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How Much Do You Need For Your Retirement?

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Do you know if you have enough for your retirement and financial freedom?

trishawintrafficEveryone's figures would be different, but you should think about your lifestyle now and how you can sustain it when you reach retirement age. Financial Freedom does not drop on your lap, you have to work a bit for it.

Say your expenses each month now is around $2500 for two persons (you and your spouse). You would assume that after retirement, you would probably still spend that amount, although it is likely to be a higher amount due to inflation, it is tempered by the fact that you'd probably spend less when you aren't working. You'd probably be at home and do a lot of stuff like watching re-runs of movies and drama serials.

So if you stop work when you are 55, and assuming you will live on till 88 years old, you'd need: (88-55) x 2500 x 12 = $990,000. You'd need almost a cool million.

How far are you from your retirement age?


If you are interested, you can download this simple excel sheet to put in the values in the blue boxes to see how much you are projected to have upon your retirement to see if you are ready for your financial freedom.

Remember though that the figures are only projected and you may earn less than the 7% targeted returns for your investments.

If you have a shortfall, either you

  • make do with whatever you have at the end
  • you extend your working life and postpone retirement
  • invest more each month
  • take a bit more calculated risks (like take out the $30k from the bank and invest it after putting aside an emergency fund of about 3 months' expenses)
  • earn some money on the side to build your retirement kitty
  • pray you go earlier than the average life expectancy (not recommended)

Without a plan, you wouldn't know if you are on the way to a comfortable retirement or an unpleasant shock.

Are you on the way to your financial freedom?

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Musicwhiz said...
August 22, 2009 at 12:21 AM  

Hi Lemizeraq,

I operate a value investment blog at http://sgmusicwhiz.blogspot.com, and hope to exchange links with you as I can identify with your topic of financial freedom and also note that you subscribe to Warren Buffett's philosophy on investing.

I should have discovered your blog sooner haha.

Please keep up the good work, and I like your articles on how expensive Singapore can be and tips of saving money and building wealth.

Hope to hear from you soon on this, or you can leave a comment on my blog.


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