Can You Afford To Stop Work?
Don’t delay finding out how much you will need for retirement
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.
To ensure that you save sufficiently, it is important that you start planning early for it. This allows a longer period for accumulation & hence, more time to save, as well as invest.
Many Singaporeans are still uncertain as to how to go about achieving their retirement objectives. As a result, they are usually financially ill-prepared after they leave the workforce.
According to the National Financial Literacy Survey commissioned by the Monetary Authority of Singapore (MAS) last year, many Singaporeans are not saving adequately, nor are they saving early enough for retirement. While the majority of Singaporeans consider personal & CPF savings to be their most important sources of retirement income, less than 1 in 3 Singaporeans are actually aware of how much CPF funds they will have when they reach 55 years old.
The reality is, CPF savings alone may not be sufficient to support your desired lifestyle during retirement. With the increasing use of CPF funds for non-retirement purposes e.g. housing, education, etc, your CPF funds may not even be sufficient to meet all your basic retirement needs.
To enjoy your golden years, you should start saving early & consider alternatives beyond CPF to accumulate adequate savings for retirement.
To ascertain how much retirement income is needed, it is important to first identify your retirement goals. You should try to envision the type of lifestyle you aspire to have, at what age you expect to retire & most importantly, establish what retirement means to you. Being realistic & having specific & measurable retirement goals can also help provide a more accurate assessment of how much money is needed.
As a general rule of thumb, most would require 50 to 70 per cent of their last drawn annual income to maintain their current standard of living during retirement. However, bear in mind that you have to take into account the impact of inflation & if you aspire to have an active retirement lifestyle that includes traveling & hobbies, you will require more savings.
Whether retirement is decades away or around the corner, now is a good time to begin planning for it.
