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How Much Do You Need for Your Retirement?


image According to the figures provided on the CPF site, Singaporeans think we need less than $250k (it doesn't tell us how much less) to more than $1.5 million (again it doesn't tell us how much more).

Some books that I have read said that you should plan on having at least 80% of your last drawn monthly pay each month that you are in 'retirement' to meet expenses.

So, if you earn say $5000 monthly upon retirement, you should have plan to have an income of at least $4000 monthly during retirement. If you retire at the age of 65, and live till 85, that is a figure of $960,000 that you need for retirement.

That's a lot of ifs. And big fat assumptions.

When I first started doing my planning for our retirement (my wife's and mine), my ballpark figure is also about $1 million. For the both of us. Now, I think maybe we have to supplant it by selling the house, getting the proceeds and moving to a smaller apartment. This could yield another $300,000 after buying a smaller unit, assuming the price differences for the big and small apartment is as it is now. The more money we have for retirement, the better.

And when I did the math, the one million will be from our investments, cash, OA and SA balance, not including the Medisave amount or the insurance payout.

How far are we from the target? Assuming we only pump in $1200 each year to our retirement kitty for our investment/OA/SA, and assuming an return of 7% from all of our present investments. We are looking at around $835k. Which is short of a cool $165k from our target.

If you are interested in doing the calculations for this use the fomula in an excel spreadsheet ‘=FV(int rate target, number of years till retirement, fixed amount of investment put in annually till retirement, initial investment amount at year 1)’.


  • Spend less for retirement
  • Pump in more money for investment
  • Take on more risk (hard to in my case as our investment are all equities and no bonds)
  • Maintain a sizeable position in equities even during retirement so that the money there can help stretch the money and fund the last years of your retirement. Which we intend to do anyway.
  • Pretend the problem will resolve itself and magically go away (which some people do)

If you want to learn more about how much you need and start off for retirement planning, you can go to the CPF Retirement Planning page to get started.

Actually my forecast is pessimistic as we have been saving more than $1200 each year to put into investment so we should meet the target comfortably. Then again, some will say that my project return of 7% is too being optimistic. So you have to play around the figures and decide yourself. 

So how much are you aiming for your retirement?



1. My Golden Egg- My CPF

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Musicwhiz said...
November 23, 2010 at 8:12 AM  

At least $2 million, as I have a kid and education can be expensive. Hopefully, out of the $2 million, $1 million will be in equities yielding 5-6% per annum, which would provide comfortable passive income. The rest is buffer money and emergency funds which are to be deployed for major decisions (e.g. renovations, child's education, medical exigencies etc).

I think 5% is a realistic and achievable target. Anyway bear markets come once in a blue moon, so we must seize the opportunities when they present themselves. :)

Lemizeraq said...
November 23, 2010 at 10:26 PM  

Hi Musicwhiz,

That is a high target. And I am sure you can get more than 5% as your dividend yield is almost that amount without taking into account capital gains.

Yeah, bears and market correction is always good time to buy. The problem is to build cash in the meanwhile. Having the guts to buy during the bear market should not be a problem as we have all bought during the Great Recession.


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