68 must be one of the hottest number in Singapore this few weeks. The general feedback I had heard is we will never retire. It is interesting to note that people who can retire choose not to while people who cannot afford to retire wants to. Singapore, like any other countries have been increasing the statutory retirement age from 55 to 62 and so on. The latest is a proposed 68.(Retire at 68)
My defination of retirement is not to stop working but to live the lifestyle I want without any debts. The million dollar question is how much do I need for retirement. There are two main variables that depends on the amount required. The first variable is how long will I live . The second variable is when I want to retire. Everyone knows the first variable is not within our control. (Personally I think it is a good gauge to take an average of our grandparent’s/parent’s age at death as a guide to determine this figure.)
As for the second variable , it’s either you take the statutory retirement age or you decide your own retirement age.
Some financial planners suggest that we take either 70% of your current expenses or last drawn income as a guide to how much you need during retirement because your lifestyle expenses like travelling, hp bills, cab fares etc may reduce. I prefer to assume the full expenses currently because although some expenses may reduce, there are other bills such as medical bills may increase. Moreover, it’s better to be on the safe side to over then to under-estimate.
One of the most important factors to consider for retirement planning is the rate of inflation. Property price has always been a good gauge of inflation. My parents used to tell me the 4 room flat they bought 30 yrs ago cost only $25,000 and it’s worth estimated $350,000 today. One way you can look at it is that your HDB flat appreciated 14x or 1400% over the last 30 yrs. Another way you can see it the inflation over the last 30 yrs is 1400% . This means that in order to buy the same item in 30 yrs time, I need to pay 1400% more than today or the purchase power of the same dollar depreciate 1400%. To add-on, the $25,000 back then is enough to get a fully paid house but it’s barely enough to pay for your deposit today. So why didn’t our parents fully paid it but took a loan too? Precisely because the median salary was not $3000 back then, the $25,000 they were looking at is similar to how we stare at the $350,000 today.
A quick run thru of the figures suggest that it is not easy if you want to retire comfortably at 68. Does that mean we cannot retire? I would suggest running through a proper retirement planning with your financial adviser will reveal the answer. End of the day, I can say with confidence that the one that have a plan with retire better than one with no goals.
My IFA@Sg 