number of bids made by the end of the latest bidding exercise last week.

For example, more than 2,340 bids were made for only 988 small-car certificates, said Singapore Vehicle Traders Association (SVTA) honorary secretary Raymond Tang.

“There is still a lot of backlog in the market,” he said. “You have more than 14,000 COEs, but it is still not enough.”

Indeed, COE premiums have continued to climb despite the sizeable COE quota for February to April. The quota was the largest since last February until the latest crop announced on Thursday. Increases across the board were seen in the latest bidding exercise, with Open Category premiums at a 12-month high of S$78,000.

Customers are also rushing to buy vehicles before more stringent conditions kick in through rebates and surcharges under the Carbon Emissions-Based Vehicle Scheme (CEVS) on Jul 1, said CarTimes’ managing director Eddie Loo and SVTA president Neo Tiam Ting.

The CEVS is aimed at encouraging the purchase of low-carbon-emission vehicles. The carbon-dioxide limits will be lowered with the revision, which could mean rebate cuts or surcharge hikes.

“A lot are rushing in to register in order to get the higher rebate, and because of that, the actual drop in premiums will not be much,” said Mr Neo.

Currently, COE quotas are determined by the allowed annual vehicle growth rate of 0.25 per cent, the number of vehicle deregistrations, adjustments for changes in the taxi population, replacement of commercial vehicles under the Early Turnover Scheme and expired COEs.

Vehicle deregistrations make up the bulk of supply.

With many buyers unaware of these reasons and rushing in to bid, they contribute to the high premiums they are hoping to avoid, said National University of Singapore transport analyst Lee Der Horng.

The link between COE quota numbers and deregistration will cause fluctuations in the market when deregistration numbers fall around 2019, a situation which is “not healthy” for motor dealers and customers, he said.

“Consumers may face greater uncertainty in COE premiums. Dealers will need to adjust business operations to accommodate this increased demand. After a few years, they will need to slim down. What they want to have is a stable COE supply,” said Professor Lee.

Although the increase in COEs presents dealers with increased sales opportunities, dealers said they were mindful of pushing sales too aggressively with steep discounts.

“No point selling and not being able to deliver the car. It doesn’t look good on the car agent,” said Mr Loo.

Originally Posted by Unregistered

Based on your numbers, one person need $4.2k pm for retirement. So a retired couple needs $8.4k pm? You are misleading people. A retired couple don't need $8.4k pm. Crazy. Eat at restaurant everyday is it? LOL.

If you are age 65 now, earning 5k and you wife 5k, you have 600k and your wife 600k, you have CPF Life 1.2k and your wife 1.2k. You are having a fully paid home. Don't tell me you and your wife are contended to survive on 1.8k a month!

You and your wife definitely can enjoy higher standard of living for next 25 years (up till 85 yo) with 8.4k a month and with 3% adjustment every year, unless you are really a miser.

Work out exactly how much you can afford to spend a month with your existing financial resources. Don't overspend, and also don't dare to spend. Always remember, everybody has a finite life span.

Originally Posted by Unregistered

Based on your numbers, one person need $4.2k pm for retirement. So a retired couple needs $8.4k pm? You are misleading people. A retired couple don't need $8.4k pm. Crazy. Eat at restaurant everyday is it? LOL.

How much do you think homes for one senior citizen will cost in Singapore? S$2.7k a month.
How much will it cost in JB? 3k ringgit a month.
Do you want to burden your children financially?
Are you saving enough for your retirement?

Fail to plan is plan to fail.
Please don't fail miserably when you are about to enter into your retirement life.

This is interesting. Now only 12.30 pm and Cat A COE is already $60k.

I think my prediction of $70k - $72k at closing 4 pm likely will come true.

All the best!