HEALTH
Retirement Planning
Demystified
Retirement is something STEP ONE:
that many young Decide on your planned
Singaporean families retirement age independent study
According to an
aspire towards. Yet, many conducted in 2013, a large majority of
of us associate a leisurely Singaporeans have inadequate savings
life in our golden years like and are not saving early enough for
a mythical phoenix – non- their retirement. As the cost of living
rises, coupled with our longer life
existent. We speak to a few expectancies, retirement planning
financial experts and plan takes on even greater importance.
a course of action for young
families to put up their Currently, Singapore’s statutory
minimum retirement age is 62
feet when the golden years with re-employment opportunities
come around. available until the age of 65 based on
performance. But like everything else
in Singapore, this is expected to rise in
the future. Earlier this year, Lim Boon
Heng, former NTUC secretary-general,
went on record to say that he believes
that the retirement age should be
upped to 70. What does this mean for
you? Simply put, you have until the age
of 62, or 65, to earn and save enough
so that you can live the rest of your life
from the savings you’ve accumulated.
By Farhan Shah
Of course, you may also choose to
retire earlier if you think you have
enough funds to tide you through the
rest of your life.
Alex Lee, the Chief Actuary for Tokio
Marine Life Insurance Singapore Ltd,
highly recommends that you start
planning for retirement as early as
possible, perhaps in your late 20s or
early 30s, and the first thing that you
can do is to decide the age that you wish
to retire at. Alex provides four common
benchmarks – 50, 55, 60 and 65.
STEP TWO:
Choose the retirement lifestyle that
you would like to enjoy, followed by a
targeted monthly retirement amount
you will need to fund such a lifestyle
Are you aiming for the same lavish
lifestyle that you are now enjoying
in the prime of your life? Or do you
not mind adopting a more prudent
approach? Perhaps you’re aiming
for somewhere in between. It’s
important to choose a retirement
lifestyle that you’re most comfortable
with. A 2013 global report regarding
retirement compiled by HSBC found
that 70 percent of the respondents
in Singapore viewed spending more
time with friends and family as one
of their most important retirement
aspirations. A close second was taking
frequent holidays, with 63 percent
of respondents hoping to pack their
luggage as often as possible during
their golden years.
The average Singaporean, Alex
shares, requires 70 percent of his
or her last drawn salary to maintain
his or her current lifestyle during
retirement. If you’re more prudent
though, 50 percent of your last drawn
monthly wage is more than enough
to take you through the rest of your
years. Thanks to Tokio Marine’s
retirement calculator, we’ve put
together a simple table that you
can use to calculate the estimated
monthly amount you need based on
your age and current wage.
Assuming a retirement age of 65, an income stream of 20 years, and an expected yearly increment of 2 percent
(based on average wage increase before inflation)
CURRENT
MONTHLY INCOME
CURRENT
AGE
TOTAL RETIREMENT GOAL
YOU REQUIRE
TARGET MONTHLY INCOME
AT RETIREMENT
AMOUNT YOU NEED TO SAVE
ANNUALLY
S$2,500
28
S$864,000
S$3,600
S$23,351
30
S$816,000
S$3,400
S$23,314
32
S$1,032,000
S$4,300
S$31,272
34
S$984,000
S$4,100
S$31,741
34
S$1,176,000
S$4,900
S$37,935
36
S$1,128,000
S$4,700
S$38,896
S$3,200
S$3,800
As you can tell from the table above, retirement 6