How much are you earning per annum?

Originally Posted by Unregistered

My total interest for 2016 is $13k.

Looks like many people in singapore have a lot of money kept with the government in CPF

To a large extent, the amount of CPF and interest from CPF is a function of a person's age. The older the person, the bigger the amount accumulated, assuming no withdrawal for property and investment. Of course, it also depends on the salary level of the person. But because of the salary limit for CPF contributions, currently at 6k, similar aged persons earning more than the salary limit should have about the same CPF amount.

How much does a retired couple, both aged 65, today need?

Assumptions:

1. 4 room HDB flat is paid up.
2. No dependents. All children are grown up and living on their own.
3. Live a normal decent life. No bad habits such as smoking, drinking, gambling, etc.
4. Totally debt free.

Expenses, per month

Food, groceries & eating out $600
Utilities (can enjoy rebates), internet, phone $200
Public transport (can enjoy senior citizen concessions) $100
Entertainment and holidays (pro-rated) $300
Medical and insurance $300
Miscellaneous $200
Total $1700 pm or $20,400 pa

In 10 years’ time, how much does a retired couple, both aged 65 in 2027, assuming an annual inflation rate of 2.5%, need? About $2200 pm or $26.400 pa.

If you choose the Enhanced Retirement Sum for your CPF Life, you will each get $1860 pm from age 65 until you die. So, in total, as a retired couple, you get $3720 pm or $44,640 pa until you die.

So, your CPF can meet your retirement needs if you save enough in CPF and do not spend away your CPF monies.

It is correct that the CPF contribution is pegged at $6k income per month. Anything more than $6k pm will not attract CPF contribution. Meaning, a person with $20k pm salary will contribute the same amount to his CPF as the guy who earns $6k pm.

And the maximum salary that attracts CPF contribution per year is $6k x 17 months = $102K. At 37% CPF contribution rate (total of employee and employer contribution), the maximum a person (below 55 yo) can contribute to his CPF is 0.37 x $102,000 = $37,740. A person above 55 yo will only contribute 26% or $26,520 per year.

The 17 months is to allow bonuses and other cash benefits a person earns to attract CPF contributions both from the employee and the employer. So if a person happens to earn $6k a month and has 5 months of bonus in that year, he will be contributing $37,740 for the year. If he earns more than that, his CPF contribution will still be capped at $37,740.

There are many ways to increase your contributions or savings into your CPF. You can look them up in the CPF website

Nothing fantastic (and in fact pretty mediocre to the ones I see here)

Male, 27 this year
S$60k pa (currently 2nd job, 1st job was about S$43k pa; both marketing)
Private Degree Holder (almost 3 years since graduation)

CPF OA: approx. S$25k
Investments: approx. S$15k
Savings: approx S$20k (really regret not managing my expenses earlier in life i.e. spending on random things like Apple Watch)
Expenses: Analyzed this for about 2 years now using this app called Toshl (Average Monthly - Expenses 43%, Maybank-Monthly Investment Plan 32%, Balance Savings 25%)

My plan is to try to manage these Expenses (bills, parents money, shopping, insurance etc) a little bit more to be under 40%.

Everything above is as true as it can be, cheers

Clearly, you don't need $1m in cash to retire. Unless you want to eat at restaurants everyday.

Originally Posted by Unregistered

How much does a retired couple, both aged 65, today need?

Assumptions:

1. 4 room HDB flat is paid up.
2. No dependents. All children are grown up and living on their own.
3. Live a normal decent life. No bad habits such as smoking, drinking, gambling, etc.
4. Totally debt free.

Expenses, per month

Food, groceries & eating out $600
Utilities (can enjoy rebates), internet, phone $200
Public transport (can enjoy senior citizen concessions) $100
Entertainment and holidays (pro-rated) $300
Medical and insurance $300
Miscellaneous $200
Total $1700 pm or $20,400 pa

In 10 years’ time, how much does a retired couple, both aged 65 in 2027, assuming an annual inflation rate of 2.5%, need? About $2200 pm or $26.400 pa.

If you choose the Enhanced Retirement Sum for your CPF Life, you will each get $1860 pm from age 65 until you die. So, in total, as a retired couple, you get $3720 pm or $44,640 pa until you die.

So, your CPF can meet your retirement needs if you save enough in CPF and do not spend away your CPF monies.

Originally Posted by Unregistered

Clearly, you don't need $1m in cash to retire. Unless you want to eat at restaurants everyday.

A joker said a retired couple needs to have a net worth of $6m in order to retire. What a joke! Hahaha. Like that 99.99% of Singaporeans cannot retire!

Originally Posted by Unregistered

A joker said a retired couple needs to have a net worth of $6m in order to retire. What a joke! Hahaha. Like that 99.99% of Singaporeans cannot retire!

It really depends on a couple's prior lifestyle. A $6m net worth generates ~$200k passive income assuming they take up a low-moderate risk profile. That is roughly what a higher middle income class couple spends a year, so it actually makes sense for quite a segment of the population.

Originally Posted by Unregistered

It really depends on a couple's prior lifestyle. A $6m net worth generates ~$200k passive income assuming they take up a low-moderate risk profile. That is roughly what a higher middle income class couple spends a year, so it actually makes sense for quite a segment of the population.

This means retrement adequecy depends on your retirement lifestyle. If you want to eat at high end restaurants everyday, travel by first class, go to Europe five times a year for holiday, etc, you will need to have $10m that generates $500k pa.

However, if you have a humble, heartland retirement lifestyle, you just need $30k pa.

Not surprising why some people cannot afford to retire because they are attached to their high end lifestyle and their status in the corporate world. They are attached to these worldly things.

Originally Posted by Unregistered

This means retrement adequecy depends on your retirement lifestyle. If you want to eat at high end restaurants everyday, travel by first class, go to Europe five times a year for holiday, etc, you will need to have $10m that generates $500k pa.

However, if you have a humble, heartland retirement lifestyle, you just need $30k pa.

Not surprising why some people cannot afford to retire because they are attached to their high end lifestyle and their status in the corporate world. They are attached to these worldly things.

Yea, but I think it's most people actually are living beyond their means during working days rather than they 'cling' to their lifestyle and refuse to downgrade during retirement.

For e.g. if a couple makes $200k and lives a lifestyle of 60-70% of ~$130k and save the rest they can in theory retire at 65 and still maintain the $130k lifestyle.

The problem with most Sg professional / manager couple is they make $200k and live a lifestyle of $190-200k. Savings too small, lifestyle too high so double whammy cannot retire in peace.

Most are just banking on paying off mortgage and renting out the condo and live on rent. But reality is a typical 1000sqft condo in Sg is only fetching ~$35k gross and ~$30k net rent, not anywhere near to maintain their current lifestyle.

Those who are not prepared for retirement should do this

1. Sell their condo away and get $1.2m cash, assuming it is fully paid up
2. Use $400k to buy a 4 room HDB flat and pay in full cash
3. Use the balance of $800k to buy annuities
4. Get payouts from CPF Life
5. Lead a simple, humble retirement lifestyle

Originally Posted by Unregistered

Yea, but I think it's most people actually are living beyond their means during working days rather than they 'cling' to their lifestyle and refuse to downgrade during retirement.

For e.g. if a couple makes $200k and lives a lifestyle of 60-70% of ~$130k and save the rest they can in theory retire at 65 and still maintain the $130k lifestyle.

The problem with most Sg professional / manager couple is they make $200k and live a lifestyle of $190-200k. Savings too small, lifestyle too high so double whammy cannot retire in peace.

Most are just banking on paying off mortgage and renting out the condo and live on rent. But reality is a typical 1000sqft condo in Sg is only fetching ~$35k gross and ~$30k net rent, not anywhere near to maintain their current lifestyle.