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How Much Do You Need To Retire In Singapore

It’s a thought that we create the minute we start working. It sometimes eats into us, makes us smile, has us drink, and also help us to sleep. There’s an indication that we all just get by, day by day, with the inclination that we will get there eventually because time moves anyway – Retirement.

So the question begs, how much does one need not only to retire, but to retire in Singapore? There’s no such thing as the right time to start planning for retirement. Scoff all you want, but the later you start on this, the harder you’ll have to work at growing your savings.

Define what your retirement goals are and the type of lifestyle you wish to have. Assessing your current situation also helps you to realistically build a plan round how much you can save and how long you will take to reach your eventual destination. I have to first specify that this article is by no means an accurate and finite explanation, but instead a quick snapshot so you get a rough overview.

As Roy Herng states in his blog, based on a very rough salary estimate of 800SGD for a low income group earner, around 100SGD goes to CPF. After tabulating all the other expenses, he deduces that a grand total of 0SGD can be saved. This is already in consideration of a basic lifestyle with no extra needs, or bonus buys to soothe the heart. It quite literally says that no matter how humble is the lifestyle you choose, you will not be able to retire and will run the everyday fear of falling sick and ending up in debt to pay those bills. Roy further states the same for a middle income family. It is a bleak view, but one that is seemingly realistic, as echoed by other online sources.

In “Singapore Perspectives 2012”, Kang Soon Hock and Leong Chan-Hoong state that current CPF rates will provide adequate savings for retirement at the age of 65 for the lower income groups albeit under the condition that no withdrawals for housing or other investments are made. Again, this is a very bleak view on hard facts and occurrences that will not happen – all of us will one day need to purchase a house and living in Singapore would probably mean that we will not be able to afford it on our own. Does it get better for the upper class? Not really.

According to a survey from Friends Provident International, 65% of Singaporeans in the upper class believe they need to save 800,000 – 1,700,000 SGD to retire at age 65. The rest, have no clue. So even if we talk about the upper class income groups, is there really a definite number that will allow us to comfortably say that at 65, we can retire, paint and sleep as and when we want?

The truth is that there is no real way to calculate for sure how much you need until you know what you want, no matter which income group you may be from. Consider factors such as lifestyle, retirement age, life expectancy, rate of returns on your investments and your family size before arriving at the golden number. The CPF and Aviva website offers online calculators to help you better understand how much you will need to retire in Singapore.

With everything that I’ve written, I close this article by saying that the best way to plan your retirement, is to first plan your finances, and develop some positive saving habits. We can never plan enough, but that’s sure better than not planning at all.