How much are you earning per annum?

When you are still working and planning your retirement you should aim high. This will give you buffer when you eventually retire and lead a simple life. The buffer is there to take care of :

1. Living longer than you planned for. For eg, you retire at 50 and planned to live to 80 years old but ended up living till 85, you will be in deep trouble. Most likely in this case, you will be back working at 65!

2. Unexpected expenses. Home repair, furniture and home appliances replacement etc...

3. Years of high inflation. These 2 years, inflation was low, but history has shown that it could go as high as 6-7%!

4. Unexpected medical expenses. Healthy one day and sick the next.

So, the careful guy always planned for the above and aimed to save more. For eg. A careful couple intending to live a very simple and boring life in retirement (with monthly expense of $3k pm) will plan to save for a more comfortable lifestyle at $5-6k pm. This careful couple will be able to treat themselves once in a while.

The old folk knows this. And for every extra year he works, he can save for 3 years in retirement. A big buffer gives one more options in life. You need not have to hide from friends and relatives inviting you to their children's weddings, first born celebration etc... You live with dignity and enjoy your retirement fully.

Originally Posted by Unregistered

A retired couple who lead a humble retirement lifestyle will need only $3k pm or $36k pa, assuming no more mortgage and debt free.

Food, groceries and utilities $800 pm
Public transport $100 pm
Condo fees $300 pm
Insurance and medical $500 pm
Holidays $300 pm ($3600 pa)
Misc $500 pm
Savings $500 pm

Singaporean senior citizen Seah, 70 ,working to survive their life in the island republic.

Are you one of the Seah's? Plan properly or else you still have to work at 70 years old just be another Seah in the republic.

Originally Posted by Unregistered

A retired couple who lead a humble retirement lifestyle will need only $3k pm or $36k pa, assuming no more mortgage and debt free.

Food, groceries and utilities $800 pm
Public transport $100 pm
Condo fees $300 pm
Insurance and medical $500 pm
Holidays $300 pm ($3600 pa)
Misc $500 pm
Savings $500 pm

Inflation, my friend, inflation.

When I was 20 years old, chicken rice used to cost 25 cents.
Now, it is between $3 to 5.

What you have calculated is based on the CURRENT situation and requirements. lAll the stated costs will increase by the time you are at your retirement age.

Originally Posted by Unregistered

Inflation, my friend, inflation.

When I was 20 years old, chicken rice used to cost 25 cents.
Now, it is between $3 to 5.

What you have calculated is based on the CURRENT situation and requirements. lAll the stated costs will increase by the time you are at your retirement age.

That's why there is a savings of $500 pm to take care of inflation. Also, non essential expenses like holidays can be reduced if needed. On top of that, at 65, when the CPF Life kicks in, a retired couple can get $3500 pm if they choose the highest payout option. So, don't be overly worried.

Originally Posted by Unregistered

That's why there is a savings of $500 pm to take care of inflation. Also, non essential expenses like holidays can be reduced if needed. On top of that, at 65, when the CPF Life kicks in, a retired couple can get $3500 pm if they choose the highest payout option. So, don't be overly worried.

It is immaterial how much you are saving now. As years gone by, your salary will increase. Likewise, expenses will increase due to inflation.

As rule of thumb, if your last drawn salary is 10k, your saving (net liquid asset plus CPF Life) should be 120X, ie 1.2m to generate 84k replacement income @ 70%. You are also expected to have a mortgage free housing. Spending 60% of replacement income and leave behind 10% to cater for yearly inflation, and you will be safe.

Originally Posted by Unregistered

It is immaterial how much you are saving now. As years gone by, your salary will increase. Likewise, expenses will increase due to inflation.

As rule of thumb, if your last drawn salary is 10k, your saving (net liquid asset plus CPF Life) should be 120X, ie 1.2m to generate 84k replacement income @ 70%. You are also expected to have a mortgage free housing. Spending 60% of replacement income and leave behind 10% to cater for yearly inflation, and you will be safe.

All these worries about inflation is nonsense. Inflation hits hard only if you indulge in luxury items. If you want to own a car during retirement, eat at high end restaurants, party all night, gamble all day, then even $30k pm in retirement will not be enough.

Mind you, there are families who live well with $5k pm. They have no problem paying the mortgage because they choose to buy cheap BTO flats for $200k (4 room flat in unmatured estates), they don't drive and they cook their own meals.

Likewise for a retired couple,they won't need much if they no longer have defendants and no more mortgage to pay. The basic necessities will cost them the most $2k pm. Add some frills, another $500 pm. So $30k pa is all they need. Just invest $600k in a blue chips stocks portfolio that gives 5% pa in dividends. These dividends will grow over time.

Originally Posted by Unregistered

All these worries about inflation is nonsense. Inflation hits hard only if you indulge in luxury items. If you want to own a car during retirement, eat at high end restaurants, party all night, gamble all day, then even $30k pm in retirement will not be enough.

Mind you, there are families who live well with $5k pm. They have no problem paying the mortgage because they choose to buy cheap BTO flats for $200k (4 room flat in unmatured estates), they don't drive and they cook their own meals.

Likewise for a retired couple,they won't need much if they no longer have defendants and no more mortgage to pay. The basic necessities will cost them the most $2k pm. Add some frills, another $500 pm. So $30k pa is all they need. Just invest $600k in a blue chips stocks portfolio that gives 5% pa in dividends. These dividends will grow over time.

So as what you have mentioned, you are earning 5k prior to retirement, your saving is 600k, that works out to be 120x your last drawn salary.

60% replacement income is 3k. You should be spending 3k instead of 2k. Still leave behind 500 every month to add up to your nest eggs.

Don't get overspend or your nest eggs won't last you through your old age.
Don't be scared to spend (under spend), if people can go for musang king, why should you settle for kampong durian.

I read from some folks here of using your house and add into the net worth for retirement. This is not advisable because you still need a house to stay in retirement so unless you can sell it off and monetise it, then a house cannot be counted into the net worth for retirement. Of course if you have more than 1 house, then you can add the value of the house to fund retirement through sale of the house or rental yield. Just wanted to caution anybody getting wrong concept here.

Many Singaporeans are asset rich and cash poor. To plan for retirement, it is best that you try to bring out an excel spreadsheet. Let me try to explain how to create this spreadsheet :

Column 1 : Year
Column 2 : Age
Column 3 : Yearly savings
Column 4 : Cumulative savings
Column 5 to 21 : Cumulative savings with added investment returns, eg stocks, unit trusts. Put in an estimated yearly % into this. I use 0% to 15%. Within each of these columns, deduct for additional special big ticket expenses (excluding usual yearly expenses in column 24) related to each year or a specific age, eg mortgage payments, children education, buy car, etc
Column 23 : Est yearly inflation (I use 3% for all years but change this figure for a specific year when the actual inflation data released the year after)
Column 24 : projected future yearly expenses (column 24 x column 25). Use your current usual yearly expenses as a baseline.

Now comes the part on knowing when can you retire right ? In columns 5 to 21, the values remaining at each age will tell you your net worth. Say you want to retire at 55, so you take the value at column 24 and deduct from each of the columns 5 to 21. Use the same foumula across all the years from 55 onwards. If it runs negative, you have to either increase savings in column 3, or postpone retirement age, or improve your targeted yearly returns before 55, or reduce expenses in column 24. It is quite complicated to explain here simply in words but the excel spreadsheet can be customised to suit your situation but you must put in your formulas correctly based on your own situation. I created such a spreadsheet to track my financial planning. I am not a financial planner trying to sell my services. I am just a working class guy with a bit more financial planning knowledge trying to.share my knowledge here.

Oh .... I also.split it up into 3 different spreadsheet. 1 for cash, 1 for CPF OA and 1 for CPF SA. Cheers folks . Give it a try. It will give you a clearer picture of your future needs , rather than just relying on some rough estimates or ballpark figures.