There is always hot debates over how much is required for a person’s retirement living. Of course, this number will differ from individual to individual, but when I looked at the break down of how the number was derived (attached below), I feel really sad if I have to retire into that kind of lifestyle.
Imagine working so hard for so many years (easily 40, age 25-65), we don’t want to end up with subsistence living. Imagine when many people will be earning a 5 figure income before retirement, reducing their expenses to $1,379 will require a significant lifestyle adjustment.
But is retirement funding really so difficult to achieve? Let’s assume a modest lifestyle of $3,000 a month, a 20 years retirement period (age 65-85) will mean a lump sum requirement of 20*12*3000 = $720k. And that means no capital preservation! But this number is only correct if inflation is zero! But inflation is not zero. If you are in your 40s, a modest inflation of 3%pa will at least double this amount to $1.5million. And we are not even counting inflation after retirement! If you are younger, then this number is even higher, “thanks” to the effect of inflation compounding over a longer period of time!
So indeed is not easy to fund a comfortable retirement, and without proper planning, it is unlikely that this amount can be achieved. Unless you happens to be in the top 5% of income earner, then as long as you don’t anyhow spend your money, you will be ok, no planning need. For the rest of the 95%, you need to plan.
Important: The information and opinions in this article are for general information purposes only. They should not be relied on as professional financial advice. Readers should seek independent financial advice that is customised to their specific financial objectives, situations & needs. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.
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Will I be able to retire comfortably?