Singapore
A recent survey revealed that two in five Singaporeans are lagging behind in their retirement savings after the global financial crisis. They have suffered serious losses because of the financial crisis.
As Singaporeans are expected to live longer due to the high quality of medical aid here, we are expected to live longer than our parents after retirement. Most Singaporeans are expected to live another 20 to 30 years after the official retirement age of 62.
Just picture this… How much will you need for a basic level of living? Just the bare minimum, no frills, no luxury, no extravagance. Do you need $1000, $2000, $3000, $4000, $5000 a month? This amount is very important as it represents basic living life style, any amount less than this means you will have to compromise your standard of living. Are you or your spouse willing to lower the standard of your lifestyle when you retire?
Next, you need to find out exactly how much you need to accumulate when you retire. Based on 3% p.a. inflation, you will need double the amount in 24 years time using the rule of 72 concept.
For example, you are 38 years old now and you intend to retire at age 62. If you need $2000 a month for retirement in today’s dollar, you will need $4000 a month in 24 years time for the same standard of living. If you are expected to live for another 28 years ( till age 80 ) you will need $1.344M.
That’s a lot of money by most Singaporean standards. There are two ways to save this amount, lump sum investment plus regular savings investment.
If you have $100K to invest at 6% p.a. now, you will have about $405,000 at age 62. The shortfall of $939,000n can be achieved if you save and invest $1540 a month at 6% p.a.
This show that the earlier you start saving and investing, the lesser you need to set aside every month. If you delay your savings till you are in your forties, you will be very hard pressed to save with so much commitment with your family expenses.
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