Do you know that 3 in 5 Singaporeans are not prepared to retire?
Are you doing anything about it?— Sean Chai
Take the desired expense you have and multiply that by 1.04
(the .04 refers to a 4% inflation rate) to the power of the number of years of retirement.
If you want to retire for 25 years with $2500 a month, that will mean:
$2500 x 1.04^25(years of retirement)= $13,501.
Note that this method takes the maximum inflation applicable.
However, by doing this, you can at least gauge the minimum required sum towards the maximum end of your years and you will be unlikely to outlive your savings/nest egg.
Retiring with Peace of Mind:
Using Your CPF to Retire: If you contribute about $500 to your CPF Special Account every month for 30 years, you can look forward to about $2000+ a month (at 65).
This method will also ensure you keep pace with inflation since 4% a year will probably outstrip average inflation rates.
It’s important for you to note the risks associated with it.
This is an alternative way of calculating how much we need to retire:
We’ve made a few assumptions in our calculations:
- The average life expectancy in Singapore is 83.1 years – we’ve rounded this to 83 years.
- The basic monthly expenses you’ll incur during retirement add up to S$1,200 to S$1,500 a month. We’ve used S$1,500 in our calculations.
- The inflation rate is assumed to be 2.5% a year.
- CPF monthly payouts were not taken into account in these calculations.
Assuming you’re 25 years old today, here’s how much you would need to save to retire by these ages:
After calculating how much you need to retire, how far are you from saving enough for your retirement?
What do you plan to do about it?