How much do you need for your retirement in Singapore?? Use our Retirement Calculator to find out first!

We’ve got good news, and bad news for you. Life expectancy for Singapore residents have increased over the years. This means that if you plan to retire at the age of 65, you will have plenty of days to enjoy. You know, the whole cruises in Hawaiian shirts and mom jeans, that whole shebang.

But living longer means you have to start figuring out your retirement savings plan. Do you even know where to start? Let alone figure out how much you need to spend your retirement life without working and worrying for money?

Financial analysts give two approaches to save for retirement:

First approach is based on fixed percentage of saving every year. If you start from the age of 25 and save 10% of your income every year, by the age of retirement you can accumulate 4 times your annual income. But that might not be enough for a country like Singapore where life expectancy is improving. By increasing your saving up to 20% each year, you can accumulate 8 times the annual income, by the time of your retirement.

In comparison to this, you may opt for a targeted approach which seems more practical.

  • If you’re below 35 years, your first target should be to accumulate your savings to the extent of your total annual income, by the time you reach 35 years.
  • When you reach 45, your total savings should be 3 times your annual income.
  • In this manner, by the time you reach your retirement age (65 years), your savings should be 8 times your annual income.

Lack of Planning for Retirement in Singapore

Mark O’ Dell, Deputy President of Life Insurance Association of Singapore believes that “retirement planning is absolutely essential if you want to achieve the lifestyle you want in your golden years. It involves determining how much you need in order to retire comfortably, identifying the best ways to accumulate savings as well as making decisions about how you live your life today”.

Surprisingly, many Singaporeans are not planning adequately or early enough for retirement. A National Financial Literacy Survey highlights that while most Singaporeans consider Central Provident Fund (CPF) and personal savings to be the major means of retirement income, only 1 out of 3 knows how much they will get from their CPF.

About 2/3 of retirees may face the problem of insufficient retirement income, after 10 to 15 years.  In addition, we have to consider costs to raise kids, pay for their health and education and mortgage purchases.

Mark O’ Dell emphasizes on early planning to accumulate sufficient savings at retirement. The sooner you plan for your retirement, the easier it will be for you to accumulate enough savings due to the longer time period. If you o prefer to enjoy and not work during your golden years, don’t wait for the right time to start saving.  START NOW!

So, how much do you want to see in your retirement pool?  Is $500,000 enough for a good lifestyle? How about $800,000, or may be a million? You can ascertain it easily by looking at your present lifestyle, circumstances and income.   Always remember, you’re never too late to save for retirement

How to Plan for your Retirement in Singapore

  1. Start by Calculating Your Funds

If you’re a Singapore citizen, or a permanent resident with CPF, you have to log in to CPF website to calculate how much you have at present. (Remember that CPF currently pays 2.5% Annual Equivalent Rate).

  1. Maximize What You Have

You have to start making your money work harder from now on!

Maximize your CPF and pension contributions! Are your retirement funds and pensions earning as much as they possibly could? Work it out now to maximize your income in future.

  1. Search Alternative Investment Options

Although CPF pays a decent interest rate, you can always use investment option. Investment means capital growth with risk. Make the most of your CPF now  by looking into CPF Investment Scheme and invest in shares. You need to have $40,000 or more in Special Account and over $12,000 in Ordinary Account

Benefits of CPF Investment Scheme

If you save $1200 in your CPF today, it will grow to become $3,222 in about 40 years. On the other hand, if you invest in stock market, you can grow this sum to more than $37,000 within the same time period.

Remember – there is risk involved, be prudent and understand all the risks involved.

  1. Evaluate Yourself

It depends on the income sources you will have during retirement, and the number of years left to retirement. . The Motley Fool designed a calculator to help you assess your income in retirement and you can find out how much you need to save to meet your objective.

To find out how you can accumulate your savings, take a look at this compound interest table. It shows how $1200 investment grows in 40 years and what if you keep investing $1200 every year.

Conclusion:

Maintaining a lifestyle with the added responsibilities of raising a family can be tricky, especially for a retiree who did not plan adequately for retirement. If you keep waiting for the best day to save, it probably won’t come.

Start saving today, even if just a little! Look for investment options to multiply your funds. Take advices from financial experts and grow your funds for a better, secure future!

Again, gauge how much you need with our Retirement Calculator !

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C.E.O @ The New Savvy
Anna Haotanto is passionate about finance, education, women empowerment and children’s issues. Anna has been featured in CNBC, Forbes, The Straits Times, Business Insider, INC and The Peak Singapore. She was nominated and selected for FORTUNE Most Powerful Women conference in 2016 (Asia) and 2015 (San Francisco, Next Gen). Anna has 10 years of experience in the financial sector and is currently a Director in Tera Capital. Her previous work experience includes positions at Citigroup, United Overseas Bank, a regional role in Business Monitor and a boutique private equity firm based in Shanghai. She graduated from Singapore Management University (Finance and Quantitative Finance).